Circular No. 101/2000/TT-BTC amends and supplements Circular No. 44-TC/TCDN dated July 8, 1997, issued by the Ministry of Finance, guiding the handling of exchange rate discrepancies in state-owned enterprises.

CIRCULAR

Amending and supplementing Circular No. 44-TC/TCDN dated July 8, 1997 of the Ministry of Finance guiding the handling of exchange rate differences in state-owned enterprises.

In order to resolve difficulties for non-state enterprises in accounting for exchange rate differences and create a fair business environment among enterprises in accordance with the provisions of the Enterprise Law, the Foreign Investment Law, and the Law Amending and Supplementing the Foreign Investment Law in Vietnam, the Ministry of Finance amends and supplements certain points of Circular No. 44-TC/TCDN dated July 8, 1997 on handling exchange rate differences as follows:

I. Amend the name of Circular No. 44-TC/TCDN dated July 8, 1997 as follows:

"Circular guiding the handling of exchange rate differences in enterprises"

II. Part I of Circular No. 44-TC/TCDN dated July 8, 1997 is amended and supplemented as follows:

I. GENERAL PROVISIONS

1. Scope of application:

This Circular applies to:

a. State-owned enterprises;

b. Enterprises operating under the Enterprise Law No. 13/1999/QH10 adopted by the National Assembly of the Socialist Republic of Vietnam on June 12, 1999;

c. Joint ventures, wholly foreign-owned enterprises, and foreign parties participating in business cooperation (hereinafter referred to as foreign joint venture parties) based on contracts under the Foreign Investment Law and the Law Amending and Supplementing the Foreign Investment Law in Vietnam shall conduct accounting in Vietnamese dong and mandatory exchange rate difference adjustments must be applied to determine costs and taxable income.

For joint ventures established based on agreements signed between the Government of the Socialist Republic of Vietnam and foreign governments, if the agreement contains provisions on handling exchange rate differences that differ from the guidance provided in this Circular, such provisions shall be followed.

2. In this Circular, the following terms shall be understood as follows:

2.1. Foreign currency means any currency other than the Vietnamese dong.

2.2. Foreign currency transactions refer to receipts and payments in foreign currency for current accounts and pricing purposes.

2.3. Exchange rate refers to the rate of exchange between two currencies (hereinafter referred to as exchange rate).

2.4. Exchange rate difference (hereinafter referred to as exchange rate difference) is the difference between the recorded exchange rate in the accounting books and the conversion rate at the time of adjustment for the same type of foreign currency.

3. The entities specified in point 1 shall account for exchange rate differences arising from foreign currency transactions in accordance with the current accounting regulations.

The exchange rate for converting foreign currencies into Vietnamese dong shall be implemented according to Circular No. 77/1998/TT‐BTC dated June 6, 1998 of the Ministry of Finance guiding the exchange rate for converting foreign currencies into Vietnamese dong for use in enterprise accounting.

4. For foreign currencies for which the State Bank of Vietnam has not announced an exchange rate to convert into Vietnamese dong, they shall be uniformly converted through the US dollar.

III. IMPLEMENTATION PROVISIONS:

1. This Circular takes effect fifteen days from the date of signature and applies to financial settlement and tax settlement from the fiscal year 2000 onwards (including enterprises concluding their fiscal year in 2000). Other provisions in Circular No. 44-TC/TCDN dated July 8, 1997 of the Ministry of Finance that do not conflict with the provisions of this Circular remain in effect.

2. All previous regulations on financial handling of foreign currency exchange rate differences at enterprises or foreign joint venture parties that conflict with this Circular are hereby abolished.

3. Any issues encountered during implementation should be reported to the Ministry of Finance for study and amendment./.