|
THE MINISTRY
OF FINANCE
-------
|
SOCIALIST
REPUBLIC OF VIET NAM
Independence - Freedom – Happiness
----------
|
|
No: 64/1999/TT-BTC
|
Hanoi, June 07, 1999
|
CIRCULAR
GUIDING THE
DISTRIBUTION OF AFTER-TAX PROFITS AND MANAGEMENT OF FUNDS IN STATE ENTERPRISES
Pursuant
to the Government’s Decree No. 59/CP of October 3, 1996 issuing the
Regulation on financial management and business cost-accounting at State
enterprises and Decree No. 27/1999/ND-CP of April 20, 1999 on amendments and
supplements to the above-said Decree No. 59/CP;
The Ministry of Finance hereby guides the distribution of after-enterprise
income tax profits and management of funds in State enterprises as follows:
I.
OBJECTS AND SCOPE OF APPLICATION
This Circular shall apply to State enterprises
engaged in business activities, including corporations, economic
cost-accounting member enterprises of corporations and centrally- or
locally-run independent enterprises of all economic sectors.
State enterprises engaged in public-utility
activities and established under the Government’s
Decree No.56/CP of October 2, 1996; as well as enterprises attached to training
and research institutions, and established under the Prime Minister’s Decision No.68/1998/QD-TTg of March 27, 1998
shall comply with separate profit distribution regime and not be governed by
this Circular.
II.
DETAILED GUIDANCES
A. ENTERPRISES’
PROFITS
...
...
...
Please sign up or sign in to your Pro Membership to see English documents.
a/ Profits from business activities: is the
difference between the total revenue from and the total cost of products and
services, which have been sold in a fiscal year of the enterprise.
b/ Profits from other activities shall include:
- Profits from financial activities, which means
the revenue therefrom is bigger than the expenditure thereon, including asset
leasing; securities trading; foreign currency trading; interests on bank
deposits being business capital; interests on capital loans; stock dividends
and shared profits from capital contributions to joint-venture(s) or business
cooperation; reimbursement of the balance of the reserve for securities
investment devaluation.
- Profits from irregular activities, which means
the revenue therefrom is bigger than the expenditure thereon, including:
payable amounts, which cannot be paid due to the creditors’ faults; bad debts which have been approved for
cancellation but now recovered; profits generated from the ownership right or
the right to use assets; revenue from redundant supplies and assets, after
making up for losses; difference arising from the liquidation and sale of
assets; profits accumulated from the previous years and detected in the current
year; reimbursement of balances of the reserves for reduction of unsold goods’ prices and for bad debts; deductions for product
warranty, which remain after the warranty duration has expired.
2. The State leaves the after-enterprise income
tax profits to the enterprises so that the latter may supplement their business
capital, set up financial reserve funds to partly make up for risks and, at the
same time, care for material interests of laborers working at the enterprises.
B. DISTRIBUTION OF AFTER-TAX PROFIT
After transferring losses according to Article
22 of the Law on Enterprise Income Tax and paying income tax as prescribed by
law, an enterprise shall distribute its remaining profit according to the
following order:
1. To offset the previous years’ losses, which cannot be accounted into the pre-tax
profits;
2. To pay a fee for the use of the State budget
capital according to the current regulations;
...
...
...
Please sign up or sign in to your Pro Membership to see English documents.
4. To cover the actual expenses, which cannot be
accounted into the reasonable expenses when determining the taxable income;
5. To share interests to the capital
contributors according to the business cooperation contracts (if any);
6. The profit amount remaining after the
deductions (mentioned in Points 1, 2, 3, 4 and 5) have been made, shall be
distributed as follows:
6.1. 10%- for the financial reserve fund. When
this fund’s balance is equal to
25% of the enterprise’s charter capital,
the deduction shall no longer be made;
6.2. At least 50%- for the development
investment fund;
6.3. 5%- for the severance allowance reserve
fund; when the fund balance is equal to the actual 6-month salary payment by
the enterprise, the deduction shall no longer be made;
6.4. For a number of particular branches (such
as commercial banks, insurance…)
where the establishment of special funds with after-tax profit is required by
law, the enterprise shall set up such funds according to the provisions of law;
6.5. For dividend distribution in case of
issuing shares;
6.6. The profit amount left after the
establishment of the funds (mentioned in Points 6.1, 6.2, 6.3, 6.4 and 6.5)
shall be deducted for the establishment of the reward fund and the welfare
fund. The maximum deduction level for both funds shall be, based on the profit
proportion against the State capital (the State capital referred here is the
arithmetical mean of the State capital balance by January 1st and that
available by the end of every quarter of a year) and made as follows:
...
...
...
Please sign up or sign in to your Pro Membership to see English documents.
- The enterprise’s above-said profit proportion
of the current year is equal to or higher than that of the preceding year.
- The enterprise invests in technological
renovation or business expansion during the enterprise income tax exemption
period under the Law on Domestic Investment Promotion, provided that its profit
proportion is lower that that of the pre-investment year.
b/ The actual 2-month salary amount, if the
profit proportion of the current year is lower than that of the preceding year.
The enterprise’s
Managing Board or director (for enterprises without managing boards) shall,
after consulting the trade union’s
executive committee, decide the deduction level for each fund.
The profit amount left after deductions have
been made for the establishment of the reward fund and the welfare fund as
mentioned above shall be fully added to the development investment fund.
7. Procedures and time for the fund
establishment deduction:
7.1. On the basis of the quarterly financial
reports on the actual profits, the enterprise shall declare and pay the
enterprise income tax as prescribed by law; the remaining profit shall be
temporarily deducted into the funds stipulated in Section II above, provided
that the temporary deduction amount for each fund shall not exceed 70% of the
total after-tax profit of that quarter.
7.2. After publicizing its yearly financial
report under the guidance of the Ministry of Finance, the enterprise shall be
entitled to distribute all the after-tax profit of the year according to the
stipulations in Section B, this Circular.
C. PURPOSES OF THE USE OF THE ENTERPRISE�S FUNDS
...
...
...
Please sign up or sign in to your Pro Membership to see English documents.
1.1 Supplement the State’s
business capital:
- To invest in the business expansion and
renovation of technologies, equipment and working conditions of the enterprise;
- To contribute capital to joint venture(s),
purchase shares and/or contribute stocks according to the current regulations;
- For State enterprises performing tasks of
buying and processing agricultural, forestry and aquatic products, they shall
be entitled to use this fund to make direct investment in the development of
raw material areas or lend capital to other economic sectors for the
development of areas of raw materials to be supplied to the enterprises.
Basing themselves on the investment demand and
the fund capacity, the managing board or the director (for enterprises without
managing boards) shall decide the investment form and measures according to the
principle of efficiency, capital preservation and development.
1.2. Make deductions for remittance to the
development investment fund of the State corporation (if the enterprise is a
member of such corporation) according to the rate annually decided by the
corporation’s managing board.
1.3. In case of necessity, the State may
mobilize part of the development investment fund of an enterprise for the
development investment in another State enterprise. The Ministry of Finance
shall, after consulting the agency that has decided the establishment of the
enterprise, decide such mobilization.
2. The financial reserve fund is used to:
2.1. Make up for the remaining asset losses or
damage incurred by the enterprise during the course of its business, after it
has been compensated for by the loss- or damage-causing organization(s) and/or
individual(s) and the concerned insurance organization.
...
...
...
Please sign up or sign in to your Pro Membership to see English documents.
3. The reserve fund for severance allowances is
used to:
3.1. Provide financial support for laborers, who
have worked at the enterprise for one year or more and who now temporarily lose
their jobs, according to the regulations of the State; spend on the
professional and technical retraining of laborers as required by the change in
the enterprise’s technology or organizational structure, especially the
training of reserve jobs for female laborers of the enterprise. This fund is
used only to support laborers who lose their jobs due to objective causes such
as: the redundancy of laborers due to technological change, joint venture or
change in organizational structure and during the time when the new jobs have
not been arranged for such laborers or the job discontinuation procedures have
not been completed for them yet.
3.2. For enterprises being members of a State
corporation which, under its own financial regulation, takes charge of giving
allowances for laborers who lose their jobs, such member enterprises shall make
deductions to set up the corporation’s
reserve fund for severance allowances according to the rates annually decided
by the corporation’s managing board.
The allowance level for each specific case shall
be decided by the enterprise’s
director after consulting the president of the enterprise’s trade union.
4. The welfare fund is used for:
4.1. Investing in building or repairing or
supplement capital for building public-welfare facilities of the enterprise;
contribute capital to the construction of public welfare facilities which shall
be used by the entire branch or shared with other units under contracts.
4.2. Financing sports, cultural and public
welfare activities of the collective of workers and employees of the
enterprise.
4.3. Making contribution to the social welfare
fund (charity and social public welfare activities’).
4.4. Providing regular and irregular allowance
for the enterprise’s laborers, who meet
with difficulties in their daily life.
...
...
...
Please sign up or sign in to your Pro Membership to see English documents.
4.6. Deductions to set up the concentrated
welfare fund of the corporation (if the enterprise is a member unit of that
corporation), according to the rate decide by the corporation’s managing board.
The enterprise’s
director shall coordinate with the enterprise’s
trade union executive committee in managing and using this fund.
5. The reward fund is used for:
5.1. Making year-end or periodical rewards to
workers and employees in the enterprise. The reward levels shall be decided by
the enterprise’s director after
consulting the trade union and on the basis of the labor productivity and the
work performance by each worker or employee in the enterprise.
5.2. Rewarding individuals and units outside the
enterprise that have economic relations with the enterprise and have fulfilled
well the terms of the economic contracts signed with the enterprise, thus
efficiently contributing to the enterprise’s
business activities. The reward level shall be decided by the enterprise’s director.
5.3. Deduction to set up the concentrated reward
fund of the corporation (if the enterprise is a member unit of that corporation)
according to the rate set by the corporation’s
managing board.
D. RESPONSIBILITIES OF ENTERPRISES AND STATE
FINANCIAL MANAGEMENT AGENCIES
1. The managing board chairmen and the directors
(for enterprises without managing boards) shall have to accurately determine
their respective enterprises profits, distribute and use the after-tax profits
in strict compliance with the provisions of this Circular.
The deduction for the establishment of
enterprises’ funds and the use
thereof must be publicized before the State management agencies and collectives
of laborers of such enterprises.
...
...
...
Please sign up or sign in to your Pro Membership to see English documents.
Any enterprises that are found having wrongly
implemented the regulations shall be requested to correct them. If committing
violations, they shall, depending on the seriousness of their violations, be
subject to appropriate forms of sanction: administrative sanctions, material
compensation or reduction of the welfare fund and the reward fund according to
the current provisions of law.
III.
IMPLEMENTATION PROVISIONS
This Circular shall apply to the after-profit
distribution from the 1999 fiscal year and replace Circular No.70-TC/TCDN of
November 5, 1996 of the Finance Ministry.
The agencies managing enterprises and State
enterprises shall have to implement this Circular.
THE MINISTRY OF
FINANCE
Tran Van Ta