Decree No. 122/2017/ND-CP stipulates certain special contents regarding the financial management mechanism and assessment of operational effectiveness for lottery businesses; Securities Trading Corporation and Vietnam Securities Depository.

DECREE

Providing certain special contents on the financial management mechanism and assessment of operational effectiveness for lottery businesses; the Stock Exchange and the Securities Depository Center of Vietnammechanism for financial management and assessment of the effectiveness of operations for lottery businesses; Securities Exchange

and Vietnam Securities Depository

investment in production and business activities at the enterprise on November 26, 2014;SECURITIES, SECURITIES DEPOSITORY

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Pursuant to the Law on Government Organization dated June 19, 2015;

Pursuant to the Enterprise Law dated November 26, 2014;

Pursuant to the Law on Management and Use of State Capital Invested in Production and Business at Enterprises dated November 26, 2014;investment in production and business at the enterprise on November 26, 2014;

Pursuant to the Securities Law dated June 29, 2006 and the Law Amending and Supplementing Certain Articles of the Securities Law dated November 24, 2010;

At the proposal of the Minister of Finance;

The Government issues this Decree providing certain special contents on the financial management mechanism and assessment of operational effectiveness for lottery businesses; the Stock Exchange and the Securities Depository Center of Vietnam. 

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Decree provides certain special contents on the financial management mechanism and assessment of operational effectiveness for lottery businesses; the Stock Exchange and the Securities Depository Center of Vietnam.

Article 2. Applicability

1. Lottery business enterprises include Limited Liability Companies for Lottery Products established by People's Committees of provinces and centrally-administered cities and the Limited Liability Company for Vietnam Lottery (hereinafter referred to as Vietlott).

2. The Stock Exchange and the Securities Depository Center of Vietnam.

3. The representative bodies of owners of lottery business enterprises; the Stock Exchange and the Securities Depository Center of Vietnam.

4. Other organizations and individuals related to the financial management mechanism and assessment of operational effectiveness of lottery business enterprises; the Stock Exchange and the Securities Depository Center of Vietnam.

Chapter II

SPECIAL PROVISIONS ON FINANCE

FOR LOTTERY BUSINESS ENTERPRISES

Article 3. Investment outside the enterprise

Lottery business enterprises may only invest outside in industries directly related to their lottery business activities.

Article 4. Revenue of lottery business enterprises

1. The revenue of lottery business enterprises includes: Revenue from operating permitted lottery products, revenue from other business operations, revenue from financial activities as prescribed by law, and other income.

2. For accumulated prizes of lottery products with selected numbers, if the prize claim period expires without the winner claiming the prize, the lottery business enterprise authorized to operate lottery products may record such amount as other income of the enterprise.

Article 5. Costs

Lottery business enterprises are allowed to deduct certain specific expenses when calculating corporate income tax as follows:

1. Prize payment costs

a) Prize payment costs for traditional lotteries, hand-drawn lotto, and instant lotteries are the actual amounts paid to winners according to the provisions of the law. For traditional lotteries issued under a joint issuance mechanism, prize payment costs include: Actual prize payment costs already paid by the lottery business enterprise for winning tickets within its own responsibility as stipulated in the Operation Regulations of the Regional Lottery Council; Actual prize payment costs already paid and allocated to the lottery business enterprise according to the allocation ratio for winning tickets within the joint responsibility of the Council as specified in the Operation Regulations of the Regional Lottery Council;

b) Prize payment costs for lottery products with selected numbers are the actual amounts paid to winners for winning tickets and the value of unclaimed accumulated prizes carried over to the next draw as specified in the Participation Rules according to the law on lotteries.

2. Commission fees for lottery agents

a) Agent commission is the amount that lottery business enterprises pay to lottery agents for selling lottery tickets;

b) The Ministry of Finance shall specify the specific levels of agent commission payments during each period;

c) The level of agent commission must be clearly stipulated in the lottery agency contract signed between the lottery business enterprise and the lottery agent;

d) Lottery business enterprises shall only pay agent commissions to lottery agents after completing the verification of the number of lottery tickets sold by the agent during the period and ensuring that the agent has fulfilled all economic obligations recorded in the agency contract with the lottery business enterprise;

đ) Lottery business enterprises have the responsibility to withhold taxes payable by lottery agents before paying them according to tax laws.

3. Costs for proxy prize payments to winning customers

a) The Ministry of Finance shall specify the specific levels of costs for proxy prize payments to lottery agents during each period;

b) The basis for payment is the agency contract signed between the lottery business enterprise and the lottery agent, which must include a clause on proxy prize payments and other supporting documents proving that the lottery agent has paid the prize to the customer;

c) Lottery agents authorized to make proxy prize payments may not charge any fees from winning customers.

4. Costs for drawing and opening lottery results and expenses for supervision by the Lottery Supervisory Council

a) Drawing and opening lottery result costs include venue rental costs and other external purchase or rental costs serving the drawing and opening process. For traditional lottery tickets issued under a joint issuance mechanism, lottery business enterprises conduct joint drawings, and the drawing costs for each enterprise are allocated according to the ratio of sales volume of lottery tickets received by each enterprise compared to the total issuance volume of the region during the period. Specific cost determination is regulated in the Operation Regulations of the Regional Lottery Council;

b) Honoraria for members of the Lottery Supervisory Council are approved by the representative body of the owner based on the proposal of the lottery business enterprise. The honorarium standard is determined according to the principle of thrift, efficiency, and suitability to the time and content of work performed, enhancing the responsibility of members in fulfilling supervisory tasks.

5. Expenses for supporting work to prevent lottery ticket fraud and counterfeit lottery tickets

a) Principles for expenditure:

- Direct support to the Public Security Organs and related agencies at localities or within the business operation area to carry out investigative, detection, and case handling activities regarding lottery ticket fraud and counterfeit lottery tickets.

- In accordance with the financial capacity of the lottery business enterprise.

- Must have valid and lawful invoices and documents as prescribed by law.

- The basis for expenditure includes copies of court judgments, decisions to initiate criminal investigations, administrative penalty decisions, and payment receipts.

- The Public Security Organs and related agencies are responsible for distributing the support funds to units and individuals with achievements in a transparent manner based on the complexity of the cases, the number of people and units involved, and the duration of the investigation.

b) The Ministry of Finance shall specify the level of expenditure for supporting work to prevent lottery ticket fraud and counterfeit lottery tickets as stipulated in this clause during each period;

c) Based on actual conditions and the level of expenditure for support as prescribed in this clause, the lottery business enterprise shall submit to the representative body of the owner for approval the specific content and level of support expenditure, ensuring that the support expenditures are correctly allocated to the intended recipients and within the prescribed limits.

6. Expenses for establishing a risk reserve fund for prize payments

a) Principles for establishment:

- Lottery business enterprises are only permitted to establish a risk reserve fund for prize payments for lottery products that are allowed to operate under a fixed prize payment method as prescribed by law on lottery business operations.

- At the time of establishment, the lottery business enterprise must not be operating at a loss and the actual prize payout ratio must be lower than the planned prize payout ratio as prescribed by law on lottery business operations. The actual prize payout ratio for the period is determined as follows:

For Vietlott, total tax-inclusive revenue generated during the period does not include revenue from pre-drawn periods that have not yet been drawn.

- At the time of establishment, the total balance of the risk reserve fund for prize payments of lottery business enterprises operating in the Northern and Central regions must not exceed 10% of the total tax-inclusive revenue of all types of lottery products allowed to establish such reserves, and 3% for enterprises operating in the Southern region and Vietlott.

b) The level of establishment for each type of lottery product is determined as follows:

c) Lottery business enterprises may temporarily establish quarterly and settle accounts at the end of the fiscal year if they meet the conditions for establishment as prescribed in point a of this clause;

d) Lottery business enterprises use the risk reserve fund for prize payments to pay prizes when the actual prize payout ratio for the period exceeds the planned prize payout ratio. If the risk reserve fund is insufficient to cover the remaining prize payments, the actual remaining prize payments will be included in business expenses. Any surplus in the risk reserve fund for prize payments that has not been fully utilized can be carried over to the next year. If the balance of the risk reserve fund for prize payments established in the period exceeds the limit prescribed in point a of this clause, it must be transferred to other income.

7. Expenses for lottery tickets

a) Expenses for printing lottery tickets at the actual payment price with the printing facility, transportation, loading and unloading, storage costs, and legitimate additional fees (if any), or contributions to joint lottery ticket printing costs according to the regulations of the Regional Lottery Construction Council based on economic contracts between the lottery business enterprise and the printing facility;

b) Expenses for printing selection number sheets, purchasing printing paper and ink, and other expenses related to self-selected number electronic lottery tickets based on actual payment prices according to economic contracts between the lottery business enterprise and the supplier;

c) In cases where the lottery business enterprise prints its own lottery tickets, the printing expenses for lottery tickets are reasonable and legitimate actual expenses incurred and recorded as general business expenses.

8. Expenses for lottery ticket information and drawing results

a) Expenses for lottery ticket information, drawing, and result announcements are expenses for broadcasting winning results on radio, television, and other mass media, and for printing leaflets about prize payout rules and results to serve customers and agents;

b) The basis for expenditure is economic contracts, valid invoices, and documents in accordance with the tax regulations.

9. Expenses for contributing to the activities of the Regional Lottery Construction Council

a) The Ministry of Finance shall specify the level of expenses for contributing to the activities of the Regional Lottery Construction Council as stipulated in this clause during each period;

b) All expenditures must have reasonable and valid documentation. In cases where the Regional Lottery Construction Council manages the expenditure, the Council must agree on the expenditure limits. The Chairman of the Regional Lottery Construction Council is responsible for the legality and validity of the expenditures. At the end of the fiscal year, a settlement must be made to disclose the expenditures within the Council. After settlement, any surplus can be carried over to the next year for continued use according to the specified purposes.

Article 6. Principles for Fulfilling Obligations to the State Budget of Vietlott

1. The determination of actual revenue from operating lottery products through computerized number selection conducted by Vietlott in each province and centrally governed city shall be carried out as follows:

a) For the distribution method of lottery tickets through terminal devices: Revenue from operating computerized number selection lottery generated from registered sales terminals within the administrative boundaries of each province and centrally governed city under agency contracts signed with Vietlott or retail outlets established by the enterprise on the local territory;

b) For the distribution method of lottery tickets through telephone and the Internet: Revenue shall be determined based on the location registered by customers when opening accounts to participate in draws according to the laws governing the operation of computerized number selection lottery.

2. Vietlott shall fulfill the following responsibilities:

a) Declare and settle value-added tax, special consumption tax, and corporate income tax at its headquarters. Based on the amount of tax payable for each type of tax, Vietlott shall allocate the taxes payable to the local budget according to the actual revenue generated in each locality;

b) Deduct, declare, and settle individual income tax payable at its headquarters. Vietlott shall allocate individual income tax payable to the local budget in accordance with the law, specifically as follows: Individual income tax on commissions paid to lottery agents shall be allocated according to the provincial or centrally governed city where the lottery agent generates taxable income; individual income tax on winners shall be allocated according to the province or centrally governed city where the individual registers to participate in draws via telephone or the Internet, and where the lottery ticket is issued via terminal devices;

c) In the case of remaining profits after corporate income tax paid into the local budget as stipulated in Clause 1, Article 7 of this Decree, Vietlott shall declare at its headquarters and allocate to the local budget according to the actual revenue generated in each provincial or centrally governed city.

Article 7. Distribution of Profits

1. The distribution of profits and the establishment of funds by lottery enterprises shall be carried out in accordance with the provisions of Government Decree No. 91/2015/NĐ-CP dated October 13, 2015, on state capital investment in enterprises and management and use of capital and assets in enterprises, and any subsequent amendments, supplements, or replacements thereof. For lottery enterprises that have been adequately capitalized, they shall not establish development investment funds.

2. The use of funds established from post-tax profits shall be carried out in accordance with the provisions of Government Decree No. 91/2015/NĐ-CP dated October 13, 2015, on state capital investment in enterprises and management and use of capital and assets in enterprises, and any subsequent amendments, supplements, or replacements thereof. Lottery enterprises are strictly prohibited from using remaining post-tax profits to pay prizes or agent commissions exceeding the maximum limit prescribed by law.

Article 8. Financial reports, statistics, and other reports

1. In addition to financial reports and statistical reports established and submitted to state management agencies and publicly disclosed according to current laws on a quarterly basis and at the end of each year, lottery businesses must prepare and submit the following reports:

a) Report on business operation status (Form No. 01/BCXS attached as Appendix to this Decree);

b) Report on ticket sales status (Form No. 02/BCXS attached as Appendix to this Decree);

c) Report on the implementation of debt terms and payment obligations of lottery agents (Form No. 03/BCXS attached as Appendix to this Decree);

d) Report on commission payments to lottery agents and authorized prize payouts by lottery agents (Form No. 04/BCXS attached as Appendix to this Decree);

đ) Report on the management and use of state capital and assets (Form No. 05/BCXS attached as Appendix to this Decree);

e) Report on actual revenue generated by region and city where lottery tickets are issued and the distribution and submission to provincial budgets for the operation of Vietlott's voluntary lottery (Form No. 06/BCXS attached as Appendix to this Decree).

2. The reports specified in Clause 1 of this Article shall be sent to the representative body of the owner and the Ministry of Finance simultaneously with the submission of financial and statistical reports as required by current laws.

3. In case the representative body of the owner and the Ministry of Finance request additional reports, the lottery business must prepare and submit such reports as requested.

4. The Board of Directors or the Chairman of the company is responsible for the accuracy and honesty of these reports.

Chapter III

SOME SPECIAL PROVISIONS ON FINANCE FOR THE SECURITIES EXCHANGE AND THE SECURITIES DEPOSITORY CENTER

SECURITIES, SECURITIES DEPOSITORY CENTER

Article 9. Investment outside

The Securities Exchange and the Vietnam Securities Depository Center may only invest or contribute capital outside to develop market infrastructure and information technology after obtaining approval from the competent authority.

Article 10. Revenue

1. For the Securities Exchange

a) Revenue from business activities includes revenue from listing activities; revenue from securities trading and derivatives trading; revenue from trading members; revenue from bond auctions; revenue from share auctions; revenue from non-trading system stock ownership transfer activities; other business activity revenue;

b) Revenue from service provision activities includes revenue from information services; revenue from infrastructure provision services; other service revenue;

c) In addition to financial activity revenue and other income as stipulated by laws on the management and use of state-owned enterprise capital and assets, the Securities Exchange may include interest income arising from share auction activities in its financial activity revenue.

2. For the Vietnam Securities Depository Center

a) Revenue from business activities includes revenue from depository member management activities; revenue from securities registration activities; revenue from securities depository activities; revenue from securities transfer activities; revenue from rights exercise activities; revenue from post-trade error processing activities; revenue from non-trading system stock ownership transfer activities; revenue from bond principal and interest payment agency activities; revenue from derivatives trading settlement and payment activities; other business activity revenue;

b) Revenue from service provision activities includes revenue from information services; other service revenue;

c) In addition to financial activity revenue and other income as stipulated by laws on the management and use of state-owned enterprise capital and assets, the Vietnam Securities Depository Center may include interest income arising from proxy dividend, bond principal and interest payments, and rights exercise activities in its financial activity revenue.

Article 11. Expenses

The Securities Exchange Center; the Vietnam Securities Depository shall be exempt from corporate income tax for certain specific expenses as follows:

1. Expenses for establishing the Member Damage Compensation Fund of the Securities Exchange Center and expenses for establishing the Business Risk Prevention Fund, the Derivative Securities Settlement Risk Prevention Fund of the Vietnam Securities Depository.

a) The contribution to the Member Damage Compensation Fund of the Securities Exchange Center and the Business Risk Prevention Fund of the Vietnam Securities Depository shall be carried out quarterly. The total annual contribution rate shall not exceed 2% of the revenue from securities trading activities for the Securities Exchange Center and 2% of the revenue from securities depositary activities for the Vietnam Securities Depository. When the fund balance equals 5% of the equity capital recorded on the quarterly or annual financial report at the same time, no further contributions shall be made;

b) The contribution to the Derivative Securities Business Risk Prevention Fund of the Vietnam Securities Depository shall be carried out quarterly, with the maximum annual contribution rate not exceeding 15% of the annual revenue from derivative securities settlement and payment business;

c) In the fiscal year, if the funds are not fully utilized, they may be transferred to the next year for continued use. If the fund balance is insufficient to cover expenses, the actual remaining portion of the expense shall be included in the business operation expenses;

d) The use of the Member Damage Compensation Fund, the Business Risk Prevention Fund, and the Derivative Securities Business Risk Prevention Fund shall be implemented in accordance with the laws on securities;

2. The Vietnam Securities Depository shall transfer back to the Securities Exchange Center the revenue from the activity of transferring ownership of securities not through the Securities Exchange Center's trading system, in accordance with the laws on securities;

Article 12. Evaluation of Operational Effectiveness and Classification of Enterprises

1. The Securities Exchange Center, the Vietnam Securities Depository shall conduct evaluations of operational effectiveness and classification of enterprises in accordance with the laws on evaluating operational effectiveness and classifying state-owned enterprises;

2. When calculating the criteria for evaluating the operational effectiveness of enterprises, in addition to the factors stipulated in Clause 2, Article 28 of Decree No. 87/2015/NĐ-CP dated October 6, 2015 on supervising state capital investment in enterprises; financial supervision, evaluation of operational effectiveness, and public disclosure of financial information of state-owned enterprises and enterprises with state capital, and any amendments or supplements thereto (if any), the Securities Exchange Center, the Vietnam Securities Depository shall exclude the following objective factors:

a) State management policies affecting the listing, trading of securities, and registration, depositary, settlement of securities on the securities market;

b) For the Securities Exchange Center, changes in business revenue due to fluctuations in the following factors: volume of securities traded and trading prices; value of winning bonds, plans, and scale of capital raising through bond issuance; value of government bond transactions, treasury bills; value of transferring ownership of securities not through the Securities Exchange Center's trading system; volume of futures contract transactions;

c) For the Vietnam Securities Depository, changes in business revenue due to fluctuations in the following factors: volume of securities deposited in the year; principal and interest value of government bonds, treasury bills; number of times rights are exercised and corresponding number of shareholders each time; number of times and value of securities transfers; value of transferring ownership of securities not through the Securities Exchange Center's trading system.

Chapter IV

RESPONSIBILITIES OF RELATED AUTHORITIES

Article 13. Responsibilities of lottery businesses, Securities Trading Departments, and the Vietnam Securities Depository Center

1. Adhere to financial management mechanisms and effectiveness evaluation regulations stipulated in this Decree and other regulations concerning capital management, asset utilization, and effectiveness evaluation for state-owned enterprises.

2. Be subject to inspection, examination, and supervision by competent state agencies regarding the financial operations of lottery businesses, Securities Trading Departments, and the Vietnam Securities Depository Center as prescribed by law.

3. The Vietnam Securities Depository Center shall be responsible for maintaining separate accounting records for the assets and capital of the Vietnam Securities Depository Center from the settlement support fund established pursuant to Article 58 of the Securities Law No. 70/2006/QH11 and the margin fund as stipulated in Clause 24 of Government Decree No. 42/2015/NĐ-CP dated May 5, 2015 on derivative securities and the derivative securities market, and any subsequent amendments or supplements thereto.

Article 14. Responsibilities of People's Committees of provinces and centrally governed cities

1. Exercise ownership rights and obligations towards lottery businesses established by the People's Committees of provinces and centrally governed cities in accordance with the law.

2. Approve the level of remuneration for members of the lottery oversight board; the level of support for anti-counterfeiting and fake lottery ticket production activities as stipulated in this Decree.

3. Direct local authorities with jurisdiction to conduct comprehensive inspections, examinations, and supervision over lottery businesses in their compliance with financial management systems as prescribed in this Decree.

Article 15. Responsibilities of the Ministry of Finance

1. Fulfill the role of the representative body of the owner for the Securities Trading Department, the Vietnam Securities Depository Center, and Vietlott in accordance with the law.

2. Guide the levels of commission payments to lottery agents; the levels of prize payout commissions to winning customers; the levels of remuneration for members of the self-selected number computer lottery oversight board; the levels of support for anti-counterfeiting and fake lottery ticket production activities; the levels of contributions to the regional lottery savings council as stipulated in Clauses 2, 3, 4, 5, and 9 of Article 5 of this Decree.

3. Evaluate compliance with policies and systems to improve financial management mechanisms and effectiveness evaluations for lottery businesses; Securities Trading Departments, and the Vietnam Securities Depository Center.

Chapter V

IMPLEMENTING PROVISIONS

Article 16. Effective Date

1. This Decree takes effect from January 1, 2018.

2. In addition to the special provisions set forth in this Decree, lottery businesses; Securities Trading Departments, and the Vietnam Securities Depository Center must also comply with financial management regulations applicable to state-owned enterprises.

Article 17. Responsibility for Implementation

The Minister of Finance, Chairmen of People's Committees of provinces and centrally governed cities; Boards of Directors, General Directors or Directors of lottery businesses; Boards of Directors, General Directors of the Securities Trading Department, and the Vietnam Securities Depository Center, and related organizations and individuals are responsible for implementing this Decree./.