A. GENERAL PROVISIONS

1. After subtracting all expenses related to advertising activities, the whole remaining advertising turnover of the Vietnam Television Station and the local radio-television stations (hereinafter referred to as the television stations), must be remitted into the State budget, including:

- Value added tax (VAT) calculated on the revenues from advertisements on television, at the tax rate(s) prescribed by the VAT Law.

- Enterprise income tax calculated on the taxable income at the tax rate(s) prescribed by the Enterprise Income Tax Law.

- After-tax income.

2. The whole amount of revenues from television advertisements already remitted into the State budget shall be re-allocated to the television branch for investment therein according to the current mechanism of assigned responsibilities for the State budget management, and on the basis of investment projects already approved by the competent authority(ies):

- Advertisement revenues belonging the Central Budget shall be re-allocated for investment in the Vietnam Television Station, the regional television stations and projects for television development in mountainous, deep-lying and remote regions.

- Advertisement revenues belonging to the local budgets shall be re-allocated for investment in the local radio-television stations.

3. Television stations that pay VAT and enterprise income tax in excess of the year-beginning estimates shall get 50% of the tax amount actually paid in excess re-allocated to them to increase their development investment.

B. SPECIFIC PROVISIONS

I. Content of advertisement revenues and expenses:

1. Regarding the advertisement revenues:

Revenues from television advertising services are those generated by television stations and permitted by the Government to be managed and used by the television branch for investment in its development.

Television advertisement turnover shall be calculated on the time volume for which advertisements have been televised multiplied (x) by advertising unit prices.

Advertising charge rates: The Vietnam Television Station shall coordinate with the Government Pricing Committee and the Ministry of Finance in guiding the bracket of advertising charge rates applicable to each region at the proposals of the local radio-television stations. The radio-television stations of the provinces and centrally-run cities shall apply advertising charge rates strictly according to the above-said regulations, and must not arbitrarily reduce the advertising charge rates without approval of the competent authority(ies). If advertising brokerage commissions have already been paid, the advertising charge rates shall not be reduced.

2. Expenses related to advertising activities:

2.1. Expenses in direct service of advertising programs:

- Production of advertising programs.

- Purchase of television programs for broadcast in service of advertisements.

- Advertising propaganda: expenses for printing of advertising paintings, pictures, documents and posters.

- Commissions for customers: shall be paid in compliance with provisions of the Ministry of Finance�s Circular No.99/1998/TT-BTC of July 14, 1998 guiding the Government�s Decree No.30/1998/ND-CP of May 13, 1998 detailing the implementation of the Enterprise Income Tax Law. The commission level must not exceed 3% of the total regular expenses (excluding incentives for laborers - if any).

- Purchase of supplies and assets, and minor repairs: Expenses for purchase of components, supplies, film, tapes, separate machinery and equipment, repair and regular maintenance of equipment in service of the production of television advertising programs. The purchase and minor repairs shall comply with the current regulations of the State.

- Lease of spaces for installation and repair of transmitting equipment in service of areas which are gloomy or affected by frequency interference.

- Managerial expenses: expenses for managerial activities of the apparatus managing advertising programs.

2.2. Expenses in support of better quality of television programs in order to attract advertisements:

- Purchase of machinery and equipment.

- Hiring of satellites.

- Transmitting charges.

- Expenses for short-term technical training courses in order to raise the professional skills of officials and employees engaged in production of television programs.

- Allowances paid to laborers who are engaged in the raising of quality of television programs in order to attract advertisements. The allowance level shall be equal to from a half to one month�s average actual wage/person/month.

2.3. The limits of expenses related to advertising activities:

Basing itself on the current regime and actual expenses, the Ministry of Finance shall prescribe the limits of expenses related to the advertising activities in percentages (%) of turnover from advertising services (without VAT) to be applicable to television stations throughout the country within the following bracket of maximum expense levels:

1- For a turnover of 100 million dong or less 50%

2- From over 100 million dong to 300 million dong 48%

3- From over 300 million dong to 500 million dong 46%

4- From over 500 million dong to 1 billion dong 44%

5- From over 1 billion dong to 5 billion dong 42%

6- From over 5 billion dong to 25 billion dong 40%

7- From over 25 billion dong to 70 billion dong 38%

8- From over 70 billion dong to 100 billion dong 36%

9- Over 100 billion dong 34%

3. After paying tax(es) as prescribed by law, the concerned units shall be entitled to deduct part of the remaining turnover to set up funds of incentives for their laborers. The maximum deduction level shall be equal to 3 months� average actually paid basic wages.

4. For example:

The Radio and Television Station of province A has the following data in a year:

- Turnover from advertisements (without VAT): 10,000 million dong.

- Average basic wages actually paid in the year: 80 million dong/month.

According to the provisions of this Circular and the current documents, the maximum expense level, enterprise income tax and after-tax income that must be remitted by the enterprise shall be as follows:

- The maximum expense level of the station: 4,000 million dong.

(10,000 million dong x 40%)

- The taxable income: 6,000 million dong.

(10,000 million dong - 4,000 million dong)

- So, the enterprise income tax shall be: 1,920 million dong.

(6,000 million dong x 32%)

- The station shall be entitled to pay no more than 240 million dong as incentives for its laborers

(80 million dong/month x 3 months).

So, the station shall have to remit into the State budget the following after-tax income: 3,840 million dong [(6,000 million - 1,920 million) - 240 million].

5. Annually, together with the State budget revenue-expenditure estimates, the stations shall elaborate their advertising service revenue and expense estimates, then send them to the finance agencies of the same level for synthesization and report to the competent authority for approval. Basing themselves on the approved expense estimates, the General Director of the Vietnam Television Station and the directors of the local radio-television stations shall have to pay expenses strictly according to the current financial regime, with all valid vouchers as required, and such expenses must not exceed the above-said limits.

II. Financial management:

The elaboration of estimates, allocation of funds and final settlement of advertisement revenues and expenses shall comply with the Ministry of Finance�s Circular No.103/1998/TT-BTC of July 18, 1998 guiding the assignment of responsibilities for drafting, implementation and settlement of the State budget and the current documents. This Circular further guides the following contents:

1. Elaboration of estimates:

1.1. At the local level: Radio-television stations of the provinces and centrally-run cities shall, upon elaborating their annual revenue and expense estimates, have to explain their advertisement revenue sources and the contents of expenses for development investment projects and efficiency of the use of advertisement revenues.

1.2. At the central level: The Vietnam Television Station shall elaborate its revenue and expense estimates and have to synthesize the advertisement revenue and expense estimates of the entire branch, clearly explaining projects invested with advertisement revenues according to the development planning of the units and the entire branch. It shall also have to analyze the efficiency of the use of advertisement revenues in the entire branch.

2. Allocation of funds:

Basing itself on the advertisement revenue and expense estimates and the amounts actually remitted into the State budget for advertising activities of the television stations, after the State Treasury gives its certification thereon, the Ministry of Finance shall allocate funds to the Vietnam Television Station, while the provincial/municipal Finance and Pricing Services shall allocate funds to the provincial/municipal radio-television stations.

3. Accounting and final settlement:

3.1. The television stations shall organize the cost-accounting and final settlement of advertisement revenues and expenses in compliance with the Ministry of Finance�s Decision No.999-TC/QD/CDKT of November 2, 1996 promulgating the system of administrative and non-business accounting regimes and the current relevant documents.

3.2. For capital construction projects invested with advertisement revenue sources, the accounting shall be conducted according to the provisions of the current Regulation on management of capital construction investment.

4. Financial inspection and supervision:

The television stations shall have to coordinate with the Ministry of Finance, the provincial/municipal Finance and Pricing Services and tax authorities of all levels in inspecting the State budget collection and remittance and expenditures of such stations.

C. ORGANIZATION OF IMPLEMENTATION

This Circular takes effect as from 1999 and replaces the Ministry of Finance�s Circular No.81-TC/HCSN of December 23, 1996. Any problems arising in the course of implementation shall be reported by the concerned units to the Ministry of Finance for study and appropriate amendments.

For the Minister of Finance
Vice Minister
NGUYEN THI KIM NGAN