Circular No. 45/2024/TT-BTC dated July 1, 2024 on promulgation of general valuation method for goods and services subject to state valuation

MINISTRY OF FINANCE -------	SOCIALIST REPUBLIC OF VIETNAM Independence - Freedom - Happiness ---------------
No. 45/2024/TT-BTC	Hanoi, July 1, 2024

CIRCULAR

ON PROMULGATION OF GENERAL VALUATION METHOD FOR GOODS AND SERVICES SUBJECT TO STATE VALUATION

Pursuant to the Law on Prices dated June 19, 2023;

Pursuant to the Government's Decree No. 14/2023/ND-CP dated April 20, 2023 defining functions, tasks, powers and apparatus of the Ministry of Finance;

At the request of the Director of Price Management Department;

The Minister of Finance promulgates a Circular on general valuation method for goods and services subject to State valuation.

Chapter I

GENERAL PROVISIONS

Article 1. Scope

1. This Circular stipulates the general valuation method for goods and services subject to State valuation as prescribed in Clause 2, Article 23 of the Price Law.

2. The valuation method for land and other goods and services specified in Clause 3, Article 23 of the Price Law shall be determined by the Minister, the head of a ministerial-level agency in charge of the sector or field, or submitted to a competent authority for issuance.

Article 2. Regulated entities

Organizations, individuals engaged in the business of goods and services; regulatory agencies; other organizations and individuals related to the valuation of goods and services subject to State valuation.

Article 3. Interpretation of terms

For the purpose of this Circular, these terms below can be construed as follow:

1. Cost-based method is a valuation method for goods and services based on reasonable and legitimate production and operating costs, profits (if any) or accumulations in accordance with law (if any) and financial obligations in accordance with law.

2. Comparative method is a valuation method for goods and services based on the prices of comparable goods and services.

Chapter II

GENERAL VALUATION METHOD FOR GOODS AND SERVICES SUBJECT TO STATE VALUATION

Section 1. VALUATION METHODS, SELECTION OF VALUATION METHOD

Article 4. Valuation methods, selection of valuation method

1. The general valuation method for goods and services subject to State valuation prescribed in this Circular includes two (2) valuation methods: the cost-based method and the comparative method.

2. Based on the characteristics of goods or services, specific conditions of production and business, market, circulation of goods or services, organizations and individuals select the appropriate valuation method for the goods or services to be valued.

Section 2. COST-BASED METHOD

Article 5. Some general principles

1. In the process of producing and trading goods or services, if other income is generated, the corresponding amount must be deducted from the cost of the main product; if by-products are recovered for sale or continued use as raw materials to produce other products, costs must be allocated to deduct from the production cost of the main product; if by-products cannot be recovered for sale or use, no costs need to be allocated.

2. For costs and pricing factors that cannot be directly assigned to specific goods or services, a suitable aggregation and allocation by criteria must be determined, such as revenue, cost, quantity, volume, time, or other industry-specific criteria and regulations of laws related to goods or services. Costs and pricing factors that are used for production and business over multiple periods or years should be gradually allocated to the costs of production and business. For costs and pricing factors incurred over multiple periods or years, data from all relevant periods or years should be considered for allocation purposes.

3. Any cost items included in the pricing calculation that are specified in technical and economic norms, cost norms issued by competent regulatory agencies, or are subject to State policies, regulations, or laws (on taxes, accounting, statistics, and related laws), or are governed by the unit's internal spending regulations must be calculated in accordance with such regulations. The unit is responsible for regularly reviewing its internal spending regulations to ensure the principles of thrift, efficiency, and compliance with the State's regimes, policies and laws, and is legally responsible for its internal spending regulations. Regulatory agencies are responsible for regularly reviewing the economic-technical norms and cost norms they promulgate to amend and supplement them in accordance with law.

4. In case there is information on material costs, outsourcing costs, labor costs, sales costs, and management costs on the market, these costs can be determined based on the prices and price levels as prescribed in Articles 13, 14, and 15 of this Circular.

5. Necessary costs for production and trading of goods or services according to the characteristics of each industry and field as prescribed (if any) are included in the price. These costs may include: costs for manuscript preparation, editing, composing, staging, performance, testing, inspection, and calibration; copyright fees and author royalties; editing, proofreading, design, and typesetting costs; appraisal costs; experimental teaching costs; training costs for using books; publishing management costs; costs for anti-counterfeit stamps and electronic learning materials; sample book printing costs; road administration building costs; costs for temporary housing and construction management; costs for construction machinery and equipment; maintenance costs for road administration buildings, temporary housing, and construction management; design and repair costs; construction supervision costs; costs for organizing traffic safety during construction; project management costs; consulting costs; construction insurance costs; management and operation costs to ensure traffic during periods of infrastructure suspension as determined by the competent authority; and other related costs.

6. Fixed asset depreciation costs are determined in accordance with the Ministry of Finance's guidelines on the management, use, and depreciation of fixed assets.

7. For taxpayers who are subject to the value added tax (VAT) under the deduction method, the price of materials and input factors excludes VAT. For taxpayers who are not subject to VAT or who are subject to VAT under the direct method, the price of materials and input factors includes VAT.

8. Costs that are not considered reasonable and valid costs for determining the price of goods or services:

a) Costs that are not considered reasonable and valid costs for determining the price of goods or services are determined in accordance with laws regarding non-deductible expenses when calculating corporate income tax and as outlined in related legal documents.

b) Costs that have been covered by the state budget; costs that have already been included in the price of the goods or services being priced, and costs that have been included in the price of other goods or services provided by the organization or individual.

Article 6. Prices of goods or services of commercial organizations or individuals

1. Formula for determining prices

Price of goods or services

=

Purchase price of goods or services

+

Sales costs, management costs, finance costs (if any)

+

+ Profit (if any)

+

Value added tax, other taxes (if any)

Where:

a) Purchase price of goods or services is equal to (=) Purchase price of goods or services recorded on invoices, contracts, documents in accordance with law minus trade discounts, purchase price reductions (if any) and other deductions (if any) plus (+) other reasonable and valid costs in accordance with law (if any);

b) Sales costs, management costs, finance costs are determined as specified in Article 10 of this Circular;

c) Profit is determined as specified in Article 11 of this Circular;

d) Value added tax and other taxes are determined as specified in tax law.

2. Prime cost sheet for one unit of good or service of a commercial organization or individual

Symbol	Description	Calculation method
A	Output for calculating the price of good or service
B	Price of good or service	B=1+2
1	Price according to invoices, contracts, documents minus trade discounts, purchase price reductions, deductions (if any)
2	Other reasonable and valid costs in accordance with law (if any)
C	Sales costs (if any)
D	Management costs (if any)
DD	Finance costs (if any)
E	Total cost	E=B+C+D+DD
G	Prime cost of one (1) unit of good or service	G=E/A

Article 7. Price of imported goods

1. Formula for determining prices

Price of imported goods

=

Original import cost

+

Sales costs, management costs, finance costs (if any)

+

+ Profit (if any)

+

Value added tax, other taxes (if any)

Where:

a) Original import cost is determined according to the following formula:

Original import cost

=

Price of imported goods

+

Import tax (if any)

+

Excise duty (if any)

+

Other taxes and fees incurred at the import stage (if any)

+

Other monetary expenses as prescribed (if any)

Where:

- The purchase price of imported goods is the price at which the goods are acquired upon arrival at Vietnam's first port of entry.

The price at which the goods are acquired upon arrival at Vietnam's first port of entry is equal to (=) [Purchase price in foreign markets plus (+) costs incurred to bring goods to Vietnam (if any) plus (+) other costs that must be added when determining the value of imported goods as prescribed (if any) minus (-) other costs that must be deducted when determining the value of imported goods as prescribed (if any)] multiplied by (x) the exchange rate.

The exchange rate is calculated based on the actual exchange rate that the production/business entity has paid to the bank (where the production/business entity transacts) when borrowing or buying foreign currency to purchase goods. In case the organization or individual has not paid to the bank, the exchange rate shall be calculated based on the exchange rate signed in the foreign currency purchase and sale contract between the organization or individual and the commercial bank or the selling rate of the commercial bank where the organization or individual has borrowed or bought foreign currency at the time of price determination;

- Import tax, excise duty, other taxes and fees incurred at the import stage (if any) shall be implemented in accordance with the law on taxes and fees;

- Other monetary expenses as prescribed (if any);

b) Sales costs, management costs, finance costs are determined as specified in Article 10 of this Circular;

c) Profit is determined as specified in Article 11 of this Circular;

d) Value added tax and other taxes are determined as specified in tax law.

2. Prime cost sheet for one (1) unit of imported good

Symbol	Description	Calculation method
A	Import output
B	Original import cost	B=1+2+3+4+5
1	Price of imported goods
2	Import tax (if any)
3	Excise duty (if any)
4	Other taxes and fees incurred at the import stage (if any)
5	Other monetary expenses as prescribed (if any)
C	Sales costs (if any)
D	Management costs (if any)
DD	Finance costs (if any)
E	Total cost	E=B+C+D+DD
G	Prime cost of one (1) unit of good or service	G=E/A

Article 8. Price of domestically produced goods or services

1. Formula for determining price

Price of domestically produced good or service

=

Prime cost of domestically produced good or service

+

+ Profit (if any)

+

Excise duty (if any)

+

Value added tax, other taxes (if any)

Where:

a) Prime cost of domestically produced good or service is determined according to the following formula:

Prime cost of domestically produced good or service

=

Cost of production of domestically produced good or service

+

Sales costs (if any)

+

Management costs (if any)

+

Finance costs (if any)

Where:

- Cost of production of domestically produced good or service is determined as specified in Article 9 of this Circular;

- Sales costs, management costs, finance costs are determined as specified in Article 10 of this Circular;

b) Profit is determined as specified in Article 11 of this Circular;

c) Excise duty, value added tax and other taxes are determined as specified in tax law.

2. Prime cost sheet for one (1) unit of domestically produced good or service

Symbol	Description	Calculation method
A	Output for calculating the price of good or service
B	Cost of production of good or service	B=1+2+3+4+5
1	Direct material costs
2	Direct labor costs
3	Direct fixed asset depreciation costs
4	General production costs
5	Other reasonable and valid costs (if any) according to regulations serving production (not included above)
C	Sales costs (if any)
D	Management costs (if any)
DD	Finance costs (if any)
E	Total production and business costs	E=B+C+D+DD
G	Prime cost of one (1) unit of good or service	G=E/A

Article 9. Cost of production of domestically produced good or service

1. Direct material costs include costs of raw materials, materials, tools, drugs, chemicals, equipment, fuel, energy and other materials (hereinafter referred to as materials) used directly for the production of goods or services.

The material cost is determined as follows:

Material cost = Material consumption rate x Material price

a) Material consumption rate is determined on the basis of economic and technical norms issued by regulatory agencies;

b) Material price

The material price used to calculate the price of goods or services is determined in accordance with the standards, types and quality of materials used, associated with the location of the production of goods or services. In specific:

For materials subject to State valuation: calculate the price according to State regulations plus (+) reasonable and valid costs (if any).

For materials not subject to State valuation: calculated based on the price on invoices and documents as prescribed by law, minus trade discounts, purchase price reductions (if any) and other deductions (if any). If complete documentation is unavailable, pricing will be determined according to Articles 13, 14, and 15 of this Circular, plus any reasonable costs incurred in transporting the materials to the company's warehouse. In case the materials purchased from households and individuals are sold without invoices as prescribed by tax laws, a list of purchased goods or services without invoices must be made as prescribed by tax laws.

For materials directly imported for production: calculated based on the original import cost as prescribed in Point a, Clause 1, Article 7 of this Circular.

For self-manufactured materials: calculated based on the actual cost when the materials leave the warehouse plus (+) reasonable and valid costs incurred during the production process (if any).

For materials processed by third parties: calculated based on the actual cost when the materials are sent for processing plus (+) processing costs plus (+) other reasonable and valid costs for transportation to the processing entity (if any) and transportation back to the unit’s warehouse (if any).

The prices of materials, processing, transportation, storage, purchasing and other costs (if any) must be recorded on invoices and documents in accordance with law.

2. Direct labor costs

a) Direct labor costs include amounts payable to workers who are directly involved in the production process. These costs include salaries, wages, allowances tied to salaries, and mandatory contributions such as social insurance, health insurance, unemployment insurance, and trade union dues, as stipulated in the Labor Code and other relevant laws and regulations;

b) Salary costs are determined as follows:

Salary costs = Labor norms x salary unit price

Labor norms are determined on the basis of economic and technical norms issued by competent regulatory agencies.

Salary rate is determined in accordance with the law on wages and related laws;

c) Wage costs are determined on the basis of economic and technical norms, labor contracts, collective labor agreements, other legal agreements in accordance with the law on labor, relevant laws, internal spending regulations for units that must issue internal spending regulations.

3. Direct fixed asset depreciation costs

Fixed asset depreciation costs are determined in accordance with the Ministry of Finance's guidelines on the management, use, and depreciation of fixed assets.

In case the depreciation costs of fixed assets directly serving production and business have already been included in the general production costs, they should not be included in this calculation.

4. General production costs

General production costs refer to costs for general production incurred in workshops, departments, teams, teams, faculties, construction sites and other departments (hereinafter referred to as workshops) in accordance with the law to serve the production and trading of goods or services. They include:

a) Workshop staff costs: These are the salaries, wages, and benefits paid to supervisory and administrative staff working in the workshop and contributions to social insurance, health insurance, unemployment insurance, and trade union dues as mandated by labor laws and regulations;

b) Costs of materials used for workshops such as materials used to repair fixed assets used for workshops, materials used for workshop management, and temporary camp costs;

c) Fixed asset depreciation costs used for workshop operations are determined in accordance with the Ministry of Finance's guidelines on the management, use, and depreciation of fixed assets. If this cost has already been calculated in clause 3, it should not be calculated in this Clause;

d) Costs of outsourced services serving the workshop's operations such as: costs of electricity, water, telephone, costs of repairing fixed assets, rents for fixed assets, costs paid to contractors (if any), other outsourced costs (if any);

dd) Other reasonable and valid cash costs in accordance with law in addition to the costs mentioned above serving the workshop's operations.

5. Other reasonable and valid costs (if any) according to regulations serving production (not included above)

Article 10. Sales costs, management costs, finance costs

1. Sales costs

Sales costs include reasonable and valid costs in the process of selling goods and providing services:

a) Costs payable to sales staff, packaging personnel, transportation workers, and warehouse staff. These include salaries, wages, and allowances tied to salaries, and contributions to social insurance, health insurance, unemployment insurance, and trade union dues as specified in the Labor Code, the State's regimes and policies and relevant laws;

b) Costs of materials and packaging used for packaging, preservation, transportation, loading and unloading, consumption of goods and products; materials used for repairing and preserving fixed assets used by the sales department;

c) Costs of tools and instruments serving the process of consuming goods or services such as measuring instruments, calculating instruments, working instruments;

d) Depreciation costs of fixed assets in the storage and sales departments such as warehouses, stores, yards, loading and unloading vehicles, transportation, calculation, measurement and quality testing equipment. Fixed asset depreciation costs are determined in accordance with the Ministry of Finance's guidelines on the management, use, and depreciation of fixed assets;

dd) Introduction and warranty costs;

e) Costs associated with purchasing services from external providers to support sales operations, such as equipment repair, warehouse and yard rentals, loading and unloading fees, transportation of products for sale, commissions paid to sales agents;

g) Other reasonable and valid cash costs in the sales stage other than the above-mentioned costs in accordance with law;

h) For goods or services purchased using the state budget, certain costs such as advertising, marketing, promotions, and commissions are not allowed.

2. Management costs

Management costs include:

a) Management staff costs include amounts payable to the management department such as salaries and salary-related allowances, social insurance, health insurance, unemployment insurance, union fees of management department staff as specified in the Labor Code, the State's regimes and policies and relevant laws;

b) Costs of materials used for management, materials used for repairing fixed assets, tools and equipment;

c) Costs of repairing fixed assets, means of transport, transmission, machinery, equipment, tools and equipment used for management;

d) Depreciation costs of fixed assets used for the management department such as: office buildings of departments, warehouses, architectural objects, means of transport, transmission, machinery and management equipment used in the office and other assets. Fixed asset depreciation costs are determined in accordance with the Ministry of Finance's guidelines on the management, use, and depreciation of fixed assets;

dd) Costs of outsourced services for management purposes; costs of purchasing and using technical documents, patents that do not meet the criteria for recognizing fixed assets are calculated by the method of gradual allocation to management costs; fixed asset rental costs, payments to contractors (if any);

e) Taxes, fees, and charges (if any) as prescribed by law;

g) Other monetary costs belonging to general management, in addition to the above costs such as: conference costs, reception costs, business trip costs, transportation costs, allowances for female workers, research, training, fees for joining associations and other reasonable and valid costs (if any) as prescribed by law.

3. Finance costs

a) Finance costs include interest expense on loans directly related to the production and business of goods or services that need to be valued and the exchange rate difference (if any) in the process of purchasing materials, goods, and services and is allocated to the unit of goods or services;

b) For goods or services purchased using the state budget: in case advance funding is received, the interest expense corresponding to the advance funding is not calculated.

Article 11. Profit

1. Pursuant to Article 22 of the Law on Prices, the determination of the profit margin (if any) or the profit level (if any) or the accumulation level (if any) ensures that the selling price of good or service is determined not to exceed the market selling price (for good or service with a market price).

The profit margin is the percentage (%) of the profit over revenue or over net revenue or over owner's equity or state capital invested as assigned by the owner's representative or over the total cost of goods sold, sales cost, enterprise management cost and finance cost (allocated to goods or services).

2. Methods for determining profit margin

a) For goods or services that are circulated on the market or for which there are similar goods and services being produced and circulated on the market: the maximum profit level or maximum profit margin is determined based on the latest audited financial statements or settlement of the producing entity or comparable businesses. Alternatively, industry benchmarks or historical data from previous years can be used;

b) For goods or services that are ordered or assigned by the State and have not yet been circulated on the market, or for which there are no similar goods or services being produced and circulated on the market: the profit margin after paying corporate income tax should not exceed the amount allocated for two welfare and reward funds as stipulated by law; alternatively, the maximum profit level or maximum profit margin is determined based on the latest audited financial statement or settlement of the producing entity or by comparing it to the profit margins of other goods or services produced and sold by the same entity;

c) For public sector entities, the accumulation level is included in the price as specified by law: This accumulation level, after paying corporate income tax, should not exceed the amount required to establish two welfare and reward funds as stipulated by law; alternatively, the accumulation level should not exceed the actual surplus allocated to goods or services, as determined by the unit's most recent audited financial statement or settlement.

3. If the competent state agency specifies a profit level or profit margin, the profit should be calculated accordingly.

Article 12. Determination of prices

1. Maximum prices, minimum prices, price ranges, and specific prices of goods or services are determined on the basis of costs as specified in Articles 5, 6, 7, 8, 9, and 10 of this Circular, and the profit level or accumulation level determined according to Article 11. The determined price must align with the valuation principles and basis outlined in Article 22 of the Price Law.

2. For goods or services subject to state-mandated maximum, minimum, or range prices: the specific price is determined according to the provisions in Clause 1 of this Article. The specific price must fall within the specified range, not exceeding the maximum price and not being lower than the minimum price set by the competent regulatory agency.

Section 3. COMPARATIVE METHOD

Article 13. Collection of price information

1. Agencies, units, organizations and individuals that prepare price plans are fully accountable for the accuracy and reliability of the data collected on goods or services prices. Agencies or organizations tasked with reviewing these valuation plans must ensure that the collected data is used appropriately and consistently.

2. Comparable goods or services

a) Comparable goods or services are those that have identical or very similar characteristics to the product or service being priced;

b) If identical goods or services cannot be found as prescribed in point a of this clause, comparable goods or services should have the most similar characteristics to the goods or services to be valued, such as: specifications, quality, features, purpose, production time, technical characteristics, dimensions, size, construction principle, main technical parameters, origin, production technology, legal characteristics, transportation, circulation, distribution and some other factors;

c) Goods or services in the field of national defense and security are not subject to the provisions in Point b of this Clause.

3. Information on prices of comparable goods or services must be collected at the time of price determination or as close as possible to the time of price determination, ideally within 24 months prior. The data should be gathered from the nearest location, both domestically and internationally, to the place where the goods or services are being priced. This information should be based on at least one of the following documents:

a) Prices set, evaluated, announced, or provided by government authorities;

b) Actual prices from completed sales transactions recorded on invoices or contracts, in accordance with regulations;

c) Winning bid and auction prices; import prices according to customs declarations or provided by customs authorities;

d) Prices on quotations and offers from producers or traders must include complete information such as the company's name, address, tax identification number (if applicable), a company stamp, the date the information was provided, and the validity period of the quotation or offer;

dd) Prices obtained from Internet or through mass media or reports of associations, unions or through Vietnamese representative agencies abroad or via emails;

e) Prices collected through surveys conducted by individuals or organizations must be documented using information survey forms that include details such as the name, brand, location, collected prices, key technical specifications, and other relevant information. The survey forms must be signed by individuals and members of the information collection organization.

Individuals and organizations conducting surveys and collecting information are fully responsible for the honesty of the information collection process and the results of the information collection;

g) Prices obtained from price databases or other sources as specified by law.

4. If the collected price is in a foreign currency, it must be converted into Vietnamese Dong using the selling rate announced by the Joint Stock Commercial Bank for Foreign Trade of Vietnam at the time of price determination.

Article 14. Information analysis

1. Determine the comparative factors of the goods or services to be priced such as: specifications, quality, features, purpose, production time, technical characteristics, dimensions, size, construction principle, main technical parameters, origin, production technology, legal characteristics, transportation, circulation, distribution and some other factors (if any); hire an organization specializing in evaluating the economic, technical, and quality aspects of goods or services if deemed necessary.

2. Analyze to select at least three (3) comparable goods or services from three (3) different suppliers. If fewer than three comparable goods or services are available, analyze the actual amount of data collected.

3. Analyze the relevant information of comparable goods or services, identify the key factors that influence their prices, and adjust the price of the target goods or services accordingly:

a) Use the target goods or services as a benchmark and adjust the prices of comparable goods or services based on the comparable factors of the goods or services to be priced.

When adjusting the price based on the difference of one comparable factor, the remaining comparable factors are held constant (assumed to be identical).

For factors where the goods or services being priced are inferior to the comparable goods or services, adjust the price of the comparable goods or services downward. Conversely, if the factors are superior, adjust the price upward. If the factors are similar, keep the price of the comparable goods or services unchanged.

The price adjustment due to differences in comparable factors can be made in absolute amounts or as a percentage increase or decrease relative to the price of the comparable goods or services.

When adjusting the prices of comparable goods or services based on individual comparable factors, absolute adjustments should be made first, followed by percentage adjustments. The price after the absolute adjustment is used as the basis for the percentage adjustment.

The total price adjustment for comparable goods or services is the sum of the adjustments made for each comparable factor, with negative values indicating decreases and positive values indicating increases.

The final price of the goods or services is determined by adding the total adjustment to or subtracting the total adjustment from the price of the comparable goods or services.

The price of the goods or services to be valued is determined by taking the representative adjusted price of the comparable goods or services, or the average of the adjusted prices of the comparable goods or services.

The representative adjusted price of the comparable goods or services is the adjusted price of each comparable good or service selected based on the following criteria:

- Comparable goods or services with the fewest price adjustments.

- Comparable goods or services with the smallest adjustment rate for each comparable factor.

- Comparable goods or services with the smallest net total adjustment;

b) If the specific adjustment rate and level for each comparable factor cannot be determined, provide a rationale for calculating the price of the goods or services to be valued.

Article 15. Determination of prices

1. Maximum prices, minimum prices, price ranges, and specific prices of goods or services are determined on the information collected and analyzed as prescribed in Articles 13 and 14 of this Circular, ensuring that the determined price complies with the principles and bases for valuation as stipulated in Article 22 of the Price Law.

2. For goods or services subject to state-mandated maximum, minimum, or range prices: the specific price is determined according to the provisions in Clause 1 of this Article. The specific price must fall within the specified range, not exceeding the maximum price and not being lower than the minimum price set by the competent regulatory agency.

Chapter III

IMPLEMENTATION

Article 16. Transitional provisions

In cases where the valuation plan for goods or services subject to state valuation has been established in accordance with the valuation method prescribed by the competent regulatory agency and the documentation has been submitted to the competent authority for price plan appraisal before the effective date of this Circular, such valuation method shall continue to be applied.

Article 17. Entry in force

1. This Circular comes into force as of July 1, 2024.

2. Circular No. 25/2014/TT-BTC dated February 17, 2014 of the Minister of Finance stipulating the general valuation method for goods or services ceases to be effective from the effective date of this Circular./.

PP. MINISTER Le Tan Can