Joint Circular No. 12/2016/TTLT-BKHCN-BTC guiding the contents of expenses and management of the Science and Technology Development Fund of enterprises

JOINT CIRCULAR

HChapterFUNCTIONS, DUTIES, POWERS, ORGANIZATIONAL STRUCTURE, OPERATIONAL REGULATIONS, AND RELATIONSHIPS OF MANAGEMENT BOARDS; DUTIES, POWERS OF THE CHAIRPERSON, VICE CHAIRPERSON (IF ANY), SECRETARY, AND MEMBERS OF MANAGEMENT BOARDSon Content and Management

of the Science and Technology Development Fund of Enterprises

________________________

Pursuant to the Law on Enterprise Income Tax No. 14/2008/QH12 dated June 3, 2008, and the Law Amending and Supplementing Certain Articles of the Law on Enterprise Income Tax No. 3/QH13 dated June 19, 2013No. Pursuant to the Law on Science and Technology No. 29/2013/QH13 dated June 18, 2013;, amended and supplemented by Decree No. 109/2025/NĐ-CP and Decree No. 193/2025/NĐ-CPPursuant to the Law on Public Investment dated November 29, 2024;No. Pursuant to Decree No. 95/2014/ND-CP dated October 17, 2014 of the Government on Investment and Financial Mechanism for Scientific and Technological Activities;No. 32/201Pursuant to Decree No. 218/2013/ND-CP dated December 26, 2013 of the Government on Guidance and Direction;1Pursuant to Decree No. 20/2013/ND-CP dated February 26, 2013 of the Government on Functions, Tasks, and Organizational Structure of the Ministry of Science and Technology;;

Pursuant to Decree No. 215/2013/ND-CP dated December 23, 2013 of the Government on Functions, Tasks, and Organizational Structure of the Ministry of Finance;No. The Minister of Science and Technology and the Minister of Finance jointly issue this Circular guiding on the content and management of the Science and Technology Development Fund of Enterprises.1Article 1. Scope of Regulation: This Circular guides on the content and management of the Science and Technology Development Fund of Enterprises (hereinafter referred to as the Fund).

Pursuant to DecreeNo. Article 2. Applicability: All enterprises established in accordance with the law (hereinafter referred to as enterprises), state agencies, organizations, and other individuals related to the matter.policies 1. "Science and technology regulations of enterprises" are regulations established by enterprises including main contents such as determining tasks, organizing implementation, and evaluating acceptance of scientific and technological tasks carried out by enterprises. The science and technology regulations of enterprises are guided by Model No. 01 attached to this Circular.No.2. "Organizations and domestic and foreign enterprises conducting research cooperation" are organizations and enterprises established in accordance with the law and having functions, tasks, and research and production capabilities suitable for the specialized field requiring research cooperation.

3. "Domestic and foreign individuals conducting research cooperation" are individuals with qualifications and research capabilities in science, or qualifications and professional capabilities in the field of technology, or financial resources.i Article 3. Forms of Organization of the FundFUNCTIONS, DUTIES, POWERS, ORGANIZATIONAL STRUCTURE, OPERATIONAL REGULATIONS, AND RELATIONSHIPS OF MANAGEMENT BOARDS; DUTIES, POWERS OF THE CHAIRPERSON, VICE CHAIRPERSON (IF ANY), SECRETARY, AND MEMBERS OF MANAGEMENT BOARDSManaged by the central government.No. 1. The Fund may be organized under one of the following two forms:policies a) Establishing an organization without legal personality and directly subordinate to the enterprise.

b) Not establishing a Fund organization and having enterprise staff concurrently perform the activities.onThe Director of the Office, Heads of Payment Department, Heads of units under the State Bank of Vietnam; credit institutions, foreign bank branches, payment switching organizations, electronic transaction settlement organizations are responsible for implementing this Circular.of the Government stipulating functions, tasks, powers, and organizational structure of the Ministry of Home Affairs2. The form of organization of the Fund shall be decided by the competent authority of the enterprise.

3. When an enterprise establishes a Fund according to one of the two forms prescribed in Clause 1 of this Article, the enterprise shall submit the Decision on Establishment of the Fund to the Department of Science and Technology of the province or centrally-administered city where the enterprise's headquarters is located within thirty days from the date of the decision to establish the Fund.onState Property.

The enterprise shall submit the enterprise's science and technology regulations, fund expenditure regulations to the tax authority where the enterprise's headquarters is located at the same time as submitting the report on the extraction and use of the Fund in the first period of extraction.FUNCTIONS, DUTIES, POWERS, ORGANIZATIONAL STRUCTURE, OPERATIONAL REGULATIONS, AND RELATIONSHIPS OF MANAGEMENT BOARDS; DUTIES, POWERS OF THE CHAIRPERSON, VICE CHAIRPERSON (IF ANY), SECRETARY, AND MEMBERS OF MANAGEMENT BOARDSN ||| concerning the content of expenditure and management of the Science and Technology Development Fund of enterprises.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation and Applicability

1. Scope of Regulation: This Circular guides on the content of expenditure and management of the Science and Technology Development Fund of enterprises (hereinafter referred to collectively as the Fund).

2. Applicability: Enterprises established in accordance with the provisions of the law (hereinafter referred to collectively as enterprises), state agencies, organizations, and other individuals related to the matter.

Article 2. Interpretation of Terms

In this Circular, the following terms are understood as follows:

1. "Science and technology regulations of enterprises" are regulations established by enterprises comprising main contents such as determining tasks, organizing implementation, and evaluating acceptance of science and technology tasks carried out by enterprises. The science and technology regulations of enterprises are guided by Model No. 01 attached to this Circular.

2. "Domestic and foreign organizations and enterprises implementing research cooperation" are organizations and enterprises established in accordance with the provisions of the law and having functions, tasks, research capabilities, and production capacity suitable for the specialized field requiring research cooperation.

3. "Domestic and foreign individuals implementing research cooperation" are individuals possessing scientific research qualifications and capabilities, or having professional qualifications and capabilities in the field of technology, or having financial resources.

Article 3. Forms of Organization of the Fund

1. The Fund may be organized under one of the following two forms:

a) Establishing an organization without legal personality and directly subordinate to the enterprise.

b) Not establishing a Fund organization and having enterprise staff concurrently carry out activities.

2. The form of organization of the Fund shall be decided by the competent authority of the enterprise.

3. When an enterprise establishes the Fund according to one of the two forms prescribed in Clause 1 of this Article, the enterprise shall send the Decision on establishment of the Fund to the Department of Science and Technology of the province or centrally administered city where the enterprise's headquarters is located within thirty days from the date of the decision to establish the Fund.

The enterprise shall submit the science and technology regulations of the enterprise, the expenditure and utilization regulations of the Fund to the tax authority where the enterprise's headquarters is located at the same time as submitting the report on the allocation and utilization of the Fund in the first period of allocation.

Article 4. Sources for Establishing the Fund

The Fund shall be formed from the following sources:

1. Taxable income for corporate income tax in the tax period, specifically:

a) From 3% to 10% of taxable corporate income in the tax period to establish the Fund for state-owned enterprises. The specific ratio shall be based on the enterprise's capacity and need for using capital for scientific and technological activities;

b) To decide the specific ratio but not exceeding 10% of taxable corporate income in the tax period for enterprises not falling under Point a Clause 1 of this Article;

c) Taxable corporate income shall be determined according to the provisions of the Corporate Income Tax Law and guiding documents.

2. Transfer from the Science and Technology Development Fund of the holding company or parent company down to the Science and Technology Development Fund of subsidiaries or member enterprises; transfer from the Science and Technology Development Fund of subsidiaries or member enterprises up to the Science and Technology Development Fund of the holding company or parent company.

The transfer and the ratio of transfer between the Science and Technology Development Funds of the holding company or parent company and those of subsidiaries or member enterprises, and vice versa, shall be decided by the Chairman of the Board of Directors, the Chairman of the Board of Members, or the General Director, Director (the legal representative of the enterprise) based on the fund contribution ratio, investment needs for scientific and technological activities at subsidiaries or member enterprises, and the development plan for scientific and technological activities of the entire system.

The transfer of the Fund stipulated in this Clause shall only apply to subsidiaries or member enterprises where the parent company holds 100% of the capital.

The transfer of the Fund stipulated in this Clause shall not apply to the following cases:

- Enterprises with foreign investment transferring to their parent companies abroad;

- Parent companies in Vietnam transferring to their subsidiaries abroad.

Article 5. Responsibilities and Authorities of Organizations and Individuals Managing the Fund

1. Utilize the Fund established by member enterprises, subsidiaries, or affiliated companies in accordance with regulations and effectively.

2. Develop and submit to the competent authority of the enterprise for approval the annual financial revenue and expenditure plan of the Fund, the enterprise's scientific and technological activity plan (including the scientific and technological activities of member enterprises and subsidiaries if it is the Fund of a holding company or parent company), and the management expenses of the Fund.

3. Manage and utilize the Fund to implement the enterprise's scientific and technological activities (including the scientific and technological activities of member enterprises and subsidiaries if it is the Fund of a holding company or parent company) according to the approved scientific and technological activity plan.

4. Inspect and organize the evaluation of the implementation of scientific and technological activities funded by the Fund.

5. Develop and submit to the competent authority of the enterprise for decision-making the transfer of resources between Funds as prescribed in Clause 2 of Article 4 of this Circular.

6. Develop and submit to the highest authority of the enterprise for decision-making the entrustment or acceptance of entrustment of other enterprises' Science and Technology Development Funds to carry out scientific and technological tasks consistent with the enterprise's scientific and technological activities.

7. Develop and submit to the competent authority of the enterprise the contents of activities supporting the development of scientific and technological activities of the enterprise.

8. Coordinate with state management agencies in inspecting and supervising the establishment, organization, management, and utilization of the Fund in accordance with the law.

9. Implement reports on the allocation, transfer, and utilization of the Fund, and send them to the tax authority and the Department of Science and Technology where the enterprise's main office is located.

Article 6. Scientific and technological council of the enterprise

1. Based on the nature and scale of the scientific and technological tasks of the enterprise as stipulated in the Enterprise's Scientific and Technological Regulations, the Chairman of the Board of Directors, the Chairman of the Board of Members, or the General Director, Director (the legal representative of the enterprise) shall decide to establish the Scientific and Technological Council of the enterprise to evaluate, select, and review the content and budget of the scientific and technological tasks.

2. Members of the Scientific and Technological Council of the enterprise are individuals with experience in business management, finance, and expertise related to the field of science and technology proposed to be resolved by the scientific and technological tasks.

The composition of the Scientific and Technological Council of the enterprise for evaluation, selection, or acceptance of scientific and technological tasks must ensure that at least 50% of the members do not work at the main agency responsible for the task, including at least two members who are reputable experts with appropriate qualifications and deep understanding of the assigned scientific and technological fields, while the remaining members are business managers.

In cases where members of the Scientific and Technological Council of the enterprise lack capacity, the enterprise may hire experts to participate in the evaluation.

The number of members of the Scientific and Technological Council is determined based on the scale and complexity of the scientific and technological tasks, but must be at least five members.

3. Each Scientific and Technological Council of the enterprise can advise on one or several scientific and technological tasks (in cases where the scientific and technological tasks are in the same field).

4. The principle of operation of the Scientific and Technological Council of the enterprise is transparent, independent, and objective. Opinions of the council members and recommendations of the council must be documented in writing. Council members must be responsible for their advisory opinions.

5. The process of evaluating, selecting, reviewing the content and budget, and accepting scientific and technological tasks is regulated in the Enterprise's Scientific and Technological Regulations.

6. The results of implementing scientific and technological tasks of the enterprise are organized by the Scientific and Technological Council of the enterprise to assess and accept according to the regulations stipulated in the Enterprise's Scientific and Technological Regulations.

Chapter II

CONTENT OF THE FUND

Article 7. Implementation of scientific and technological tasks

The Fund's capital is used to implement the following scientific and technological tasks:

1. Implementing national, ministerial, and provincial-level scientific and technological tasks.

The Fund arranges corresponding funds according to the progress of implementing national, ministerial, and provincial-level scientific and technological tasks based on research contracts and approved task descriptions.

Clause 2. Implement scientific and technological tasks of the enterprise.

a) Scientific and technological tasks of enterprises implemented according to the Enterprise's Scientific and Technological Regulations.

Scientific and technological tasks that potentially affect national interests, defense, security, environment, human lives, and health, before being applied to production and daily life, must be carried out in accordance with Circular No. 02/2015/TT-BKHCN dated March 6, 2015, issued by the Minister of Science and Technology, regarding the assessment and review of the results of implementing scientific and technological tasks without state budget funding.

b) Funds for implementing scientific and technological tasks are allocated for contents reviewed by the Enterprise's Scientific and Technological Council and as stipulated in the Fund's Expenditure and Usage Regulations.

c) Budget allocation for scientific and technological tasks of enterprises is established, decided, and promulgated by the competent authority of the enterprise and is responsible under the law.

d) Cost allocation to the final product or partial cost allocation for scientific and technological tasks is defined in the Enterprise's Scientific and Technological Regulations and is applicable according to Joint Circular No. 27/2015/TTLT-BKHCN-BTC dated December 30, 2015, issued by the Ministry of Science and Technology and the Ministry of Finance, regarding cost allocation for implementing scientific and technological tasks using state budget funds.

Article 8. Support for the development of science and technology of enterprises

1. Equipping material and technical infrastructure for the scientific and technological activities of enterprises: Establishing research and development organizations, analytical centers, testing, trial, certification, calibration, product testing centers; enterprise information infrastructure, databases, and statistics on scientific and technological activities; expenses for maintenance, repair, and servicing of material and technical infrastructure and equipment for scientific and technological activities; other expenses for the development of science and technology; quality management systems of enterprises.

The investment in establishing research and development organizations, analytical centers, testing, trial, certification, calibration, product testing centers; enterprise information infrastructure, databases, and statistics on scientific and technological activities shall be carried out according to the procedures and formalities of investment projects and approved by the competent authority of the enterprise in accordance with regulations.

2. Purchasing rights to use and ownership: Trade secrets; technical knowledge about technology transferred in the form of technological solutions, technological processes, technical designs, technical solutions, formulas, technical parameters, drawings, technical diagrams, computer programs, data information; production rationalization solutions, technological innovation; patents for inventions, utility models; plant varieties; industrial designs; initiatives; research results, products related both domestically and internationally to serve the scientific and technological activities of enterprises;

Technologies listed in the Restricted Technology Transfer Catalogue may only be implemented after obtaining permission from the competent state agency for technology transfer.

The purchase of rights to use and ownership shall be based on one of the following grounds:

a) A description of the scientific and technological tasks selected and appraised by the enterprise's Scientific and Technological Council regarding content and budget in accordance with the Enterprise's Scientific and Technological Regulations;

b) Purchase or transfer contracts between the enterprise and individuals or organizations holding the rights to use and ownership.

3. Purchasing machinery and equipment accompanied by technology transfer objects as stipulated in the Law on Technology Transfer (except for technologies listed in the Restricted Technology Transfer Catalogue which can only be implemented after obtaining permission from the competent state agency for technology transfer) to replace part or all of the existing technology with more advanced technology in order to improve productivity, product quality, or develop new products of the enterprise.

Investment in purchasing machinery and equipment accompanied by technology transfer objects shall be carried out according to the procedures and formalities of investment projects and approved by the competent authority of the enterprise in accordance with regulations.

4. Paying remuneration, hiring experts, or contracting with scientific and technological organizations to carry out the scientific and technological activities of the enterprise.

5. Expenses for initiatives.

a) Initiatives recognized by agencies or organizations in accordance with Decree No. 13/2012/NĐ-CP dated March 2, 2012, issued by the Government on the Initiative Charter and relevant laws.

b) In cases where enterprises use funds from the Fund, based on the Enterprise's Scientific and Technological Regulations, labor contracts, or collective labor agreements, the competent authority of the enterprise decides the amount of payment for recognized initiative activities.

c) The content of expenses for initiative activities shall be carried out in accordance with Article 16 of Decree No. 13/2012/NĐ-CP dated March 2, 2012, issued by the Government on the Initiative Charter.

6. Expenses for evaluation, testing, standardization; costs for promoting and commercializing new products and technologies; registering intellectual property rights.

7. Research project expenses, new product development research expenses where the new products are not sold or the projects are not continued due to objective reasons and determined by the enterprise's Scientific and Technological Council.

Article 9. Training of scientific and technological human resources for enterprises

1. The training activities of scientific and technological human resources for enterprises shall be carried out according to the following training and capacity building contents and forms:

a) Degree training at higher education institutions;

b) Research group training;

c) Specialist training in priority and key fields of science and technology, and new fields of science and technology;

d) Postgraduate research;

đ) Professional upgrading in terms of expertise, knowledge, and management skills in science and technology.

2. Training and capacity building shall be implemented through short-term and long-term forms both domestically and internationally; internships and work placements at reputable domestic and international scientific and technological organizations; participation in the implementation of scientific and technological tasks.

3. Enterprises have the responsibility to develop annual plans for training scientific and technological human resources and budget estimates for such training activities, which must be approved by the competent authority of the enterprise.

4. The expenditure for training activities of scientific and technological human resources shall be regulated in the Financial Regulations and Usage Rules of the Fund.

5. The expenditure standards for training activities of scientific and technological human resources shall apply the current regulations of the State on expenditure standards for training. For expenditure items that do not have established standards issued by authorized state agencies, the competent authority of the enterprise shall establish and issue expenditure standards applicable to the enterprise for implementation.

Article 10. Scientific and Technological Cooperation Activities

1. Cooperation activities in scientific and technological matters with domestic and foreign organizations, individuals, and enterprises include surveying, partner search, and technology needs both domestically and internationally; joint research tasks encouraged and prioritized by the state in various fields of science and technology.

2. Forms of scientific and technological cooperation

a) Depending on the fields of scientific and technological cooperation, enterprises cooperate with domestic and foreign organizations, individuals, and enterprises in scientific and technological matters in the following forms:

- Commissioning scientific research to research and development organizations under scientific research and technology development contracts;

- Technology transfer under technology transfer contracts;

- Training to enhance scientific and technological levels and capabilities under training contracts;

- Hiring consultancy for technological innovation under consultancy contracts;

- Joint scientific and technological research aimed at solving specific scientific and technological issues or in fields of science and technology within industry clusters and production chains that provide competitive advantages for enterprises;

b) For the forms of scientific and technological cooperation mentioned in Point a Clause 2 of this Article, enterprises are responsible for developing descriptions of scientific and technological tasks. These scientific and technological tasks shall follow the procedures for selection, content and funding review, and final evaluation as stipulated in the Enterprise's Scientific and Technological Regulations.

3. Encouraged and Prioritized Scientific and Technological Cooperation Activities

Research and implementation activities in science and technology in fields prioritized by the state, such as high-tech fields prioritized for investment and development and high-tech products encouraged for development according to Decision No. 66/2014/QĐ-TTg dated November 25, 2014 of the Prime Minister.

Enterprises conducting overseas partner surveys, technology needs searches, and other activities prioritized according to Decision No. 1069/QĐ-TTg dated July 4, 2014 of the Prime Minister on approving the program for seeking and transferring foreign technologies until 2020 will receive state financial support as prescribed;

Enterprises undertaking joint research tasks with foreign countries prioritized and supported financially according to Decision No. 538/QĐ-TTg dated April 16, 2014 of the Prime Minister on approving the bilateral and multilateral scientific and technological research cooperation program.

Article 11. Management Activities of the Fund

1. The contents of expenditures serving the management activities of the Fund include:

a) Salaries and social insurance, unemployment insurance, health insurance contributions, and other contributions as prescribed;

b) Allowances for part-time staff;

c) Rent for office space (if applicable);

d) Expenditures for purchasing and repairing office supplies and assets serving the operations of the Fund;

đ) Expenditures for public service fees serving the operations of the Fund;

e) Expenditures for the activities of the Science and Technology Council of the enterprise;

g) Expenses for hiring experts to evaluate for the Science and Technology Council of the enterprise;

h) Travel expenses incurred for performing tasks of the Fund;

i) Other related expenditures for the operations of the Fund.

2. The ceiling on expenditures for management activities of the Fund and the ratio of expenditures for management activities of the Fund shall be decided by the competent authority of the enterprise.

Chapter III

MANAGEMENT OF THE FUND

Article 12. Financial Management of the Fund

1. The competent authority of the enterprise shall issue regulations on the management and utilization of assets and finances, expenditure ceilings of the Fund; approve the ratio of expenditures for management activities of the Fund, endorse financial plans and reports on the establishment, transfer, and utilization of the Fund annually.

2. The Fund can only be used for scientific and technological investment activities of the enterprise as stipulated in Articles 7, 8, 9, 10, and 11 of this Circular. The enterprise may not use the Fund's capital for investments in other activities unrelated to the development of science and technology of the enterprise or duplicate expenditures for the budget items of scientific and technological tasks already funded by other sources.

3. During the course of operation, if a holding company or parent company needs to use the Fund from its subsidiaries or member companies, and vice versa, the holding company or parent company may decide to transfer the Fund's resources to meet the capital requirements for the entire system's scientific and technological activities. The decision must clearly state the year of the Fund's establishment being transferred.

4. All expenditures from the Fund must have complete invoices and supporting documents as prescribed.

5. Expenditures guaranteed from the enterprise’s science and technology development fund shall not be recorded as deductible expenses when determining taxable income for the tax period.

6. In any year, if the enterprise has a need to use the Fund for scientific and technological activities exceeding the current balance, the remaining difference between actual expenditures and the amount already allocated from the Fund can either be taken from the subsequent years' allocations to make up the shortfall or included in deductible expenses when determining corporate income tax for the tax period.

Article 13. Management of Assets Formed from the Fund

1. For fixed assets mentioned in Clauses 1, 2, and 3 of Article 8 of this Circular, the enterprise must establish a fixed asset record to manage according to the Ministry of Finance's regulations and does not need to depreciate fixed assets. For other assets, the enterprise must organize management and tracking according to regulations, ensuring proper use.

2. If fixed assets invested with Fund capital undergo repair or upgrade, the enterprise continues to use the science and technology development fund to cover these costs.

3. If fixed assets invested with Fund capital have not yet been fully depreciated and are transferred for business operations, the remaining value of the fixed assets must be recorded as other income, and the remaining value of the fixed assets will be depreciated and included in expenses when determining corporate income tax.

4. If fixed assets formed from the results of implementing scientific and technological tasks of the enterprise as stipulated in Clause 2 of Article 7 of this Circular are transferred for business operations, their value must be recorded as other income, and the value of those assets will be depreciated and included in expenses when determining corporate income tax.

5. If fixed assets mentioned in Clauses 1, 2, and 3 of Article 8 are transferred according to Clause 2 of Article 4 of this Circular, the enterprise must determine the remaining value to adjust the increase or decrease in the science and technology fund when transferring assets.

6. Liquidation of assets serving scientific and technological activities of the enterprise shall be carried out in accordance with current regulations.

Article 14. Handling of the Fund when the enterprise does not use, uses insufficiently, or uses incorrectly for its Purpose

1. The amount of money already used from the Fund is determined by the total amount of money that has been settled, the amount of money temporarily advanced and has complete supporting documents but lacks the conditions to settle for implementing the activities of the Fund according to the contents stipulated in Articles 7, 8, 9, 10, and 11 of this Circular and the amount of money transferred out from the Fund's capital as stipulated in Clause 2, Article 4 of this Circular.

2. The level of establishment and use of the Fund is calculated based on the principle that funds contributed earlier are used first.

3. Within five years from the date of establishment, if the total amount of money used and the amount of money deposited back to the National Science and Technology Development Fund or the Science and Technology Development Fund of the ministries in charge, provinces, and cities where the enterprise registers to pay taxes does not reach 70% of the amount of the Fund established, including any transfers (if any), then the enterprise must pay to the state budget corporate income tax on the remaining amount of the Fund and the interest generated from that corporate income tax.

The corporate income tax rate used to calculate the recovered tax is the rate applicable to the enterprise during the period of establishing the Fund.

The interest rate for calculating interest on the recovered tax based on the unused portion of the Fund is the government bond interest rate for a one-year term (or treasury bill interest rate for a one-year term) applied at the time of recovery, and the interest calculation period is two years.

4. During the period of establishment, if the enterprise uses the Fund incorrectly for its Purpose, the enterprise must pay to the state budget corporate income tax on the income portion that was established for the Fund but used incorrectly for its Purpose and the interest generated from that corporate income tax.

The corporate income tax rate used to calculate the recovered tax is the rate applicable to the enterprise during the period of establishing the Fund.

The interest rate for calculating interest on the recovered tax based on the portion of the Fund used incorrectly for its Purpose is the late payment surcharge rate prescribed by the Law on Tax Administration and guiding documents. The interest calculation period is the duration from the date of the violation to the date of payment into the state budget.

5. The enterprise shall not deduct the interest arising from the corporate income tax payable from its taxable income.

6. During the period of establishment, if the enterprise is within the scope of tax incentives (applying preferential tax rates, being exempted from tax, or having tax reductions), the amount of tax recovered due to the Fund not being used, using less than 70%, or being used incorrectly for its Purpose is determined based on the income that has been subject to tax incentives at the time of establishing the Fund and interest is calculated as prescribed.

7. Depending on the type of enterprise, the amount of the Fund established when the enterprise does not use, uses less than 70% within five years from the year of establishment, or uses incorrectly for its Purpose will be handled as follows:

a) For State-owned enterprises

- State-owned enterprises establish the Fund according to Point a, Clause 1, Article 4 of this Circular. If the Fund is not used, uses less than 70% of the amount established, including any transfers (if any), they must deposit a portion of the unused or insufficiently used Fund back to the National Science and Technology Development Fund or the Science and Technology Development Fund of the ministries in charge, provinces, and cities where the enterprise registers to pay taxes.

The amount deposited back to the National Science and Technology Development Fund or the Science and Technology Development Fund of the ministries in charge, provinces, and cities is at least 20% of the unused or insufficiently used Fund.

- If the total amount of money used and the amount of money deposited back to the National Science and Technology Development Fund or the Science and Technology Development Fund of the ministries in charge, provinces, and cities does not reach 70% of the amount established, including any transfers (if any), the enterprise must pay to the state budget corporate income tax on the remaining amount of the Fund and the interest generated from that corporate income tax.

- After depositing the amounts as prescribed above, the remaining amount of the Fund established can be used according to the regulations.

* Example 1:

State Corporation X (State-owned enterprise), in the report on establishing and using the Science and Technology Development Fund in 2021, has the following data:

In 2016, State Corporation X established a science and technology fund for the enterprise at 10%, which is 20 billion VND. By 2021, State Corporation X had only used the Fund for scientific and technological activities to the tune of 10 billion VND (accounting for 50% of the Fund established). The amount of the Fund that was not used up to 70% is 10 billion VND (20 billion - 10 billion) and must be partially deposited back to the National Science and Technology Development Fund or the Science and Technology Development Fund of the ministries in charge, provinces, and cities where the enterprise registers to pay taxes.

- Assuming State Corporation X deposits 40% of the unused Fund, which is 4 billion VND (40% x 10 billion VND), to the National Science and Technology Development Fund. Thus, the total amount State Corporation X has used and deposited back to the National Science and Technology Development Fund is 14 billion VND (10 billion + 4 billion), accounting for 70% of the Fund established, so the remaining amount of the Fund established is 6 billion VND (20 billion - 14 billion), which the enterprise does not need to pay corporate income tax and can use according to the regulations.

- Assuming State Corporation X deposits 20% of the unused Fund, which is 2 billion VND (20% x 10 billion VND), to the National Science and Technology Development Fund. Thus, the total amount State Corporation X has used and deposited back to the National Science and Technology Development Fund is 12 billion VND (10 billion + 2 billion), accounting for 60% of the Fund established (less than 70% of the Fund established), so State Corporation X must pay corporate income tax on the remaining 8 billion VND (20 billion - 12 billion) of the Fund and the interest generated from that corporate income tax as follows:

The corporate income tax payable due to the Fund not being used up to 70% (the corporate income tax rate during the period of establishing the Fund in 2016 is 20%) is:

8 billion VND x 20% = 1.6 billion VND.

The interest generated from the aforementioned corporate income tax is (assuming the government bond interest rate for a one-year term is 12%) is:

1,6 billion VND x 12% x 2 years = 384 million VND.

- In cases where state-owned enterprises use the Fund for purposes other than those intended, such enterprises must pay to the State budget the corporate income tax calculated on the amount of income set aside in the Fund that was used for purposes other than those intended, and the interest accrued from such corporate income tax.

b) For other enterprises

- Other enterprises (excluding state-owned enterprises) have the right to contribute to science and technology development funds of provinces and cities where they are registered for tax payment.

- In cases where enterprises fail to contribute to the science and technology development fund of the province or city, or contribute but the Fund is not utilized, or less than 70% of the Fund is utilized (including contributions to the science and technology development fund of the province or city if applicable), or the Fund is used for purposes other than those intended, such enterprises must pay to the State budget the corporate income tax calculated on the amount of income set aside in the Fund that was not utilized, utilized less than 70%, or used for purposes other than those intended, and the interest accrued from such corporate income tax.

* Example 2 (in the case where the enterprise does not utilize the entire Fund):

Company A, in its report on setting up and using the science and technology development fund in 2021, has the following data:

In 2016, Company A set up a science and technology fund for the enterprise at 10%, which amounts to 2 billion VND. By 2021, Company A had only used the Fund for scientific and technological activities, totaling 1.2 billion VND (accounting for 60% of the Fund established). The amount of the Fund that was not utilized to 70% is 0.8 billion VND (2 billion VND - 1.2 billion VND).

+ Assuming Company A contributes 200 million VND (0.2 billion VND) to the provincial science and technology development fund. Therefore, the total amount that Company A has used and contributed to the provincial science and technology development fund is 1.4 billion VND (1.2 billion VND + 0.2 billion VND), accounting for 70% of the Fund established, so the remaining amount of the Fund that Company A does not need to pay corporate income tax is 0.6 billion VND (2 billion VND - 1.4 billion VND).

+ Assuming Company A does not contribute to the provincial science and technology development fund, then Company A must pay corporate income tax on the 0.8 billion VND and the interest accrued from such corporate income tax as follows:

The amount of corporate income tax payable due to not utilizing 70% of the Fund (the corporate income tax rate during the period of establishing the Fund in 2016 was 20%) is:

0.8 billion VND x 20% = 160 million VND.

The interest accrued from the above corporate income tax is (assuming the annual interest rate on government bonds is 12%):

160 million VND x 12% x 2 years = 38.4 million VND.

* Example 3 (in the case where the enterprise uses the Fund for purposes other than those intended):

In 2016, Company B established a science and technology development fund of 800 million VND. By the end of 2016, the company had used 300 million VND from the Fund. Each year, the company has prepared reports on establishing and using the Fund. Assuming, on May 5, 2017, through inspection, the tax authority discovered that on December 31, 2016, the company had used 50 million VND from the Fund for purposes other than those intended and issued a record. On May 10, 2017, the company paid the fine into the State budget. The late payment interest rate according to the current regulations of the Law on Tax Administration is 0.03% per day.

In this case, the amount of tax and interest payable is determined as follows:

The amount of corporate income tax payable due to using the Fund for purposes other than those intended (the corporate income tax rate during the period of establishing the Fund in 2016 was 20%) is:

50 million VND x 20% = 10 million VND.

The number of days for calculating late payment interest: from December 31, 2016 to May 9, 2017 is 131 days.

The amount of interest payable (based on the late payment rate):

10 million VND x 0.03%/day x 131 days = 393,000 VND.

* Example 4 (in the case where the enterprise is enjoying preferential corporate income tax during the period of establishing the Fund):

Company C, in its report on establishing and using the science and technology development fund in 2021, has the following data:

In 2016, Company C established a science and technology fund for the enterprise at 10%, which amounts to 2 billion VND. By 2021, the company had only used the Fund for scientific and technological activities, totaling 1.2 billion VND (accounting for 60% of the Fund established). The amount of the Fund that was not utilized to 70% is 0.8 billion VND (2 billion VND - 1.2 billion VND).

Assuming at the time of establishing the Fund in 2016, the preferential corporate income tax rate applied to the company was 10%, and the company was eligible for a 50% reduction in the corporate income tax payable. Since the company did not utilize 70% of the Fund and did not contribute to the provincial science and technology development fund, the company must pay corporate income tax on the amount of the Fund that was not utilized and the interest accrued on such corporate income tax as follows:

The amount of corporate income tax payable due to not utilizing 70% of the Fund is:

0.8 billion VND x 10% x 50% = 40 million VND.

The interest accrued from the above corporate income tax is (assuming the annual interest rate on government bonds is 12%):

40 million VND x 12% x 2 years = 9.6 million VND.

* Example 5:

In 2016, Company D established a science and technology fund of 2 billion VND, and in 2017, the company established an additional fund of 2.5 billion VND. If by 2021, the company had used 1.8 billion VND for research, which is 90% of the amount of the fund established in 2016, the remaining balance of the fund from 2016 would be 0.2 billion VND (after using 90% of the amount established for scientific and technological activities of the company as stipulated), the company can continue to use it for scientific and technological activities within the enterprise in subsequent years without being subject to back taxes or interest penalties, but still must follow the principle of using before spending.

Assuming in 2022, the company does not use the fund for research, the unutilized portion of the fund established in 2017 (2.5 billion VND) will be subject to back taxes and interest penalties for late payment, while the remaining unspent portion of the fund established in 2016 (0.2 billion VND) will not be subject to back taxes or interest penalties.

8. For holding companies and parent companies - subsidiary companies that implement Fund transfers within their systems, the remaining Fund after transfer (of the transferring enterprise) and the received transferred Fund (of the receiving enterprise) shall be responsible for managing and using the Fund in accordance with the provisions of this Circular.

In the case where an enterprise receives a Fund Transfer but does not use it, uses less than 70% of the Fund (including the transferred amount) or uses it for purposes other than intended, the enterprise receiving the Fund Transfer must pay corporate income tax and interest to the State budget according to regulations. If the enterprise receiving the Fund Transfer is enjoying corporate income tax incentives at the time of the Fund establishment, the collected corporate income tax shall be handled as follows:

- For the amount of the Fund established at the enterprise receiving the Fund Transfer, the corporate income tax shall be determined based on the preferential tax rate applicable at the time of the Fund establishment of the enterprise receiving the Fund Transfer.

- For the amount received from another enterprise, the corporate income tax shall be determined based on the general corporate income tax rate applicable at the time of receiving the Fund Transfer.

The determination of the unused or improperly used Fund Transfer amount shall be allocated according to the ratio between the received Fund Transfer amount and the total Fund (including the transferred amount).

* Example 6:

In 2016, Company E extracted a science and technology fund totaling 4 billion VND and received a Fund Transfer of 1 billion VND from its subsidiary. The total Fund extracted in 2016 was 5 billion VND. By 2021, the company had only used 3 billion VND (60% of the extracted Fund) for science and technology activities. The amount of the Fund that was not used up to 70% is 2 billion VND (5 billion VND - 3 billion VND).

Assuming that Company E was applying a preferential corporate income tax rate of 10% at the time of 2016.

The determination of the corporate income tax for the portion not used up to 70% is as follows:

+ Corporate income tax for the part of the Fund established at the enterprise receiving the Fund Transfer that has not been used is:

2 billion VND x 4/5 x 10% = 160 million VND

+ Corporate income tax for the part of the Fund received by the enterprise that has not been used is:

2 billion VND x 1/5 x 20% = 80 million VND

The total corporate income tax payable due to not using up to 70% of the Fund is:

160 million VND + 80 million VND = 240 million VND

The interest accrued from the above corporate income tax is (assuming the annual interest rate on government bonds is 12%):

240 million VND x 12% x 2 years = 57.6 million VND.

Article 15. Requirements for Support from National, Ministry, and Local Science and Technology Development Funds

1. Enterprises that have contributed to the National, Ministry, and Local Science and Technology Development Funds as stipulated in Points a and b Clause 7 Article 14 of this Circular, when they have scientific and technological tasks requiring funding, have the right to request support from these development funds.

2. The National, Ministry, and Local Science and Technology Development Funds that have received the transfer are responsible for providing support with the transferred amount and prioritizing additional support within the capacity of the fund according to the budget of the scientific and technological task. The amount of support and additional support provided by the National, Ministry, and Local Science and Technology Development Funds to enterprises shall be managed and monitored according to the Charter of the National, Ministry, and Local Science and Technology Development Funds.

3. The procedure and formalities for enterprises to request support from the National, Ministry, and Local Science and Technology Development Funds are as follows:

a) Procedure:

- Enterprises that have contributed to the National, Ministry, and Local Science and Technology Development Funds as stipulated in Points a and b Clause 7 Article 14 of this Circular shall prepare and submit the application to the National, Ministry, and Local Science and Technology Development Funds;

- The National, Ministry, and Local Science and Technology Development Funds shall directly receive the application at their offices, the staff shall stamp the receipt, record the date of receipt, note the number of documents in the file, and enter it into the office's document register; or the application can be sent through postal service, the staff shall stamp the receipt date and enter it into the office's document register.

b) Method:

Submitting directly at the headquarters of the National, Ministry, and Local Science and Technology Development Funds or sending through the postal system;

c) Dossier components and quantity:

- Application contents: A letter requesting the National, Ministry, and Local Science and Technology Development Funds to provide financial support already paid into the Fund; Detailed explanation and budget for implementing the scientific and technological task;

- Number of dossiers: One set.

d) Time limit for processing: Not exceeding 45 working days from the date of receipt of the complete application for support (excluding the time for correcting and supplementing the application due to errors by the enterprise).

Article 16. Management of the Fund when there is a change in ownership form, merger, consolidation, division, or separation of enterprises

1. In case an enterprise undergoing operation experiences a change in ownership form, merger, or consolidation, the newly established enterprise from such changes shall inherit and be responsible for managing and using the Fund prior to the conversion, merger, or consolidation.

2. If an operating enterprise has a remaining unused Fund when implementing division or separation, the newly established enterprise from such division or separation shall inherit and be responsible for managing and using the Fund prior to the division or separation. The allocation of the Fund shall be decided by the enterprise and reported to the tax authority before implementation.

Article 17. Reporting on the Establishment, Transfer, and Use of the Fund

Annually, enterprises must prepare a Report on the Establishment, Transfer, and Use of the Fund according to Model No. 02 of the Appendix issued together with this Circular.

In cases where holding companies or parent companies have a Fund formed from the transfer of the Fund from subsidiary or member enterprises, or vice versa, the receiving unit must report the situation of receiving the transfer and using the transferred Fund amount. The report must clearly state the year of establishment of the source Fund being transferred and received.

The Report on the Establishment, Transfer, and Use of the Fund must be submitted to relevant authorities as stipulated in Clause 1, Article 11 of Decree No. 95/2014/NĐ-CP dated October 17, 2014 of the Government regarding investment and financial mechanisms for scientific and technological activities. The deadline for submitting the report is the same as the deadline for submitting the final income tax return of the enterprise.

Chapter IV

IMPLEMENTATION

Article 18. Effectiveness and Implementation

1. This Circular takes effect from September 1, 2016, and applies to the establishment, management, and use of the scientific and technological Fund at enterprises starting from the 2016 corporate income tax period.

2. The following documents become invalid from the date this Circular takes effect:

a) Decision No. 36/2007/QĐ-BTC dated May 16, 2007, of the Ministry of Finance on the issuance of the Regulations on the Organization and Operation of the Science and Technology Development Fund of organizations, individuals, and enterprises;

b) Circular No. 15/2011/TT-BTC dated February 9, 2011, of the Ministry of Finance guiding the establishment, organization, operation, management, and use of the Science and Technology Development Fund of enterprises;

c) Circular No. 105/2012/TT-BTC dated June 25, 2012, of the Ministry of Finance amending and supplementing Circular No. 15/2011/TT-BTC dated February 9, 2011, of the Ministry of Finance guiding the establishment, organization, operation, management, and use of the Science and Technology Development Fund of enterprises;

d) Article 10 of Circular No. 78/2014/TT-BTC dated June 18, 2014, of the Ministry of Finance guiding Decree No. 218/2013/NĐ-CP dated December 26, 2013, of the Government on the provisions and implementation of the Corporate Income Tax Law.

đ) Model No. 03-6/TNDN issued together with Circular No. 156/2013/TT-BTC dated November 6, 2013, of the Ministry of Finance guiding the implementation of certain Articles of the Tax Administration Law; the Law Amending and Supplementing Certain Articles of the Tax Administration Law and Decree No. 83/2013/NĐ-CP dated July 22, 2013, of the Government.

3. For enterprises that have established and contributed to the Fund according to previous legal regulations, from the date this Circular takes effect, the contents of expenditures and the management of the Fund shall be implemented in accordance with the provisions of this Circular.

4. In cases where legal regulations cited in this Circular are amended, supplemented, or replaced by new legal regulations, they shall be applied according to the new regulations.

5. During the implementation process, if there are difficulties, organizations and individuals are advised to reflect them to the Ministry of Science and Technology and the Ministry of Finance for timely guidance and resolution./.