Circular No. 110/2005/TT-BTC guiding the accounting system and collection of contributions to the Vietnam Telecommunications Service Fund

CIRCULAR

Guidelines for accounting, collection, and submission of contributions to the Vietnam Universal Service Fund

for the Vietnam Universal Service Fund

Pursuant to Decree No. 160/2004/NĐ-CP dated September 3, 2004 of the Government detailing implementation of certain provisions of the Ordinance on Posts and Telecommunications regarding telecommunications;

Pursuant to Decision No. 191/2004/QĐ-TTg dated November 8, 2004 of the Prime Minister establishing, organizing, and operating the Vietnam Universal Service Fund;

The Ministry of Finance issues guidelines for the collection and submission of contributions to the Vietnam Universal Service Fund to support the implementation of state policies on providing universal telecommunications services throughout the country as follows:

This technical regulation sets out technical requirements, testing methods, sampling procedures; management requirements; responsibilities of organizations and individuals producing, trading, and importing cigarettes.

1. Subjects contributing financial contributions:

Telecommunications enterprises (hereinafter referred to as enterprises) legally operating in Vietnam, providing services specified in Clause 2, Section I of this Circular, are subjects contributing financial contributions to the Vietnam Universal Service Fund (hereinafter referred to as the Fund).

2. Financial contributions from enterprises:

a) Contributions at a percentage rate of revenue from the following services:

- Mobile telecommunications services (local and nationwide), including:

+ Land mobile information services

+ Radio trunking telephone service

+ Short message service

- International telephone services (voice, fax, data transmission over voice channels), international leased line services.

- Domestic long-distance telephone services (including both inter-provincial and intra-provincial long-distance services), domestic long-distance leased line services (including both inter-provincial and intra-provincial leased line services).

b) Supplementary connection charges (if applicable)

II. CONTRIBUTION LEVELS AND ACCOUNTING PROCEDURES FOR COLLECTION AND SUBMISSION

1. Financial contribution levels for enterprises include:

1.1. Contributions at a percentage rate of revenue from the following services:

a) Mobile telecommunications services: the contribution level is 5% of revenue.

b) Long-distance international telephone services, international long-distance leased line services: the contribution level is 4% of revenue.

c) Domestic long-distance telephone services, domestic long-distance leased line services: the contribution level is 3% of revenue.

1.2. Supplementary connection charges (if applicable) as stipulated by the Ministry of Posts and Telecommunications: the contribution level is 100%.

2. Revenue determining the contribution level for the Fund shall be calculated based on service revenue provided to customers (excluding supplementary connection charges), specifically:

a) Revenue from mobile telecommunications services: it is the revenue from providing services to customers from postpaid subscribers (excluding international call charges from mobile phones), from local mobile subscribers (excluding domestic long-distance call charges and international call charges from local mobile phones) plus (+) Prepaid card service revenue.

Service revenue provided to customers includes: network revenue, mobile information revenue, and subscriber revenue reflected in accounting books.

b) Revenue from domestic long-distance telephone services: it is the revenue from domestic long-distance calls from fixed-line networks and from local mobile networks (including intra-provincial and inter-provincial long-distance calls).

c) Revenue from domestic long-distance leased line services: it is the revenue from leasing domestic long-distance lines (including intra-provincial and inter-provincial lines) minus (-) intra-zone leased line charges (if applicable).

d) Revenue from international long-distance telephone services includes:

Revenue from outgoing international long-distance calls from fixed-line networks, from postpaid mobile subscribers, and from local mobile networks plus (+) Revenue from incoming international long-distance calls minus (-) Additional charges (if applicable) minus (-) Charges paid to foreign partners.

In cases where enterprises settle the difference between incoming and outgoing international call charges, "Revenue from international long-distance telephone services" is determined as: Revenue from outgoing international long-distance calls from fixed-line networks, from local mobile networks, and from postpaid mobile subscribers plus (+) International settlement revenue.

e) Revenue from international long-distance leased line services: it is the revenue from leasing international long-distance lines minus (-) Leased line charges paid to foreign partners (if applicable - in the case of leasing entire lines) minus (-) Intra-provincial and inter-provincial leased line charges (if applicable).

3. Collection, submission, and accounting procedures for contributions:

3.1. For enterprises:

a) Based on the actual performance of the previous year and the business plan for the planning year, enterprises are responsible for developing annual financial contribution plans together with their annual financial plans, divided by quarter, and submitting them to the Vietnam Universal Service Fund and the Ministry of Posts and Telecommunications. The deadline for submission is no later than September 30 each year.

b) Based on the annual financial contribution plan (divided by quarter) announced by the Fund, enterprises are responsible for depositing funds into the Fund's account quarterly. The latest payment date is not more than 15 days (for companies) and 30 days (for corporations) from the end of the quarter.

c) At the end of the fiscal year, based on the audited annual revenue, enterprises determine the amount due for the year according to this Circular and settle the amount of financial contributions due to the Fund within 30 days (for companies) and 90 days (for corporations) from the end of the fiscal year. Enterprises must pay any outstanding amounts to the Fund within 30 days from the settlement date with the Fund. If enterprises have overpaid the Fund, the excess payment can be deducted from the next period's payment amount or refunded by the Fund if the enterprise no longer provides the services subject to financial contributions as specified in Clause 2, Section I of this Circular. The Fund will refund the enterprise within 15 days from the settlement date with the Fund.

For the year 2005, enterprises shall deposit into the Fund's account financial contributions based on actual revenue for the first nine months of 2005 before December 31, 2005. Enterprises shall declare and pay the financial contribution obligation based on actual revenue generated from January 1, 2005 to the Universal Telecommunications Service Fund and settle the revenue collection for 2005 according to general regulations.

d) In cases where enterprises violate the contribution and payment regime to the Fund as stipulated in this Circular, they will be handled in accordance with the law and fined for late payment as prescribed in Decree No. 142/2004/NĐ-CP dated July 8, 2004 of the Government on administrative penalties for postal, telecommunications, and radio frequency violations.

e) The financial contributions of telecommunications enterprises to the Fund as specified in Clause 1 Section II of this Circular are expenditures incurred by enterprises in fulfilling their obligations to provide public telecommunications services and are recorded as business expenses of the enterprise.

Enterprises must separately record and monitor revenues from services subject to contributions as specified in Clause 2 Section II and have the responsibility to timely submit contributions in accordance with the provisions of this Circular.

f) Financial contributions of enterprises as stipulated in this Circular shall be paid in Vietnamese Dong into the Fund's Account.

3.2. Regarding the Fund:

a) Based on the annual financial contribution plans of enterprises, the Fund conducts reviews and consolidates the plans for collecting contributions from enterprises to the Fund and reports to the Ministry of Posts and Telecommunications.

b) According to the annual financial plan approved by the Ministry of Posts and Telecommunications, the Fund has the responsibility to establish and notify the annual financial contribution plan to enterprises within the scope defined in Clause 1 Section I of this Circular, and implement it within thirty days from the end of the fiscal year.

c) Continuously urge enterprises to fulfill their full and timely financial contribution obligations. Settle the annual financial contributions due from the relevant entities according to established procedures.

d) Inspect and guide enterprises within the scope defined in Clause 1 Section I to submit financial contributions in accordance with the guidelines set out in this Circular, ensuring that no sources of income or contributors are overlooked.

e) The Fund has the right to request enterprises to provide data, documents, and explanations regarding their fulfillment of financial contribution obligations to the Fund.

Detect and recommend competent state management agencies to handle violations by enterprises in complying with financial contribution obligations to the Fund as stipulated in this Circular and other related laws.

4. Accounting for Contributions:

4.1. Supplement Level 2 Accounts consistent with the specific accounting system currently applied by enterprises, specifically:

- Supplement one Level 2 Account under Account 338 "Other Payables and Due Payments" to track amounts payable, paid, still due, and balances concerning financial contributions to the Universal Telecommunications Service Fund.

- Supplement one Level 2 Account under Account 642 "Administrative Expenses" to track amounts included in expenses, transferred to determine operating results concerning financial contributions to the Universal Telecommunications Service Fund.

4.2. Accounting methods for major economic transactions related to financial contributions are implemented as follows:

4.2.1. At the end of each quarter:

a) Based on the Fund's notification of financial contributions, record:

Debit Account 642 - Administrative Expenses (Detailed Level 2 Account - Contribution to the Fund)

Credit Account 338 - Other Payables and Due Payments (Detailed Level 2 Account - Due to the Fund).

b) When transferring funds to the Fund's account, record:

Debit Account 338 - Other Payables and Due Payments (Detailed Level 2 Account - Due to the Fund)

Credit Accounts 111, 112

4.2.2. At the end of the fiscal year:

a) Based on actual revenue generated during the year, the enterprise determines the difference between the amount payable as notified by the Fund and the amount payable determined by the enterprise for accounting purposes:

- If the amount payable as notified by the Fund is less than the amount payable determined by the enterprise, then the additional amount payable is recorded:

Debit Account 642 - Administrative Expenses (Detailed Level 2 Account - Contribution to the Fund)

Credit Account 338 - Other Payables and Due Payments (Detailed Level 2 Account - Due to the Fund)

- If the amount payable as notified by the Fund is more than the amount payable determined by the enterprise, then reduce the amount payable (recorded negatively):

Debit Account 642 - Administrative Expenses (Detailed Level 2 Account - Contribution to the Fund)

Credit Account 338 - Other Payables and Due Payments (Detailed Level 2 Account - Due to the Fund)

b) When transferring the additional amount payable to the Fund's account, the accounting entry is made as in item b of section 4.2.1.

c) If the enterprise has overpaid the Fund, the excess amount is deducted from the amount payable in the next period; if the excess amount is refunded (if any), record:

Debit Accounts 111, 112

Credit Account 338 - Other Payables and Due Payments (Detailed Level 2 Account - Due to the Fund).

4.2.3. At the time the Fund completes the settlement with enterprises:

a) If the settlement is completed before the enterprise issues its financial statements: If there is a difference between the amount payable determined by the enterprise and the amount payable determined by the Fund, the accountant makes similar adjusting entries as in section 4.2.2.

b) If the settlement is completed after the enterprise issues its financial statements: If there is a difference between the amount payable determined by the enterprise and the amount payable determined by the Fund, the accountant makes the following adjusting entries:

- If the amount payable determined by the enterprise is less than the amount payable determined by the Fund, the difference is adjusted to increase the amount payable, recorded:

Increase the beginning-year credit balance of Account 338 - Other Payables and Due Payments (Detailed Level 2 Account - Due to the Fund).

Decrease the beginning-year credit balance of Account 333 - Taxes and Other State Payments (recorded negatively).

Decrease the beginning-year credit balance of Account 421 - Undistributed Profits (4211 - Last Year's Profit).

- If the amount payable determined by the enterprise is more than the amount payable determined by the Fund, the difference is adjusted to decrease the amount payable, recorded:

Decrease the beginning-year credit balance of Account 338 - Other Payables and Due Payments (Detailed Level 2 Account - Due to the Fund) (recorded negatively).

Increase the beginning-year credit balance of Account 333 - Taxes and Other State Payments.

Increase the beginning-year credit balance of Account 421 - Undistributed Profits (Account 4211 - Last Year's Profit).

c) When additional payment is required, refund is made, or retention is held to offset the amount due for the next accounting period, the journal entries shall be made as specified in paragraphs b and c of Clause 4.2.2.

III. IMPLEMENTATION

This Circular shall take effect fifteen days after its publication in the Official Gazette.

During the implementation process, if there are any difficulties, please promptly reflect them to the Ministry of Finance for research and resolution./.