Circular No. 14/2016/TT-BTC guides the financial mechanism when wholly state-owned limited liability companies participate in performing political tasks, ensuring social welfare, and balancing supply and demand in the economy.

CIRCULAR

Guidelines on financial mechanisms when state-owned single-member limited liability companies

with 100% state capital participate in performing political tasks, ensuring social welfare,

balancing supply and demand for the economy

cân đối cung cầu cho nền kinh tế

Pursuant to Decree No. 215/2013/NĐ-CP dated December 23, 2013 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Implementing the directive of Deputy Prime Minister Vu Van Ninh in Notification No. 146/TB-VPCP dated April 8, 2014 of the Government Office;

After reaching consensus with the Ministry of Labor, Invalids and Social Affairs in Circular No. 3657/LDTBXH-KHTC dated September 11, 2015;

At the proposal of the Director of the State Enterprise Financial Department;

The Minister of Finance issues this Circular guiding the financial mechanism when state-owned single-member limited liability companies (LLC) with 100% state capital participate in performing political tasks, ensuring social welfare, balancing supply and demand for the economy according to the Prime Minister's decision or voluntarily registering to implement according to the State's policy without profit motive and approved by the Prime Minister.

PART I

GENERAL PROVISIONS

Article 1. Scope of Application and Regulatory Scope

1. Regulatory scope: This Circular guides the financial mechanism when single-member limited liability companies (TNHHMTV) owned by the state with 100% state capital operate production and business activities under the Law on Enterprises and participate in performing political tasks, ensuring social welfare, balancing supply and demand for the economy according to the Prime Minister's decision or voluntarily register to implement according to the State's policy without profit motive and approved by the Prime Minister.

2. The objects of application include: Single-member limited liability companies (TNHHMTV) owned by the state with 100% state capital (economic groups, state corporations, companies) participating in performing political tasks, ensuring social welfare, balancing supply and demand for the economy; the representative bodies of owners and other agencies, organizations, and individuals related to the implementation of political tasks, ensuring social welfare, balancing supply and demand for the economy.

Activities in the field of national defense and security, providing public goods and services as prescribed in Decree No. 130/2013/NĐ-CP dated October 16, 2013 of the Government and Decree No. 93/2015/NĐ-CP dated October 15, 2015 of the Government are not within the scope and objects of application of this Circular.

Article 2. Interpretation of Terms

In this Circular, the following terms shall be understood as follows:

1. "Single-member limited liability company owned by the state with 100% state capital" (hereinafter referred to as the enterprise) includes:

a) Single-member limited liability company that is the parent company of economic groups; the parent company of state corporations; the parent company in the parent-subsidiary model;

b) Independent single-member limited liability companies directly subordinate to ministries, sectors, provincial people's committees, and directly subordinate to economic groups, state corporations.

Single-member limited liability companies owned by state enterprises with 100% state capital.

2. "Performing political tasks, ensuring social welfare, balancing supply and demand for the economy" (hereinafter abbreviated as "performing political tasks") means implementing tasks according to the directives, decisions of the Prime Minister or voluntarily registering to implement tasks according to the State's policy without profit motive and approved by the Prime Minister.

3. "Common business operations of the enterprise" : including the business activities of the enterprise, excluding activities to perform political tasks.

Chapter II

SPECIFIC PROVISIONS

PART I

Regulations on financial mechanisms when enterprises participate

in performing political tasks, ensuring social welfare

balancing supply and demand for the economy

Article 3. Mechanism for Exemption and Reduction of Land Rent, Land Use Fee, and Water Surface Lease Fee

Enterprises participating in performing political tasks shall be exempted or reduced from land use fee, land rent, and water surface lease fee if they meet the conditions stipulated in Decree No. 45/2014/NĐ-CP dated May 15, 2014 of the Government on Collection of Land Use Fee and Decree No. 46/2014/NĐ-CP dated May 15, 2014 of the Government on Collection of Land Rent and Water Surface Lease Fee and subsequent amendments and supplements (if any), provided that such enterprises use the land area and water surface area for their intended purposes and political tasks as prescribed.

The procedures for exemption and reduction of land use fee, land rent, and water surface lease fee shall be carried out in accordance with the provisions of the Law on Tax Administration and guiding documents.

Article 4. Management of Revenue

Enterprises shall maintain detailed accounting books to separately track revenue from production and business activities and provision of products and services when participating in the performance of political tasks, ensuring social security and balance between supply and demand in the economy.

Article 5. Management of Costs

Expenses incurred during the process of enterprises participating in the performance of political tasks shall be recorded separately and must comply with the principles of reasonableness and legality as prescribed by the Law on Corporate Income Tax and related legal documents.

Enterprises shall maintain detailed accounting books to separately track expenses incurred during the process of enterprises participating in the performance of political tasks according to the following principles:

1. In cases where enterprises use and account for fixed assets, current assets, and other costs separately for the purpose of performing political tasks, actual expenses shall be aggregated based on supporting documents.

2. In cases where enterprises share fixed assets and current assets and cannot separate other costs when performing political tasks, expenses (including depreciation of fixed assets, current asset costs, and other costs) shall be allocated according to the ratio of revenue from production and business activities and provision of products and services when participating in the performance of political tasks to the total revenue from general production and business activities of the enterprise.

Article 6. Payments to the State Budget

Payments to the State Budget shall be implemented in accordance with current regulations.

Article 7. Handling of Revenue and Expense Discrepancies

Discrepancies in revenue and expenses from production and business activities and provision of products and services when participating in the performance of political tasks shall be accounted for in the overall results of production and business activities of the enterprise to determine corporate income tax in accordance with the law;

- In cases where revenue exceeds expenses in production and business activities and provision of products and services when participating in the performance of political tasks, income from the performance of political tasks shall be subject to preferential corporate income tax as prescribed by the Law on Corporate Income Tax and related legal documents.

- In cases where revenue is less than expenses in production and business activities and provision of products and services when participating in the performance of political tasks, the discrepancy shall be offset from the profit of the enterprise's general production and business activities.

Article 8. Reporting and Audit Regime

1. Enterprises shall prepare separate reports on their activities to fulfill political tasks, including indicators attached as appendices to this Circular.

2. Enterprises shall prepare and submit reports on their activities to fulfill political tasks together with annual financial statements submitted to the enterprise's owner representative body and the corresponding financial management agency.

3. Enterprises shall conduct audits of their financial reports, including audits of revenues and expenses related to activities to fulfill political tasks, as a basis for support in capital, exemption or reduction of land rental fees, land use fees, water surface rental fees, and preferential tax treatment for corporate income tax.

Article 9. Accounting Accounts

Accounting accounts shall be implemented according to the accounting account system applicable to enterprises.

PART II

Evaluation of business production efficiency for enterprises participating in the fulfillment of political tasks, ensuring social security, and balancing supply and demand for the economy

Article 10. Exclusion Cases When Evaluating Business Production Activities and Establishing Salary Funds for Enterprises Participating in Political Tasks

When evaluating business production activities and establishing salary funds, enterprises may exclude losses resulting from participation in political tasks that affect:

1. The assessment of the preservation level of capital of the enterprise.

2. Ranking and classification of enterprises, ranking and classification of enterprise managers.

3. Consideration for awards for enterprises; consideration for awards for enterprise managers.

4. Establishment of planned salary funds, determination of actual salary funds for employees; when establishing planned remuneration funds, determination of actual remuneration funds for enterprise managers.

Chapter III. IMPLEMENTATION

Article 11. Effective Date

This Circular takes effect from March 7, 2016.

During implementation, if there are difficulties or obstacles, agencies and units are requested to report to the Ministry of Finance for review and resolution.