Draft Circular on Implementation of State Budget 2023 Released

The Ministry of Finance recently completed a draft circular on the implementation of the State budget 2023. Accordingly, the draft proposes that the State budget receives 100% of the revenue from e-commerce business, digital business, cross-border services and other services provided by foreign suppliers who register, declare and pay the tax directly at the website of the General Department of Taxation.

Regarding the decentralization of revenue and state budget expenditure, the draft proposes the decentralization of revenue and expenditure among the central and local budgets to be implemented in accordance with the State Budget Law and other relevant guidance. The State budget receives 100% of its revenues from e-commerce, digital-based business, cross-border services and other services provided by foreign suppliers which make tax registration, and declaration of tax payment directly at the website of the General Department of Taxation.

In addition, the draft also stipulates continuing the allocation of revenue from water rights as prescribed in Resolution 64/2018/QH14 dated June 15, 2018 of the National Assembly (for permits issued by the central authority, 70% of the revenue goes to the central budget, 30% goes to the local budget; for permits granted by the provincial people's committees, 100% of the revenue go to the local budgets).

The allocation of environmental tax for gas and oil products between the central and local budgets shall comply with the provisions of the State Budget Law for 2023 and be stable for the period 2023-2025 on the basis of the correlation between output domestically produced and sold and total output consumed in the market. Specifically, 60% will be divided between the central budget and the local budget; The remaining 40% will go to the central budget. For the collection of road user charges for automobiles, after deducting expenses for collection, 100% shall be paid to the state budget, of which 65% shall be kept in the central budget and 35% will go to local budgets for road management and maintenance.

Meanwhile, land use levy from equitization and divestment of state capital in locally managed SOEs shall be used for development investment for subjects of local budgets. The revenue from the lottery in local budget estimates is also used for development investment, with priority given to education and vocational training, and healthcare. The draft also stipulates that the percentage of revenue distribution between the central budget and the budget of each province and city and the supplemented amount to balance the budget for each locality shall be applied for 2023 and the stabilization period until 2025. Ministries, central agencies, People's Committees of provinces and cities assign the task of collecting tax in 2023 to relevant authorities and ensure the collected revenue is up to estimates assigned by the Prime Minister. In addition to assigning state budget revenue estimates, ministries, central agencies, and People's Committees of provinces and cities assign the task of collecting revenue from public services to affiliated units (if any).

The draft requires that the assignment of state budget revenue estimates in 2023 must be based on a full review, analysis and evaluation of implementation results in 2022. In addition to regulations on revenue and expenditure estimates, the draft circular also provides guidance on revenue generation to implement the salary and allowance mechanism in 2023. The draft clearly states that, from July 1, 2023, the base salary will be adjusted to VND1.8 million /month, so the central ministries and agencies implement the revenue generation mechanism to implement the wage policy reform according to regulations. At the same time, when allocating and assigning estimates to affiliated units, it is compulsory to keep a 10% saving of recurrent expenditure in 2023 compared to 2022 for salary reform (except for salaries, allowances, contributions according to salary, and human expenses, according to regulations).

By Hien Kien, Vietnam Business Forum