Laws of Vietnam

In furtherance of the Government’s Resolution No. 02/2002/NQ-CP of February 4, 2002, pending the amendment and supplementation of the regimes of distribution of the after-enterprise income tax profits prescribed in the Government’s Decree No. 27/1999/ND-CP of April 20, 1999, the Ministry of Finance hereby provisionally guides the use of the State capital use levy, applicable to the State enterprises, as follows:

I. GENERAL PROVISIONS:

1. Subjects governed by this Circular are State enterprises operating under the Law on State Enterprises, including: independent State enterprises, corporations and State enterprises being corporations’ members.

One-member limited liability companies, which are converted from State enterprises, shall not be governed by this Circular. The addition of capital from after-tax profits by those companies shall comply with the Finance Ministry’s guidance and be decided by the companies’ owners or their representatives.

2. As from January 1, 2002, the State shall not collect into the budget the levy on the use of the State capital at enterprises being subjects mentioned at Point 1, Section I. Enterprises may use such amounts to execute asset-investing projects, raising their production and business capacity, product quality as well as the efficiency and competitiveness of State enterprises.

Particularly in 2001, the collection of capital use levy applicable to State enterprises shall comply with the provisions of the Government’s Resolution No. 05/2001/NQ-CP of May 24, 2001 on adding a number of solutions to administering the 2001 economic plan.

II. SPECIFIC PROVISIONS

1. As from January 1, 2002, the profits made in a year by an enterprise and left after paying enterprise income tax, offsetting the previous years’ losses, which cannot be accounted into the pre-tax profits; paying fines for violations of State laws, such as the violations of tax laws, traffic laws, environment law, commercial law, and administrative regulations…, after subtracting compensations paid by violating collectives or individuals (if any); covering the actual expenses, which cannot be accounted into reasonable expenses when determining the taxable income, shall be deducted for addition to the State capital at the enterprise (business capital – Account 411) with an amount equal to 1.8% of the State capital at the enterprise which shall be determined according to the provisions in Clause 2 below.

After making addition to business capital as prescribed above, the remaining after-tax profits shall be distributed according to the provisions in Circular No. 64/1999/TT-BTC of June 7, 1999 of the Ministry of Finance guiding the distribution of after-tax profits and management of funds at State enterprises (from Point 5 to Point 6, Part B, Section II).

For cases where the deductions for the establishment of the reward fund and welfare fund as prescribed are less than two months’ actually paid salary amount, the enterprise shall be entitled to reduction of the amount to be added to business capital (from after-tax profits), so as to ensure that the deduction level for the establishment of the enterprise’s reward fund and welfare fund shall be equal to two months’ actually paid salary amount. The maximum reduction level shall be equal to the level of deduction of the after-tax profit for addition to capital.

2. For 2001:

- The collection level of the State capital use levy shall apply to all subjects, being equal to 0.15%/month (1.8%/year) multiply (x) the average State capital amount in a year which shall be calculated according to accounting books of the enterprises or economic organizations.

- The State capital at enterprises shall be determined as follows:

+ For enterprises and economic organizations, the State capital at the enterprises shall be displayed in their accounting books as follows:

Business capital source (Account 411)

Construction investment source (Account 441)

+ Particularly for commercial banks and credit institutions: the State capital at enterprises shall be displayed in their accounting books as follows:

Charter capital (Account 601)

Construction investment capital (Account 602)

- In a year, if there arises any increase or decrease of the State capital amount, the weighted average State capital used by the enterprise in that year shall be calculated according to the following formula:

For public-utility enterprises, if they have separate business sections (the State capital of these sections are accounted separately), the collection levels of the State capital use levy shall be calculated on the State capital amounts used by these sections for business activities.

In cases where the public-utility enterprises cannot separate the State capital amounts used for business and public-utility activities, the State capital amounts used by the enterprises for business activities shall be determined to calculate the State capital use levy as follows:

(The total turnover obtained in a year comprises turnover from business activities and turnover from public-utility activities).

Enterprises, for which the collection levels of the capital use levy calculated according to this Circular are higher than the levels calculated according to Decree No. 12/HDBT of January 24, 1991 of the Council of Ministers (now the Government) and Circular No. 33/TC/TCT of June 15, 1997 of the Ministry of Finance guiding the collection regimes of the State capital use levy, shall only have to pay an amount equal to the level calculated according to the above-mentioned Decree No. 22/HDBT and Circular No. 33/TC-TCT.

If the amount of capital use levy already paid in a year is smaller than the payable amount, enterprises shall have to pay the deficit, if it is larger, the surplus amount shall be cleared against the payable enterprise income tax amount.

3. The provincial/municipal Tax Departments shall have to guide and inspect the determination of the amount of capital use levy to be paid by enterprises in strict accordance with the provisions of this Circular.

4. Agencies in charge of enterprise finance shall have to monitor, supervise and inspect the addition of capital from the after-tax profits according to this Circular, as well as the preservation and raising of the use efficiency of capital by enterprises according to current regulations

III. IMPLEMENTATION ORGANIZATION

This Circular takes effect 15 days after its signing.

This Circular replaces Circular No. 33TC/TCT of June 13, 1997 of the Ministry of Finance and other regulations guiding the regimes for collection of the levy on the use of State budget capital, which are contrary to the provisions of this Circular.

Any problem arising in the course of implementation must be timely reported to the Ministry of Finance for study, amendment or supplementation.

For the Minister of Finance
Vice Minister
TRAN VAN TA