Circular No. 127/1999/TT-BTC guides the implementation of financial management regulations for lottery companies.

 

CIRCULAR

Guidelines for Financial Management

for Lottery Savings Companies

Implementing Decree No. 59/CP dated October 3, 1996 of the Government on the "Regulation on Financial Management and Accounting for State-Owned Enterprises" and Decree No. 27/1999/NĐ-CP dated April 20, 1999 of the Government amending and supplementing certain provisions of the aforementioned financial regulation;

The Ministry of Finance guides the financial management regime for Lottery Savings Companies (XSKT) 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/ Lottery Savings Companies are state-owned enterprises operating in the lottery business sector, possessing legal personality, receiving statutory capital from the State, and having rights and responsibilities to implement current State regulations.

2/ Due to their specific characteristics, in addition to implementing Decree No. 59/CP dated October 3, 1996, Decree No. 27/1999/NĐ-CP dated April 20, 1999 of the Government, and the current financial management regimes of the Ministry of Finance, Lottery Savings Companies must also comply with the specific provisions set forth in this Circular.

II. SOME SPECIFIC PROVISIONS

||| 1. Revenue of Lottery Companies:

||| 1.1- Revenue from ticket sales of Lottery Companies includes the total amount of money from sold tickets, including traditional lottery ticket sales, scratch-off lottery ticket sales, lottery ticket sales by peeling, lottery ticket sales by lotto, and lottery ticket sales by electronic lottery (if applicable).

||| The revenue from ticket sales mentioned above does not include value-added tax.

||| 1.2- Revenue from other activities.

||| 2. Expenses of Lottery Companies:

||| In addition to managing cost prices as stipulated in Circular No. 63/1999/TT-BTC dated June 7, 1999 of the Ministry of Finance, Lottery Companies shall implement specific provisions as follows:

2.1- Prize payment: When establishing prize structures, they must adhere to the regulations of the Ministry of Finance for each type of lottery. Prize payments must be based on valid winning tickets from each issuance period and actual prize payouts to determine.

2.2- Agent commission: This is the amount paid to agents responsible for selling tickets on behalf of Lottery Savings Companies.

||| Agent commissions are determined by Lottery Companies for each type of lottery and applied over specific periods and regions based on the general ratio prescribed by the Ministry of Finance.

The maximum agent commission rate shall not exceed 13% of total ticket sales revenue for plains provinces and cities; it shall not exceed 15% of total ticket sales revenue for mountainous provinces and the Central Highlands.

Lottery Savings Companies are responsible for withholding corporate income tax payable by agents subject to corporate income tax before paying out agent commissions according to current regulations.

In addition to the above agent commission rates, depending on scale, region, nature, and business capacity, Lottery Savings Companies may apply support expenses for developing the agent network as specified in Point 2.8, Section II of this Circular.

||| 2.3- Wages and allowances with wage-like characteristics:

Besides implementing the current wage expense management system and other wage-like items, wage settlement regulations applicable to state-owned enterprises, Lottery Savings Companies must develop reasonable labor plans and wage structures to avoid situations where workers are required to work overtime beyond the limits stipulated by the Labor Code.

2.4- Ticket expenses: Ticket expenses are determined based on the actual transaction price with the printing base ordered by the Lottery Savings Company through economic contracts, plus transportation, handling, storage costs, and legitimate additional fees (if any). These expenses must be supported by valid invoices and documents in accordance with prescribed regulations.

2.5- Expenses for drawing prizes, destroying unsold tickets, and expired stored tickets: This includes venue rental fees; allowances for the Supervisory Board, observers of the draw, and destroyers of unsold tickets, service personnel...

The allowance levels for the Supervisory Board observing the draw, the Supervisory Board destroying unsold tickets and retrieving winning ticket stubs...are established and registered with the provincial or municipal financial management authority by the Lottery Savings Company on the principle of being consistent with local market prices and enhancing the responsibility of members in supervising and witnessing draws and the destruction of unsold tickets. The basis for these allowances is a record of the number of sessions attended by each member.

2.6- Contributions to the linked group (if applicable): This is the contribution to the common activities of the linked group used primarily for stamping tickets (if applicable), transporting tickets for provinces, allowances for the draw supervision board, announcing draw results, serving inspection work, subsidies for concurrently holding the standing board, paying salaries to dedicated staff (if applicable), meetings, rewarding units and individuals contributing to building the group (in accordance with the regulations on reward and incentive spending), and other direct expenses serving the common activities of the linked group.

Regarding contribution levels, the Regional Association General Assembly agrees to approve reasonable and legitimate budget estimates according to current financial regulations. At the end of the fiscal year, financial settlements must be made and reported to the group's audit committee for approval. The Chairman of the group is responsible to the State for the legitimacy of these expenditures. After settlement, if there is a surplus, it will be deducted from the contribution for the following year.

2.7- Promotion and information dissemination about Lottery Savings activities and draw results: This includes advertising, marketing, promoting the purpose of Lottery Savings, providing information, printing flyers with draw results to serve customers and agents, and other related expenses.

2.8- Development of the agent network: This is the expenditure aimed at encouraging the expansion and development of the sales phase of the special Lottery Savings business.

Expenditures for developing the Lottery Savings agent network include: printing costs for forms, books, lists, equipment, means of transport, delivering tickets to remote locations from the company headquarters, meetings, partial risk support in sales, and other necessary support for agents.

The maximum rate of expenditure is set at 2.5% of the total ticket sales revenue of the Lottery Company.

||| - The general ratio of expenditure is 2% of the total ticket sales revenue of Lottery Companies.

||| If, in the implementation year, Lottery Companies have a revenue increase of 10% or more compared to the previous year, they can spend up to a maximum of 2.5% of total ticket sales revenue.

- Lottery Savings Companies base the application of the above expense ratios on the specific characteristics and business conditions of their units. Ensuring that total issuance expenses do not exceed the control range for each region as stipulated in Item 2.11, Point 2, Section II of this Circular.

- The Director of Lottery Savings Companies seeks the opinion of the Provincial or Municipal Lottery Savings Supervisory Board to establish and publicly announce regulations on the form and level of agent support suitable for the business characteristics of each company. Based on the issued support regulations, the Director of the Lottery Savings Company issues specific decisions regarding support levels for each agent. According to the Support Decision, the management department implements payment vouchers for agents; monthly, quarterly, and annually detailed reports of support payments to agents (attached model) are submitted together with the company's financial reports.

2.9. Entertainment expenses, ceremonial expenses, transaction expenses, external relations expenses, conference expenses, and other types of expenses must have supporting documents as prescribed, be linked to business results, and not exceed the control limits specified below:

- In the first two years of establishment, it shall not exceed 7% of total expenses (excluding prize payout expenses).

- In subsequent years, it shall not exceed 5% of total expenses (excluding prize payout expenses).

2.10. Other expense items: expenses for preventing fraudulent activities using lottery tickets, research and design of new lottery products...

2.11. The maximum issuance costs of the Lottery Company in each defined region are as follows:

- For Lottery Companies in the Southern Association Region (from Binh Thuan and Lam Dong provinces southward), it is 19% of total ticket sales revenue.

- For Lottery Companies in the two Association Regions of Northern Central Vietnam, it is 22% of total ticket sales revenue.

- For Lottery Companies in the Northern Association Region, it is 24% of total ticket sales revenue.

Within the scope of issuance costs prescribed in this Circular, any savings on issuance costs below the control limit can be fully used to directly supplement the development investment fund.

If actual issuance costs exceed the control limit, the excess portion must be deducted from retained earnings. In special cases due to objective reasons such as newly established companies or companies with very low initial revenue when implementing this mechanism compared to other companies in the same region, report to the Ministry of Finance for consideration and handling of reasonable costs exceeding the issuance cost limit prescribed in this Circular.

Total ticket sales revenue as stipulated in Section 2.2, 2.8, 2.11, Point 2, Section II of this Circular shall be used to determine commission rates and total issuance costs including value-added tax.

3. Value-added tax of the Lottery Company:

The Lottery Company shall fully, timely, and correctly pay the Value Added Tax according to the Law at the Tax Department where the company's headquarters is located.

III. DISTRIBUTION OF PROFITS AND ESTABLISHMENT OF FUNDS

1. The realized profit of the Lottery Company is determined as follows:

Where:

- Revenue from lottery ticket sales: as stipulated in Point 1, Section II of this Circular.

- Cost of goods sold includes: total issuance costs (+) prize payout costs.

2. Profit distribution, establishment of funds:

- Payment of corporate income tax and additional corporate income tax payments by the Lottery Company shall be carried out according to Circular No. 18-1999/TT-BTC dated February 6, 1999, issued by the Ministry of Finance.

- The profit distribution system after tax, establishment, and management of funds shall be implemented according to current regulations applicable to state-owned enterprises.

IV. FINANCIAL REPORTING SYSTEM AND FINANCIAL DISCLOSURE

In addition to implementing the financial reporting and financial disclosure regulations under the current system, the Lottery Company shall submit to the Ministry of Finance (Department of Financial Affairs of Banks and Financial Institutions):

- Reports on the implementation of debt and collateral situations of agents quarterly and annually.

- Reports on the payment of agent commissions and submission of corporate income tax by agents quarterly and annually.

- Quarterly and annual financial reports.

Quarterly reports must be submitted no later than the 15th day of the first month of the quarter; annual reports must be submitted no later than January 31 of the following year.

V. IMPLEMENTATION

The Lottery Company is responsible under the law for the use of state capital and assets, preservation and development of capital, and full fulfillment of tax obligations as prescribed by law. The company is subject to inspection and audit by competent state management agencies.

This Circular replaces Circular No. 06/1998/TT-BTC dated January 10, 1998, issued by the Ministry of Finance, and takes effect from the date the Government Decree No. 27/1999/NĐ-CP dated April 20, 1999, comes into force.

(Except for the payment of corporate income tax by agents, which will take effect from September 1, 1999).

During the implementation process, if there are any difficulties, please reflect them to the Ministry of Finance for consideration and timely supplementation or amendment.

MODEL NUMBER: 01 - BK-HTDL

(Attached to Circular No. 127/1999/TT-BTC dated October 26, 1999, issued by the Ministry of Finance)

SUPPORT AGENT STATEMENT

(Month, Quarter, Year)

Unit of measurement: 1,000 VND

Hanoi, day month year 199