Circular No. 129/2003/TT-BTC guiding financial regulations for income after tax from lottery activities

CIRCULAR

Guidelines on financial regulations for post-tax income from lottery activities

of the lottery activities

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Pursuant to Decree No. 59/CP dated October 3, 1996 of the Government on Financial Management Regulations and Business Accounting for State-Owned Enterprises and Decree No. 27/1999/NĐ-CP dated April 20, 1999 of the Government amending and supplementing Decree No. 59/CP of the Government;

- Pursuant to Point 3, Article 9 of Decree No. 164/2003/NĐ-CP dated December 22, 2003 of the Government detailing the implementation of the Law on Corporate Income Tax;

The Ministry of Finance issues guidelines on financial regulations for post-tax income from lottery activities as follows:

1. Scope of application:

Lottery companies organize lottery business operations in accordance with the Law on State-Owned Enterprises.

2. Realized profit of lottery companies:

The realized profit of lottery companies includes profit from business operations, financial activity profit, and other profits.

2.1 Profit from business operations is the difference between total revenue minus the full cost of products sold and taxes as prescribed by law (excluding corporate income tax).

2.2 Financial activity profit is the excess of income over expenses from financial activities, including leasing assets, buying and selling bonds and securities, foreign currency trading, interest on bank deposits from operating capital, interest on loans from various sources and funds, dividends, and write-offs of the balance of provisions for the reduction in value of securities investments.

2.3 Other profits are other income exceeding other expenses, including liabilities without creditors, recovery of bad debts that have been written off (not recorded in the balance sheet); surplus materials and assets after deducting losses and shortages, similar materials; gains from liquidation and sale of assets (the amount received from sale minus the remaining book value and liquidation and sale expenses); profits discovered in the current year from previous years; write-offs of provisions for inventory reduction, doubtful receivables, and warranty reserve funds remaining after the warranty period.

3. Distribution of profits:

The realized profit of lottery companies, after transferring losses according to Article 20 of the Law on Corporate Income Tax and paying corporate income tax as prescribed by law, shall be distributed as follows:

3.1. Covering losses from previous years that were not deductible from pre-tax profit;

3.2. Paying fines for violations of state laws such as tax laws, traffic laws, environmental laws, trade laws, and administrative regulations, after deducting compensation for collective or individual violations (if any);

3.3. Deducting actual expenses incurred but not considered reasonable when determining taxable income;

3.4. Supplementing the state capital at the enterprise according to Circular No. 30/2002/TT-BTC dated March 27, 2002 of the Ministry of Finance;

3.5. The remaining profit shall be distributed as follows:

a. Allocating 10% to the financial reserve fund. When the balance of this fund reaches 25% of the state capital at the enterprise, no further allocations are required;

The indicator of state capital at the enterprise is reflected in the enterprise's accounting books (excluding joint venture and associated investment capital) and includes:

- Operating capital (Account 411)

- Capital for basic construction investment (Account 441)

- Development Fund (Account 414)

b. Allocating up to a maximum of 30% to the development fund of the enterprise for the needs of developing lottery activities;

c. Establishing a bonus and welfare fund. The maximum allocation rate for these two funds is based on the profit margin on state capital (the average of the balance of state capital at the beginning of the year and the end of each quarter), as follows:

- Three months' salary for enterprises with a profit margin on state capital this year equal to or higher than last year;

- Two months' salary if the profit margin this year is lower than last year;

The enterprise director, after consulting with the Trade Union Committee, decides the distribution ratio of the funds.

If the lottery company strives to increase its profit level next year compared to this year, it may allocate an additional month's salary to each of the bonus and welfare funds.

d. Depositing the remaining amount into the state budget after the lottery company has allocated sufficient funds to the reserves as stipulated in points a, b, and c of Section 3.5 to serve the purpose of investing in social welfare projects in the locality.

In cases where the lottery company has a need for development investment in lottery activities and the development fund cannot meet the requirements, the company must prepare a project and submit it to the provincial People's Committee for approval to retain this revenue to supplement the company's capital.

4. Organizing the collection of financial income from post-tax income from lottery activities into the state budget:

4.1 Declaration and payment of financial income of lottery companies: Lottery companies are responsible for submitting temporary declaration forms for financial income to the Tax Department and Provincial Department of Finance. Temporary payment of financial income is made quarterly along with the temporary payment of corporate income tax.

4.2 Payment, accounting, and settlement of financial income of lottery companies shall be carried out according to the regulations for the payment, accounting, and settlement of other income of lottery companies deposited into the state budget.

5. Use of enterprise funds:

The use of enterprise funds shall be carried out in accordance with the current regulations of the Ministry of Finance.

6. Effective date:

This circular takes effect 15 days after publication in the Official Gazette and applies from the fiscal year 2004.

For the year 2004, which is the first year implementing new tax laws simultaneously, lottery companies are permitted not to use the profit margin on state capital index when determining the level of allocation for the bonus and welfare funds, but instead allocate the two funds at the maximum level.

During the implementation process, if there are difficulties, units are advised to report to the Ministry of Finance for research, consideration, and supplementary guidance.