THE MINISTRY OF FINANCE
SOCIALIST REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
Ha Noi , September 10, 2007
Guiding the state financial management of foreign non-governmental aid not constituting a state budget revenue source
Pursuant to the Government's Decree No. 77/2003/ND-CP of July 1, 2003, defining the functions, tasks, powers and organizational structure of the Finance Ministry;
Pursuant to the Prime Minister's Decision No. 64/2001/QD-TTg of April 26, 2001, promulgating the Regulation on management and use of foreign non-governmental aid;
The Finance Ministry guides the state financial management of foreign non-governmental aid not constituting a state budget revenue source as follows:
1. This Circular guides the state financial management of non-governmental aid provided by foreign non-governmental organizations, other organizations and foreign individuals, including overseas Vietnamese, to Vietnam's non-state organizations for humanitarian and development objectives which have been negotiated, concluded and approved under the Regulation on management and use of foreign non-governmental aid promulgated together with the Prime Minister's Decision No. 64/2001/QD-TTg of April 26, 2001.
Other supports given by foreign non-governmental organizations and organizations and individuals beyond the above scope are regarded as presents not subject to the management guided in this Circular.
2. Foreign non-governmental aid not constituting a state budget revenue source means non-governmental aid defined in Section 1, Part I of this Circular, directly provided by organization or individual donors according to their commitments with non-state organizations in order to improve the operating capacity and conditions of these organizations, and approved by competent bodies of these organizations (defined at Point 2, Article 6 of the Regulation on management and use of foreign non-governmental aid promulgated together with the Prime Minister's Decision No. 64/2001/QD-TTg of April 26, 2001).
3. Non-state organizations mentioned in this Circular include the following legal entities:
a/ Political organizations and socio-political organizations;
b/ Social organizations, socio-professional organizations;
c/ Social funds, charity funds;
d/ Economic organizations;
e/ Other non-governmental organizations.
4. Foreign non-governmental aid not constituting a state budget revenue source shall be used for the following purposes:
a/ Financing regular activities;
b/ Financing research, training and retraining;
c/ Procuring and building working facilities of organizations;
d/ Paying other expenses of organizations.
5. Non-state organizations shall bear responsibility before law for transparent management and efficient use of foreign non-governmental aid not constituting a state budget revenue source for proper purposes and in strict accordance with their commitments with donors. When using aid money for spending purposes specified by regulations on management and use of the state budget, aid-using project owners/units are not required to organize bidding.
I. Aid receipt
When aid is directly provided in the form of goods or turnkey capital construction works or aid money is used to purchase goods in order to enjoy tax exemption for non-refundable aid goods according to the provisions of tax law, such goods must go through aid certification procedures prescribed below:
1. Aid-certifying agency:
The agency competent to certify foreign non-governmental aid not constituting a state budget revenue source is the Finance Ministry.
2. Units requesting aid certification:
Aid-using project owners/units shall request aid certification. Aid certification requests are stated in aid certification declaration forms.
3. Aid certification declaration forms:
3.1. Set aid certification declaration forms enclosed with this Circular include:
- Form C1-HD/XNVT: Aid certification declaration form for imported goods (Appendix 1a, not printed herein), which shall be used in making aid certification declarations for equipment, machinery, supplies, materials, utensils and other kinds of goods imported from foreign countries;
- Form C2-HD/XNVT: Aid certification declaration form for domestic goods and services (Appendix 1b, not printed herein), which shall be used in making aid certification declarations for equipment, machinery, supplies, materials, utensils and other kinds of goods domestically purchased (including service charges) with foreign aid.
- Form C3-HD/XNVT: Aid certification declaration form for monetary aid (Appendix 1c, not printed herein), which shall be used in making declarations for foreign monetary aid amounts.
- When a foreign country provides goods, separate equipment and monetary amounts as aid for building a capital construction work, which, upon completion, will be transferred to the Vietnamese side by turnkey mode (below referred to as work construction aid), the aid-using project owner/unit shall still use forms C1, C2 and C3-HD-XNVT in making declaration for aid certification but mark on the section "work construction aid" of such forms and concurrently supply additional information on the work (name, location, projected time for construction and handover of the work). After the work is completed and handed over by the donor to the Vietnamese side, the aid-using project owner/unit shall use these aid certification declaration forms for drawing up a list of certifications of work construction aid (according to a form in Appendix 2 to this Circular, not printed herein). This list and the work takeover test report constitute legal grounds for the tax agency to refund value-added tax.
3.2. Management of aid certification declaration forms:
After the Finance Ministry completes procedures for aid certification, an aid certification declaration form shall be kept and managed as follows:
- The Finance Ministry shall keep two copies (in the aid certification register);
- The customs office and the tax agency shall each process and keep one copy in the tax exemption/refund dossier;
- The managing agency of the aid-using project owner/unit shall keep one copy for monitoring the management and making general reports on foreign aid;
- The aid-using project owner/unit shall keep one copy for making reports on receipt, payment and settlement of the aid program or project.
4. Time of making aid certification declaration forms:
- Form C1-HD/XNVT: Aid certification declaration form for imported goods shall be filled in right after aid-using project owners/units receive import documents (invoices, bills of lading, airway bills and/or other transportation documents);
- Form C2-HD/XNVT: Aid certification declaration form for domestic goods and services shall be filled in on a monthly basis when aid-using project owners/units draw up detailed lists of decisions on value-added tax refund for aid programs and projects;
- Form C3-HD/XNVT: Aid certification declaration form for monetary aid shall be filled in right after the Vietnamese side receives money transfer documents from foreign parties.
5. Necessary dossiers enclosed with aid certification declaration forms:
5.1. For first-time aid certification declaration forms:
An aid-using project owner/unit shall supply to financial agencies at all levels the following documents:
a/ A legal dossier set of the aid program or project, which comprises the following principal documents:
- An aid approval decision of a competent authority;
- Program or project documents;
- Aid agreement, commitment or notice;
- In case of necessity, the Finance Ministry may request the aid-using project owner/unit to coordinate with functional agencies in supplying information on the operation license of the foreign non-governmental organization providing aid to the program or project.
b/ Specific documents and vouchers evidencing aid goods, services or works, such as import documents, the disbursement notice or money transfer documents of the donor, domestic goods purchase and service hire documents, purchase and sale contracts, the written record of handover and settlement of turnkey construction work funded with foreign aid.
5.2. For subsequent aid certification declaration forms:
Aid-using project owners/units shall supply the documents specified at Point 5.1.b above.
5.3. Aid-using project owners/units shall fully declare the above documents in aid certification declaration forms and bear responsibility before law for the accuracy of the declared figures and contents.
6. Places of aid certification:
Aid certification is conducted at the Finance Ministry (the External Finance Department based in Hanoi, or this Department's sections in Ho Chi Minh and Da Nang cities which perform the task of managing and receiving international aid goods).
7. Some noteworthy contents in aid certification declaration forms:
- Form C1-HD/XNVT: Aid certification declaration form for imported goods shall be filled in with the foreign-currency purchase prices shown on import goods invoices (FOB, CIF, C&F).
- Form C2-HD/XNVT: Aid certification declaration form for domestic goods and services shall be filled in with tax-exclusive prices stated in contracts signed between contractors, providers and program or project owners.
7.2. Exchange rates for conversion of foreign currencies into Vietnam dong:
These exchange rates are those for foreign-currency accounting announced by the Finance Ministry on a monthly basis on its website at http://www.mof.gov.vn/
7.3. To facilitate the taxation of non-refundable aid, the section on aid-using project owners/units in the aid certification declaration form must:
- Be fully and accurately filled in with the names and contact addresses of the aid-using unit, project owner and project-managing agency.
- Be filled in with the budget-using unit code of the aid-using project owner/unit; particularly for aid-using unit that are enterprises or non-business units having revenues, their tax identification numbers must be additionally declared to facilitate the tax refund.
II. Aid use limits:
Non-refundable aid money use limits: Aid-using project owners/units shall apply spending levels within limits set by donors in aid agreements or apply specific spending levels jointly set by representatives of donors, aid-using project owners/units and project managing agencies in case donors do not specify aid use limits in aid agreements.
III. Aid accounting and settlement:
Aid-using project owners/units shall organize the aid accounting in the course of non-refundable aid receipt, management and use in compliance with the Government's Decree No. 128/2004/ND-CP of May 31, 2004, detailing and guiding the implementation of a number of articles of the Accounting Law applicable to the state accounting domain and the Finance Ministry's accounting regulations.
The system of accounting documents and books and financial statements for reflecting in detail and separately settling the value of aid not constituting a state budget revenue source is organized under the accounting law applicable to accounting units not funded with the state budget.
IV. Financial reports and publicity:
1. Reports on annual settlement of aid amounts not constituting a state budget revenue source are financial reports of annual accounting periods. Annual financial reports and annual settlement reports shall be submitted to reporting units' immediate superior agencies (if any) and finance agencies of the same level according to the provisions of Articles 24 and 25 of the Government's Decree No. 128/2004/ND-CP of May 31, 2004.
2. Accounting units shall examine, verify and approve annual settlements of aid not constituting a state budget revenue source of their immediate subordinate accounting units.
3. Aid-using project owners/units shall publicize annual financial statements and annual financial revenue-expenditure settlements regarding non-refundable aid.
3.1. Contents subject to financial publicity include:
- Names of aid programs, projects and amounts;
- Name of the aid-providing organization and title of the written aid agreement;
- Value of each aid program/project or amount;
- Aid revenue-expenditure settlement made under the Accounting Law;
- Accounting results (if any).
3.2. Modes of publicizing financial reports:
- Sending of written reports to reporting organizations' immediate superior agencies (if any) and finance agencies of the same level;
- Public posting of reports at reporting organizations' offices;
- Other modes.
3.3. Time of publicization:
Financial reports shall be publicized right after the completion of annual settlements under the Accounting Law.
V. Financial handling in case of separation, division, consolidation, merger, ownership transformation, dissolution and operation termination of non-state organizations:
1. On principle, financial resources and assets formed from non-refundable aid source provided directly to non-state organizations are owned by these organizations and used for purposes compliant with their organization and operation charters in accordance with law, and may not come under any form of personal ownership in any circumstance.
2. In case of separation, division, consolidation, merger, ownership transformation, dissolution or operation termination, non-state organizations shall carry out following activities under specific financial management regulations:
- Closing accounting books, inventorying assets, identifying unpaid debts and making financial reports;
- Making written records of handover of assets and unpaid debts, and recording them in accounting books according to handover records;
- Handing over all accounting documents to new accounting units;
- New accounting units shall base themselves on handover records to open accounting books and make accounting book entries under the Accounting Law.
3. The handover of assets and liabilities between old and new accounting units following the issuance of a separation, division or merger decision must be witnessed and certified by the agency that has signed the separation, division or merger decision and the finance agency
4. Documents relevant to separation, division, consolidation, merger, ownership transformation, dissolution or operation termination, which are accounting documents, must be preserved for at least 10 years at archival places decided by agencies competent to decide on the separation, division, consolidation, merger, ownership transformation, dissolution or operation termination.
ORGANIZATION OF IMPLEMENTATION
1. This Circular takes effect 15 days after its publication in "CONG BAO" and replaces the Finance Ministry's Circular No. 32/2005/TT-BTC of April 26, 2005, guiding the state financial management of foreign non-refundable aid for associations.
2. Problems arising in the course of implementation should be promptly reported by non-state organizations to the Finance Ministry for study and appropriate supplementation and amendment.
Tran Xuan Ha