Vietnam: State budget and 04 things you should know

Vietnam: State budget and 04 things you should know (Internet image)

1. What is the state budget?

According to Clause 14, Article 4 of the Law on State Budget 2015, State budget means all the expenditures and revenues of foreign that are estimated and realized over a certain period of time decided by competent authorities in order to perform the functions and tasks of the State.

In which, the state budget includes:

- Local government budget means state budget revenues that a local government may use, additional funding from central government budget to the local government budget, and state budget expenditures within the liabilities of the local government.

- Central government budget means state budget revenues that are given to the central regulatory agencies and state budget expenditures within the liabilities of central regulatory agencies

 (Clause 13, 15, Article 4 of the Law on State Budget 2015)

2. Scope of state budget in Vietnam

Specifically, in Article 5 of the Law on State Budget 2015, the scope of the state budget includes:

- State budget revenues include:

+ All revenues from taxes and fees;

+ All revenues from fees for services provided by regulatory agencies; fees for service provided by public service agencies and state-owned enterprises that are transferred to state budget as prescribed by law;

+ Grant aid provided by governments of other countries, overseas organizations and individuals for Vietnam’s government and local governments of Vietnam;

+ Other revenues prescribed by law.

- State budget expenditures include:

+ Expenditure on development investment;

+ Expenditure on national reserve;

+ Recurrent expenditures;

+ Payment of loan interest;

+ Provision of aid;

+ Other expenditures prescribed by law.

- The State budget deficit.

- Total loan of state budget, including loans to cover deficit and repayment of debt principal of state budget.

3. Conditions for the State budget revenues and expenditures in Vietnam

According to  Article 12 of the Law on State Budget 2015, conditions for the State budget revenues and expenditures are as follows:

- State budget revenues must comply with this Law, tax laws, and regulations of law on collection of state budget revenues.

- State budget expenditures are only permitted if they are included in a given budget estimate except for the case in Article 51 of this Law, have been decided by the head of the budget-using unit, investor, or an authorized person, and satisfy all conditions in each of the following cases:

+ Expenditure on investment in fundamental construction must satisfy conditions prescribed by regulations of law on public investment and construction;

+ Recurrent expenditures must comply with the standards, limits on budget expenditures imposed by competent authorities; in case an organization or unit is permitted by a competent authority to exercise financial autonomy, it shall comply with its regulations on spending which conform to its budget estimate.

+ Expenditure on national reserve must satisfy conditions prescribed by regulations of national reserve;

+ With regard to procurements of consulting services, goods, construction works under programs/projects that need bidding to select contractors providing, bidding must be organized in accordance with regulations of law on bidding;

+ Expenditures on tasks given or ordered by the State must comply with regulations of law on prices or fees and charges promulgated by competent authorities.

4. Prohibited acts in respect of state budget in Vietnam

Individuals and organizations are prohibited from performing the following acts in the field of state budget:

- Misusing position or power to appropriate state budget; irresponsibility that causes losses to state budget.

- Collecting revenues against regulations of tax laws and other regulations of law on collection of revenues; incorrectly distributing sources of revenue between various levels of state budget; improperly retaining state budget revenues; collecting revenues against the law.

- Spending without budget estimates except for the case in Article 51 of this Law; Spending against given budget estimates; spending against regulations, standards, and limits on expenditure, or on improper purposes; making expenditures against the law.

- Deciding investment in programs/projects funded by state budget ultra vires or without determined capital sources.

- Taking loans against the law; taking loans beyond the state budget capacity.

- Using state budget to grant loans, make advanced payment, or contribute capital against the law.

- Delaying enactment of budget expenditures while all conditions prescribed by law have been satisfied.

- Doing accounting against accounting regulations and list of state budget entries.

- Making, submitting state budget estimates or statements behind schedule.

- Approving state budget statements against the law.

- Using the state budget fund at a State Treasury beyond the budget estimate approved by a competent authority, except for the case of temporary funding or advance funding from next year’s budget prescribed in Article 51 and Article 57 of Law on State Budget 2015.

- Other prohibited acts related to state budget in relevant laws.

(Article 18 of Law on State Budget 2015)

Thanh Rin

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