Thông tư 19/2015/TT-BTC

CIRCULAR

GUIDANCE ON MECHANISM FOR RAISING, MANAGEMENT AND ALLOCATION OF FUNDS FOR INITIATIVES AGAINST CONTRABAND CIGARETTES AND COUNTERFEIT TOBACCO PRODUCTION AND TRADING

Pursuant to Law on Cigarettes Harm Prevention dated June 18, 2012;

Pursuant to the Decree No.215/2013/ND-CP on functions, responsibilities, the power and structural organization of the Ministry of Finance dated December 23, 2013;

Pursuant to the Decision No.2371/QD-TTg on destruction of confiscated contraband cigarettes dated December 26, 2014;

At the request of the Director of the Department of Tax Policy;

The Ministry of Finance issues this Circular providing guidelines on raising, management and allocation of funds for initiatives against contraband cigarettes and counterfeit tobacco production and trading.

Chapter I

GENERAL PROVISIONS

Article 1. Scope

This Circular provides guidelines on mechanism for fundraising from tobacco production and trading enterprises for the establishment of the Fund for initiatives against contraband cigarettes and counterfeit tobacco (hereinafter referred to as the Fund); management and allocation of the Fund.

Article 2. Regulated entities

1. Contributors to the Fund that are tobacco production and trading enterprises that are members of Vietnam Tobacco Association and others that are legally operating in Vietnam (hereinafter referred to as the enterprise).

2. Fund beneficiaries including units that directly investigate, inspect, seize and destroy contraband cigarettes and counterfeit tobacco (hereinafter referred to as the enforcement units); the National Steering Committee on combating Smuggling, Commercial Fraud and Counterfeit Goods (hereinafter referred to as The National Steering Committee 389) and the Standing Office of the National Steering Committee 389 ( hereinafter referred to as the Standing Office of 389); Steering Committees on Combating Smuggling, Commercial Fraud and Counterfeit Goods of provinces and central-affiliated cities and their standing agencies (hereinafter referred to as the Steering Committee 389 of the province) that directly instruct and cooperate with the enforcement units to investigate, inspect, seize and destroy contraband cigarettes and counterfeit tobacco ; the Fund Administration Board of Vietnam Cigarettes Association; entities that denounce offenders of cigarette smuggling and counterfeit tobacco production and trading.

Chapter II

SCOPE OF RAISING AND ALLOCATION OF FUNDS

Article 3. Rules for fundraising and allocation

1. Rules for fundraising and allocation

a) The total of the annual fund equals (=) the estimated quantity of seized and destroyed cigarettes/tobacco in the planned year multiplied by (x) the amount of funding regulated in Article 6 hereof.

Vietnam Tobacco Association estimates the quantity of seized and destroyed cigarettes/tobacco of the planned year based on the actual number of seized and destroyed cigarettes of the previous year, forecasts and analyzes trends in cigarette smuggling and counterfeit tobacco production and trading, and action plans against such violations taken by the National Steering Committee 389.

b) Contributions of every enterprise to the Fund shall be transparent to ensure the fairness amongst enterprises; encourage profitable enterprises make a higher contribution than the basic amount.

c) All contributions shall be transferred to the Vietnam Tobacco Association’s account.

2. Rules for management and allocation of the Fund

The Fund is used for supporting beneficiaries promulgated in clause 2, Article 2 hereof to investigate, inspect, seize and destroy contraband cigarettes and counterfeit tobacco, to denounce offenders of contraband cigarettes and counterfeit tobacco production and trading (hereinafter referred to as offenders); to coordinate professional training classes, preliminary and final summary meetings, reward and recognition ceremonies, to disseminate laws on initiatives against contraband cigarettes and counterfeit tobacco production and trading, to combat and cooperate to combat contraband trafficking and counterfeit tobacco production and trading. No entities are entitled to spend the Fund on other items that are irrelevant to the prevention of cigarette smuggling and counterfeit tobacco production and trading.

b) Payments to the enforcement units shall be made based on the actual number of destroyed cigarettes/tobacco stated on the decision on penalties or decision on confiscation (if the cigarette/tobacco owner is unidentified) of the competent authority and the record of illegal cigarette destruction of the Council takes charge of tackling illegal cigarettes/tobacco by destruction (hereinafter referred to as the Council).

c) The Vietnam Tobacco Association shall manage and spend the fund for the right purposes; as at the end of a fiscal year, the Vietnam Tobacco Association shall submit a report on raising and allocation of the Fund to the Department of Tax Policy and General Department of Taxation - Ministry of Finance and the Department of Taxation of the province where the enterprise's headquarters is located.

d) Any agencies that receive the allocated funding shall separately record and accounting for such funding transparently and publicly. Under Article 5, hereof, The Head of such agency shall estimate budgets for specific items according to his/her agency’s duties and shall take responsibilities towards its superior governing body. The remainder of such funding shall be entered into the following year account.

dd) The funding stipulated in this Circular is not affect any funding promulgated in the current regulations on prevention and action against contraband and counterfeit goods and commercial fraud. Administrative penalties for contraband cigarettes or counterfeit tobacco shall be imposed in accordance with regulations of laws on management and tackling of exhibits and impounded and confiscated instruments as a means of administrative offences under administrative procedures.

E.g.: According to the State Budget Estimate in 2015, the Department of Custom A receives a fund of VND 400 millions for tackling contraband counterfeit goods and commercial fraud. Assumed that the Department of Custom A has seizures of 1,200,000 contraband cigarette and counterfeit tobacco packs in 2015, the remainder of aforesaid VND 400 million shall be still kept by the Department of Custom A under the current regulations of laws.

Article 4. Estimation and notification of amount of contributions

1. Development of total estimates:

The Vietnam Tobacco Association shall estimate the Fund as follows:

- Estimation of total Fund: total contributions from contributors regulated clause 1, Article 2 hereof.

The total Fund estimate = total contributions from contributors + the remainder from the previous year

- Estimation of total expense: the total funding given to beneficiaries regulated in clause 2, Article 2, hereof.

The total expense estimate of the planned year = the estimated quantity of seized and destroyed cigarettes in the planed year (x) funding rate prescribed in Article 6 hereof.

The total estimated fund must be at least equal to the total estimated expense.

2. The Vietnam Tobacco Association shall calculate the annual contribution of each enterprise ̣ (hereinafter referred to as the estimated annual contribution) as follows:

The estimated annual contribution of an enterprise (=) estimated annual revenue (x) planned basic contributions applying to an enterprise ( hereinafter referred to as planned basic contributions )

The planned basic contribution (=) estimated annual fund (/) estimated revenue of the whole sector.

If any enterprise willingly makes a higher contribution than the estimated annual contribution of the enterprise, the Vietnam Tobacco Association shall deduct such higher contributions from the total estimated fund and re-calculate the planned basic contributions thereafter.

3. The Vietnam Tobacco Association shall publicly inform every enterprise of the total fund estimate and annual contribution estimate of each enterprise ̣using form 01 hereof and submit such estimates to the the Department of Tax Policies and General Department of Taxation - Ministry of Finance and the Department of Taxation where the enterprise’heaquarter is situated.

4. The enterprise shall calculate its quarterly interim contribution based on the estimated contribution of each enterprise made by the Vietnam Tobacco Association and actual revenue of the previous quarter and transfer its contribution to the Vietnam Tobacco Association within first 10 days of the quarter (for any enterprise willingly making the over contribution, its quarterly contribution shall be negotiable). Funding for annual expenses on action against contraband trafficking and counterfeit tobacco production and trading allocated by the Vietnam Tobacco Association shall be included in reasonable costs for determining income subject to corporate income tax.

Article 5. Fund Allocation

The Fund shall be used for:

1. The provision of additional funding for enforcement units including the following sub-items:

a) Funding for seizure of illegal cigarettes and tobacco, night shift allowances, overtime payments, costs of tackling and destruction of contraband cigarettes and counterfeit tobacco ;

b) Funding for procurement of specialized instruments for tackling contraband cigarettes and counterfeit tobacco , ̣if capable. Specialized instrument procurement shall be decided by the Minister of Public Security, Minister of National Defense or Heads of relevant Ministries;

c) Funding for merit awards for anti-contraband trafficking and anti-counterfeit tobacco production and trading

d) Funding for awards for discovering and denouncing offenders;

The amount of funding provided for enforcement units equals (=) the quantity of seized contraband cigarettes and counterfeit tobacco packs (recorded on the Decision of confiscation of contraband cigarettes /counterfeit tobacco or record of destruction of contraband cigarettes/counterfeit tobacco) multiplied by (x) the funding rate after the commissions given to the National Steering Committee 389 and Steering Committees 389 of the provinces and Fund Administration Board of the Vietnam Tobacco Association are deducted as regulated in article 6 hereof.

2. The funding given to the National Steering Committee 389 and Steering Committees 389 of the provinces for the direction, implementation and inspection of actions against contraband cigarettes and counterfeit tobacco production and trading includes the following sub-items:

 a) Funding for development of plans and preventive measures against contraband cigarettes and counterfeit tobacco production and trading ;

b) Funding for organization of specialized workshops and professional training;

c) Funding for campaigns against contraband cigarettes and counterfeit tobacco ;

d) Funding for periodical and surprise inspection of the execution of fighting against contraband trafficking and counterfeit tobacco production and trading within their provinces;

dd)Funding for organization of primary and final summary meetings and merit awards for anti-contraband cigarettes and anti-counterfeit tobacco production and trading;

e) Funding for direction, expedition and instruction activities against contraband and counterfeit goods and commercial fraud.

3. The funding given to the Fund Administration Board of the Vietnam Tobacco Association includes the following sub-items:

a) Allowances for business trips to provinces where contraband cigarettes exist;

b) Funding for expenses and payments to the Association’s officials and specialists for their inspection and supervision of the destruction of contraband cigarette in some key areas;

c) Funding for payments for exchange for smuggling organizations’ information;

d) Funding for procurement of equipment necessary for the Fund Administration Board such as photocopiers, computers;

dd) Funding for merit awards to the Fund Administration Board of the Vietnam Tobacco Association

Article 6. Funding rate

The beneficiary shall be granted a funding rate of VND 3,000 per 20-cigarette pack regardless of its value. The beneficiary shall be given an extra of VND 500 per 20-cigarette pack for destruction of contraband and counterfeit cigarettes. Such beneficiaries should deploy suitable and environmental-friendly methods of destruction.

5% of the funding rate of VND 3,000 per 2-cigarette pack shall be given to the National Steering Committee 389; similarly, 7% and 5% of such funding rate shall be given to the Steering Committee 389 of the province where seized contraband and counterfeit cigarettes exist and the Fund Administration Board of the Vietnam Tobacco Association, respectively. The remainder of the allowance shall be given to the enforcement units .

Article 7. Procedures for provision of funding

The Vietnam Tobacco Association shall fund for activities of against contraband cigarettes and counterfeit tobacco production and trading in accordance with the following procedures:

1. For the enforcement units:

According to the notice of the quantity and types of seized contraband cigarettes and counterfeit tobacco released by the Steering Committee 389 of the province, the Vietnam Tobacco Association shall estimate the fund given to the enforcement unit.

Funding transfer shall be made to every seized batch/shipment of cigarettes through the Steering Committee 389 of the province in the following 02 stages :Within 10 working days from the date of receipt of the notice of quantity and types of seizures of contraband cigarettes and counterfeit tobacco (enclosed with the Decision on confiscation of such cigarettes/tobacco), the Vietnam Tobacco Association shall transfer an advance of 50% of the total funding to the account of the Steering Committee 389 of the province.

After the destruction of such cigarettes, the Steering Committee 389 of the province shall send the Vietnam Tobacco Association a notice of the quantity and types of destroyed cigarettes/tobacco ( enclosed with a record of destruction of contraband cigarettes/ counterfeit tobacco ).

Within 10 working days from the date of receipt of the notice of quantity and types of seizures of contraband cigarettes and counterfeit tobacco (enclosed with the Decision on confiscation of such cigarettes/tobacco), the Vietnam Tobacco Association shall transfer an advance of 50% of the total funding to the account of the Steering Committee 389 of the province. After receiving such transfers, the Vietnam Tobacco Association of the province shall give an advance or make full payment to the enforcement units.

2. For the National Steering Committee 389 and Steering Committees 389 of provinces; According to the quarterly statistics of seizures and destruction of contraband cigarettes and counterfeit tobacco, Vietnam Tobacco Association shall transfer the funding to the National Steering Committee 389 ( via accounts of its Standing Office) and Steering Committee 389 of the province where seized cigarettes exist.

Article 8. Fund finalization

As at the year ended, the Vietnam Tobacco Association shall finalize and update enterprises on the status of raising, management and allocation of the fund. To be specified:

- The actual total fund, and contributor’s detailed information

- The annual quantity and types of seized and destroyed contraband cigarettes and counterfeit tobacco ; the amount of allowance per cigarette pack.

- The total amount given to the enforcement units and the National Steering Committee 389 and Steering Committees 389 of provinces, and beneficiaries’ detailed information ̣ using form hereof.

- The balance as at December 31st of every year

Every enterprise shall submit the Vietnam Tobacco Association a report on its net actual annual revenue not later than January 15th of the following year.

According to the annual expenses and the actual annual revenue of the whole sector, the Vietnam Tobacco Association shall determine the amount of enterprise’s annual contributions. The expenses shall be entered into the reasonable cost and the remainder or deficit shall be recorded in the form 03 hereof. The Vietnam Tobacco Association shall send such aforesaid information to enterprises as a basis for determination of corporate income tax and to the Department of Tax Policies and General Department of Taxation - Ministry of Finance and the Department of Taxation of province where the enterprise’s headquarter is placed.

If the expense of an enterprise that is entered into the reasonable cost is more than its estimated contribution, such enterprise shall make up the deficit. If the expense of an enterprise that is entered into the reasonable cost is less than its estimated contribution, the remainder shall be entered into the account of the following year Fund.

The Vietnam Tobacco Association shall send each enterprise a notification(using form 03 hereof ) as documentaries for auditing the enterprise’s tax deductible expenses.

Article 9. Destruction of contraband cigarettes and counterfeit tobacco

Contraband cigarettes and counterfeit tobacco shall be periodically destroyed under the supervision of the Vietnam Tobacco Association:

- The authority that confiscates contraband cigarettes or counterfeit tobacco shall submit a destruction plan to the Steering Committee 389 of the province where such contraband cigarettes or counterfeit tobacco are seized and prepared to be destroyed. The Steering Committee 389 of the province shall request the Vietnam Tobacco Association to send its representatives and other enterprises’ representatives to the destruction site for the purpose of supervision of the destruction of such cigarettes and tobacco. The notification of destruction of contraband cigarettes and counterfeit tobacco shall be submitted the Vietnam Tobacco Association not later than 07^th days before the date of destruction

- The destruction of contraband cigarettes and counterfeit tobacco shall be conducted monthly, in case of a huge volume of seized cigarettes, the destruction shall be conducted more than once a month.

- Contraband cigarettes and counterfeit tobacco shall be destroyed by the Council and made in record signed by all members of the Council under the Circular No.173/2013/TT-BTC guiding the implementation of a number of articles of management and ways of tackling exhibits, seized and confiscated instruments as means of administrative offences according to administrate procedures.

Article 10. Responsibilities of the Vietnam Tobacco Association

1. The Vietnam Tobacco Association shall be responsible for raising, management and allocation of the fund under this Circular and take responsibility for the accuracy of statistic figures that indicated at Article 8 hereof

2. In case, the enforcement unit that receives an advance of 50% of the funding still does not destroy contraband cigarettes and counterfeit tobacco , the Vietnam Tobacco Association shall request the enforcement units to conduct the destruction. In case of no cigarettes/tobacco needing destroying, the Vietnam Tobacco Association shall take the advance back and notify the Steering Committee the Steering Committee 389 of this issue.

3. The Vietnam Tobacco Association shall submit an annual status report on raising, management and allocation of the fund to the Ministry of Finance and Ministry of Industry and Trade.

Chapter III

IMPLEMENTATION ORGANIZATION

Article 11. Entry into Force

1. This Circular comes into effect from February 03, 2015. Annually, the Ministry of Finance shall take charge of and cooperate with the Steering Committee 389 and Vietnam Tobacco Association to evaluate and make a preliminary summary report on progress of the regime implementation.

2. This Circular shall replace the Circular No.57/2012/TT-BTC on fundraising for prevention and action against cigarette smuggling and counterfeit tobacco production and trading dated April 11, 2012 of the Ministry of Finance.

3. The remainder (if any) regulated n the Circular No.57/2012/TT-BTC dated April 11, 2012 of the Ministry of Finance shall be entered into the next year account under regulations hereof. The National Steering Committee 389 and Steering Committee 389 of the province area entitled to receive the remainders from the Central Steering Committee 127 and Steering Committee 127 of the local government.

Any issues or concerns arising during the implementation of this Circular shall be promptly reported to the Ministry of Finance./.