Mobilising revenues from equitisation and divestment to State budget

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Debts from the fund of local enterprises as of December 31st 2018 were VND 575,461 million. Photo: internet

Many enterprises owe debts from Fund

The Ministry of Finance said that the mechanisms and the policy on the management and use of revenues from restructuring, equitisation and the divestment of State capital are developed based on closely following policies and guidelines of the Party and Government on each period; creating a sufficient and stable legal framework for management and use of revenues from restructuring, equitisation and divestment of State capital.

Revenues from restructuring, equitisation and divestment of State capital were transferred to the State budget in a timely fashion to spend oninvestment and development under Resolution No. 26/2016/QH14 dated November 10, 2016 of the National Assembly on the medium-term public investment plan for 2016 -2020. From January 1, 2016 to December 31, 2019, were transferred from the fund for support of arrangement and development of enterprises to the State budget in theamount of VND 205,000 billion.

However, it is a fact that the mechanism on management of revenue from restructuring, equitisation and divestment is being governed by different legal documents, leading to inconsistent implementation.

Maintaining current revenue management makes mobilization of revenues from equitisation and divestment of state capital not be implemented completely because some localities have been allowed to retain revenues from the equitisation and the divestment of state capital (HCMCity, Hanoi and Binh Duong province).

The collection and comparison of debts from the fund for arrangement and development of enterprises still depends on representative agencies of owners in the localities and is not effective, so it is difficult to completely deal with the debts from the fund of local enterprises. This amount as of December 31, 2018 was VND 575,461 million.

In addition, the management of the fund does not ensure equality among localities andrevenues are balanced according to the State Budget Law corresponding to the number of localities remitting to the fund.

Therefore, the Ministry of Finance proposed changingthe current revenue management model from remitting to the fund for arrangement and development of enterprises into directly remitting to State budget; decentralize collection between the central budget and local budget in accordance with the State Budget Law.

Revenues to be included in annual estimate

The change of the management model is to guide management and use of revenues from the restructuring, equitisation and divestment of State capital in accordance with the provisions of the Constitution and the State Budget Law. According to the provisions of the 2015 State Budget Law, revenues of budget investment capital at central or local economic organizations are determined as respective revenues of central budget or local budget. The revenues to the State budget will be managed and used in accordance with the State Budget Law.

Moreover, according to this regulation, revenues from the restructuring, equitisation and divestment will be remitted fully and in a timely manner and must be included in the annual State budget estimates, financial plans, medium-term public investment plans; prioritized to spending estimates for development and investment and creating long-term resources. Unexpected and excessive revenues should be reported to the National Assembly and the National Assembly Standing Committee for consideration and decision on management and use according to law provisions.

According to the drafting agency, the change of management model will have many positive socio-economic impacts.

In fact, the management process of the fund shows that some ministries, agencies and localities have not strictly abided by the collection and remittance to the fund, some of them have retained revenues from restructuring, equitisation and divestment of State capital at local budget accounts and not yet remitted to the fund; the outstanding debts from the fund are not completed handled due to the lack of sanctions. Clause 3, Article 8 of the State Budget Law stipulates "The budget revenues comply with the provisions of tax law and collection regime prescribed by law,” accordingly, State budget revenues are subject to sanctions according to the Law on Tax Administration. The change of the management model will help the State budget manage this revenue more closely.

In addition, the change of the model is also more convenient ascurrently the State budget has a capital recovery account opened by at Central State Treasury and local State Treasuries, ensuring timely and accurate collection of revenues from equitisation of SOEs, divestment of State capital in enterprises to the State budget.

The Ministry of Finance’s proposal does not increase human resources and costs related to the management of the fund, or even cut down costs because if the current management model of the fund remains, it will need to maintain the apparatus to manage the fund, it is costly.