Thông tư 06-TC/TCDN

Circular No. 06-TC/TCDN of February 24, 1997, guiding the regime of financial management at public utility state enterprises

Nội dung toàn văn Circular No. 06-TC/TCDN of February 24, 1997, guiding the regime of financial management at public utility state enterprises


THE MINISTRY OF FINANCE
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SOCIALIST REPUBLIC OF VIET NAM
Independence - Freedom Happiness
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No. 6-TC/TCDN

Hanoi, February 24, 1997

 

CIRCULAR

GUIDING THE REGIME OF FINANCIAL MANAGEMENT AT PUBLIC UTILITY STATE ENTERPRISES

In furtherance of Decree No.56-CP of October 2, 1996 of the Government concerning the State enterprises engaged in public utility activities, the Ministry of Finance gives the following guidance on the financial management at these enterprises:

I. GENERAL PROVISIONS

1. The scope of regulation of this Circular covers the public utility State enterprises already ratified by the competent authorities. They include independent enterprises, independent accounting enterprises members of a Corporation (public utility enterprises for short). The list of public utility enterprises shall be decided by the Ministers, the Heads of ministerial-level agencies, the Heads of the agencies attached to the Government, the Presidents of the Peoples Committees of the provinces and cities directly under the Central Government according to the criteria stipulated in Article 1 and Article 2 of Decree No.56-CP of October 2, 1996 of the Government.

2. The public utility enterprises shall have to use the capital and other sources assigned by the State to supply public utility products and services to given objects at prices, price frames or charges prescribed by the State.

3. After fulfilling the assigned public utility task, a public utility enterprise is entitled to make full use of the land, landscapes and State capital and property and raise capital to organize production and business in a way suited to its capability and the demand of the market on the following conditions:

- It must get the written consent of the agency deciding its establishment.

- Such activities shall not affect the implementation of the public utility task which the State has assigned to it or for which the State has placed orders with it.

- It has to register auxiliary occupations and trades under current regulations.

- It has to account the extra businesses separately.

- It has to fulfill its obligation of tax payment for the extra businesses as prescribed by law.

II. MANAGING AND USING CAPITAL AND PROPERTY AT PUBLIC UTILITY ENTERPRISES

1. Capital investment:

1.1. A newly established public utility enterprise shall receive priority investment in the necessary start-up registered capital from the State which shall not be lower than the legal capital prescribed for each occupation and trade in Decree No.50-CP of August 28, 1996 of the Government in order to build fixed assets and purchase mobile assets correspondingly with the scale and task of public utility assigned to it.

1.2. If an operating public utility enterprise really runs short of capital compared to the public utility task assigned by the State (after mobilizing all the existing sources at the enterprise) shall be given additional investment by the State according to the following modalities:

- If the enterprise is making profit, it shall be eligible for consideration for reduction of profit tax to supplement its capital according to provisions of law.

- If the enterprise has no profit or after enjoying profit tax reduction still runs short of capital, the State shall consider additional capital investment.

1.3. The agency which establishes the enterprise shall have to ensure the registered capital at the time of the establishment as stipulated in Article 2 of Decree No.50-CP mentioned above and to make additional investment to the enterprise.

1.4. Procedures of capital investment:

a/ With regard to construction investment: the enterprise shall comply with the stipulations in the Regulations on the management of investment and construction currently in force.

b/ Investment in floating capital: the enterprise shall have to make a dossier to apply for capital allocation including:

+ A copy of the decision to establish the enterprise.

+ A copy of the certificate of business registration

+ The decision of the head of the agency that has decided to establish the enterprise on the assignment of the public utility task.

+ The production and financial plan of the enterprise already ratified by the competent authority for the year when the proposal of capital supplement is made.

+ The financial report of the previous year (if it is an operating enterprise).

+ The record of the assignment of mobile capital ratified by the agency for management of State capital and property.

1.5. The order of capital allocation for the enterprise shall proceed as stipulated by the Ministry of Finance.

2. Capital mobilization:

2.1. When the need arises to raise capital, to call for joint venture capital or to mortgage the value of land use right associated with the property under the management of the enterprise at Vietnamese banks in order to borrow capital in service of the public utility activities as prescribed by law, the enterprise shall have to draw up a concrete plan and send it to the agency for the management of State capital and property located in the enterprise so that it may give its comments before submitting the plan to the head of the agency which has decided the establishment of the enterprise for decision.

2.2. In case the public utility enterprise engaged in business activities outside the assigned public utility task, it can borrow capital from credit organizations (commercial banks, financial companies...), other enterprises, individuals (including the personnel in the enterprise) to cater for its business activities, but it must comply with the regulations of law and must not change the form of ownership.

In particular, with regard to the enterprises producing or repairing weapons, specialized military gear and equipment directly in service of national defense and security, the raising of capital for business activities must be decided by the Ministry of Defense and the Ministry of the Interior after consultation with the agency for the management of State capital and property at the enterprise.

2.3. The interest rate of the mobilized capital accounted for in the production and service cost of the enterprise must not be higher than the ceiling interest rate of loans announced by the Vietnam State bank at the time of the capital mobilization for the enterprises of the same branch or business line.

2.4. When it mobilizes capital, the enterprise must make careful calculations about the economic efficiency, ensure that the capital raised shall be used for the right purpose and efficiently. It must not use short term loans to invest in construction. The enterprise has to pay the debt including capital and interest according to the commitments made when it raises capital.

The Director of a public utility enterprise is answerable to the State for the drawing up of the capital raising plan and if the capital is not used according to the purported objective or is not used efficiently leading to losses of capital.

3. Investment outside the enterprise

3.1. When the need arises to use the capital, property or the value of the land use right or the land rent of the public utility enterprise to invest outside the enterprise, the enterprise must draw up the plan of capital pool or give explanations about the joint venture project and send it to the agency managing the State capital and property at the enterprise so that it can make comments before submitting the plan to the Head of the agency which has decided to establish the enterprise for approval.

3.2. Investment outside the enterprise must not affect the public utility task assigned by the State and must comply with the prescriptions of law, ensure the principle of efficiency, conservation and development of the capital and increase of income. When it uses the value of the land use right to invest outside, the enterprise must comply with the provisions of the Land Law.

3.3. A public utility enterprise must not use the State investment to conduct monetary businesses such as purchasing treasury bonds, credit bonds or depositing in savings banks...

3.4. A public utility enterprise must not invest in enterprises not owned by the State where the manager, the executive director or the main owner is the wife, husband, father, mother or child of the director of the said public utility enterprise.

4. Assigning, renting, mortgaging and pawning property:

4.1. The assignment, renting, mortgaging or pawning of property under the management of a public utility enterprise must be decided by the Head of the agency which has decided to establish the enterprise subject to the written consent of the agency managing the State capital and property at the enterprise.

4.2. When it decides to assign property which is no longer needed or which has become technically backward in order to retrieve capital, the enterprise must set the price and organize a bidding as prescribed by law. The difference between the revenue from the assignment of the property and the remaining value in the book of accounts together with the expenses in the assignment shall be accounted for in the business result of the enterprise.

4.3. With regard to the property leased by the enterprise with the aim of raising its use efficiency and increasing the income of the enterprise, the enterprise still has to deduct the depreciation cost according to the prescribed regime and must monitor the activities of the property and recover it at the end of the lease term.

The property which is mortgaged, pawned for capital borrowing at a credit organization must comply with the order and procedures prescribed by law.

A public utility enterprise must not pawn, mortgage or lease the property which is borrowed or hired by it or is entrusted to its charge or used as a mortgage or a pawn... from other enterprises unless it has the consent of the owners of these property.

5. Liquidation of property:

5.1. With regard to the essential machinery and equipment and other property of a decisive importance for the operation of a public utility enterprise (except trees and animals), if the enterprise decides to liquidate them it must get a written permission from the agency which has decided to establish it and the agency managing the State capital and property at the enterprise.

In particular, with regard to the property of the enterprises producing or repairing weapons, military equipment and special use gear for defense and security, such a liquidation must get a written permission from the Ministry of Defense and the Ministry of the Interior and, in special cases, must be decided by the Prime Minister.

The liquidation of other properties shall be conducted in the same way as in other State enterprises engaged in business activities.

5.2. The enterprise shall have to set up the property liquidation council. If spare parts and waste materials recovered from the liquidated property are to be used in production and business, the enterprise shall have to set the prices. If it sells the liquidated property it has to organize an action as prescribed by law. The difference between the revenue from the liquidation of the property and the remaining value in the book of accounts of the liquidated property and the expenses in the liquidation shall be accounted for in the business result of the enterprise.

6. Capital allocation, responsibility for capital conservation, re-evaluation of property, plan for handling cases of property losses, and the management of the public debts shall comply with the prescriptions for State enterprises engaged in business activities.

7. A public utility enterprise has the responsibility to open a book of accounts to accurately monitor the whole existing property and capital of the enterprise in conformity with the accountancy accounting regime; it shall have to report truthfully and in time the changes of the property and capital in the process of its operation.

III. FINANCIAL RESULT AND HANDLING OF RESULT OF OPERATION OF PUBLIC UTILITY ENTERPRISES

A. FINANCIAL RESULT

1. The turnover of a public utility enterprise comprises the turnover from public utility activities, from business activities and other activities.

1.1. The turnover from public utility activities includes: revenue from the payment by the State of the public utility services achieved according to plan or orders, the sale of products and the supply of services at the prices, price frame or fee collection set by the State; and revenue from State allowances and price subsidies when the enterprise supplies goods and services at the request of the State.

a/ In case the enterprise is paid by the State for the public utility and services it supplies according to the planned targets or orders from the State, the bases for payment are:

- The public utility task in the plan or orders assigned to the public utility enterprise by the Head of the agency which decides to set up the enterprise in the plan year.

- The unit price for payment decided by the competent agency by assignment of responsibilities from the Government.

- The written record on the test on completion concerning the quantity and quality of the products and services accomplished and delivered by the public utility enterprise to the agency which assigns the plan or places the order.

The financial agency shall conduct the expertise and procedures of payment for the public utility enterprise after deducting the fines to be paid by the enterprise when it violates the terms in the goods order.

b/ Bases for the Government to consider allowances and price subsidies:

- The business lines or services on the list of eligibility for allowances or price subsidies defined by the Government.

- The public utility task assigned to the enterprise in the plan year by the Head of the agency which decides to establish the enterprise.

- The quantity and quality of the products or services achieved in the framework of the assigned plan.

- The unit price of the allowances and subsidies for each product or service decided by the competent agency according to the Government assignment.

The modalities of granting the allowances and price subsidies shall comply with the regulations of the Ministry of Finance.

1.2. The turnover from business and other activities shall comply with the regulations concerning State enterprises engaged in business activities.

2. The expenses of public utility enterprises comprise expenses on public utility activities, business activities and other activities:

2.1. The contents of the expenses on public utility activities of each branch of production shall be defined by the parent ministry or the President of the Peoples Committee of the province or city on the basis of the economic and technical characteristics of the branch after getting a written consent from the Ministry of Finance.

2.2. The content of the expenses on business activities and other activities shall comply with the regulations concerning the State enterprises engaged in business activities.

3. The public utility enterprises are allowed to use their turnover to make up for expenses. More concretely:

- The turnover from business activities used to make up for the total production cost of the goods and services already consumed, taxes and other revenues of the State as prescribed by law (excluding profit tax).

- The turnover from business activities used to make up for the total production cost of commodity products and services already consumed, taxes and other revenues of the State as prescribed by law (excluding profit tax).

- The turnover from other activities shall be used to make up for expenses, tax and other revenues of the State as prescribed by law (excluding profit tax).

A public utility enterprise engaged in business activities must in principle ensure that these activities are profitable and must not use the profit from public utility activities to compensate for the losses in business activities.

B. HANDLING OF FINANCIAL RESULT

1. For the enterprises which supply public products and services at State defined prices but the revenue of which does not depends much on the expenses incurred (the Ministry of Finance shall decide the list of public utility enterprises of this type after consulting the agency which decides to establish such an enterprise), the difference between revenue and expenditure shall be handled as follows:

a/ Deductions to set up various funds at the following rates and ceiling levels:

+ Development investment fund: 25% of the difference.

+ Financial reserve fund: 5% of the difference, but the balance of this fund must not exceed 25% of the registered capital.

+ Deductions to establish the reward and welfare funds representing three months of real wages if the remittance to the budget in the reporting year is higher than the previous year, and representing two months of real wages if the remittance to the budget in the reporting year is equal to or lower than the previous year.

b/ The remainder shall be remitted to the State budget.

The profits from business activities and other activities shall be distributed as in a State enterprise engaged in business activities but the total of deductions for each fund from all sources shall not exceed the maximum prescribed for a State enterprise engaged in business activities.

2. With regard to an enterprise from which the State buys the whole of its public utility products and services (including enterprises producing or repairing weapons, military equipment and special purpose gear for defense and security) and the enterprises which supply public utility products and services at State defined prices, the profits earned within the year (including profits from business and other activities) shall be distributed according to the following order:

a/ Payment of profit tax as prescribed by law.

b/ Deductions to pay fines for violation of discipline in the collection of revenues and remittances to the budget, administrative violations, violations of contracts, failure to pay due debts, and reasonable expenses which have not been deducted when determining the taxable profits.

c/ Deductions to compensate for the losses not yet deducted from the pre-tax profit.

d/ Concerning the remaining profits, after deductions according to Items a, b and c, the enterprise is allowed to make deductions for the establishment of various funds according to the following proportions and ceiling rates:

+ For the development investment fund: 50% at least.

+ For the financial reserve fund: 10%, with a maximum balance not exceeding 25% of the registered capital.

+ For the reward and welfare funds: a maximum of three months of real wages if the remittance to the budget in the reporting year is higher than the previous year, and two months of real wages if the remittance to the budget in the reporting year is equal to or lower than the previous year.

After deductions according to Items a, b, c and d, and for the investment development fund and the financial reserve fund, if there is a balance from the deduction of the profit for the reward and welfare funds, the balance shall be wholly transferred to the development investment fund. In case the profit is not enough to deduct for the establishment of the reward and welfare funds at the rate of two months of real wages, the State shall make up for the shortfall.

3. For an enterprise supplying public utility products or services at State defined prices which cannot make up for the reasonable expenses (including expenses necessitated by the fight against natural calamities, and defense and security needs), if it is still in the red after using 50% of the profit from business activities to fill the gap, the State shall provide subsidies as follows:

- Make the necessary allocations to fill the remaining shortfall

- To grant to the reward and welfare funds allowances equal to two months of real wages of the enterprise.

For the remaining profit from the business and other activities, 80% shall be deducted for the development investment fund and 20% for the financial reserve fund.

4. The procedures and time of the deductions and the aim of the use of the funds of the enterprise shall comply with the regulations for State enterprises engaged in business activities.

Within the total of deductions for the reward and welfare funds, the Director of the enterprise is entitled to decide the proportion of the deduction for each fund after consulting the trade union organization at the enterprise.

A public utility enterprise shall not set up a reserve fund for severance allowance. In special cases where the enterprise has to scale down its public utility activities, the agency that has decided its establishment and the financial agency of the same level shall consider the grant of severance allowances for the laborers who have lost their jobs according to the prescribed regime.

5. With regard to the public utility enterprises in deep-lying, remote and border or island areas or strategic areas with exceptional difficulties, the State shall consider the provision of the following expenses:

- Expenses on crches and other educational establishments where there is not yet any school or class of the national educational system.

- Expenses on healthcare for the areas where, for special conditions, a hospital or medical station must be maintained.

IV. FINANCIAL PLAN

1. Each year, basing itself on the regulations and guidance of the financial agency, the public utility enterprise shall draw up the plan for the production of the public utility products and the supply of public utility services according to the policies or orders placed by the State, the draft budget revenues and expenditures (including the planned allowances and subsidies) and report it to the agency that has decided to establish the enterprise and the financial agency of the same level. The agency which has decided to establish the enterprise shall have to ratify the plan, and make a general report to the competent authority and the related financial agency.

2. Within the ratified annual draft budget revenues and expenditures, the Head of the agency which has decided to establish the enterprise shall assign the plan of production of public utility products and supply of public utility services, place orders and make draft budget allocations to the enterprise and send it to the financial agency of the same level for coordination. The Budget shall provide allowances only within the ratified draft budget.

V. INSPECTION OF ACCOUNTS, FINANCIAL REPORT AND FINANCIAL TRANSPARENCY

1. Drawing up the financial report:

- Every three months and every year the public utility enterprise shall have to draw up the financial report according to current regulations. The director of the enterprise shall be answerable to the State and law for the accuracy, truthfulness of the financial report.

-The quarterly and annual financial report shall be sent to the agency which has decided to establish the enterprise, the tax agency, the agency for the management of the State capital and property at the enterprise and the statistical agency.

2. Inspection of accounts and financial report:

- Quarterly and annually, the public utility enterprise shall have to make its own inspection of the accounts and of the financial report.

- The agency which has decided to establish the enterprise shall together with the agency managing State capital and property at the enterprise have to inspect the ratification of the annual financial report of the public utility enterprise.

- The financial agency shall have to inspect the implementation of the financial and accountancy regimes, the discipline of Budget collection and remittance and the accuracy and truthfulness of the financial report.

- All violations of the regime of accountancy and the regime of financial revenues and expenditures, the regime of collection and remittance to the budget, the regime of deduction and use of the funds of the enterprise shall be subject to administrative and economic sanctions according to the provisions of law.

3. Making public annual financial report:

- Basing itself on the annual financial report already ratified by the competent agency, the public utility enterprise shall publicly announce a number of financial targets before the conferences of workers and public employees of the enterprise.

- The contents of the targets shall be made public according to the form attached to this Circular.

VI. IMPLEMENTATION PROVISIONS

1. Apart from separate provisions for the public utility enterprises stipulated in this Circular, the public utility enterprises shall also have to carry out other regulations of law with regard to a State enterprise.

2. With regard to a number of public utility activities with specific characteristics, the agency which decides to establish the enterprises shall base themselves on the regime of financial management stipulated in this Circular to study and issue appropriate regulations after getting a written consent from the Ministry of Finance.

3. This Circular takes effect from the date of its signing. All earlier regulations on financial management at the enterprises directly performing defense or security tasks or producing products and supplying public utility services according to the State policies which are contrary to this Circular are now annulled.

4. In the process of implementation if any problem arises, the enterprises are asked to report in time to the Ministry of Finance with a view to appropriate modifications and amendments.

 

 

FOR THE MINISTER OF FINANCE
VICE MINISTER





Pham Van Trong

 

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          Circular No. 06-TC/TCDN of February 24, 1997, guiding the regime of financial management at public utility state enterprises
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          Lĩnh vựcDoanh nghiệp, Tài chính nhà nước
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