Circular No. 15-BTC/TT stipulates the financial management regime for State-owned Commercial Banks and Development Investment Bank.

CIRCULAR

DECISION NO. 15-BTC/TT OF MARCH 16, 1991 ISSUED BY THE MINISTRY OF FINANCE ON THE FINANCIAL MANAGEMENT REGIME FOR STATE OWNED COMMERCIAL BANKS AND INVESTMENT AND DEVELOPMENT BANKS

IMPLEMENTING THE COUNCIL OF MINISTERS' DECREE NO. 196-HĐBT OF DECEMBER 11, 1989 ON "THE TASKS, POWERS AND RESPONSIBILITIES OF STATE ADMINISTRATION OF THE MINISTRIES," THE COUNCIL OF MINISTERS' DECREE NO. 155-HĐBT OF OCTOBER 15, 1988 ON "FUNCTIONS, TASKS AND ORGANIZATIONAL STRUCTURE OF THE MINISTRY OF FINANCE," THE LAWS ON BUSINESS TAX AND PROFIT TAX ENACTED BY THE NATIONAL ASSEMBLY'S RESOLUTION AT ITS EIGHTH SESSION, SEVENTH MEETING ON JUNE 30, 1990, AND THE COUNCIL OF MINISTERS' DECREES NO. 351-HĐBỘTRƯỞNG AND NO. 353-HĐBT OF OCTOBER 2, 1990 ON THE DETAILING OF THE IMPLEMENTATION OF THE LAWS ON TAXES.
BASED ON THE STATUTE ON ACCOUNTING AND STATISTICS ISSUED BY THE STATE COUNCIL ON MAY 20, 1988 AND THE COUNCIL OF MINISTERS' DECREE NO. 25-HĐBT OF MARCH 18, 1989 ON THE CHARTER OF STATE ACCOUNTING ORGANIZATION.
BASED ON THE STATUTE ON COOPERATIVE CREDIT BANKS AND FINANCIAL COMPANIES ISSUED PURSUANT TO ORDER NO. 38-LCT/HĐNN OF MAY 24, 1990 BY THE CHAIRMAN OF THE STATE COUNCIL.
THE MINISTRY OF FINANCE ISSUES THE FINANCIAL MANAGEMENT REGIME FOR STATE OWNED COMMERCIAL BANKS AND INVESTMENT AND DEVELOPMENT BANKS AS FOLLOWS:

II- SUPPORT MEASURES FOR STATE-OWNED AGRICULTURAL FARMS AND FORESTRY COMPANIES IN THE FIELD OF SCIENCE AND TECHNOLOGY

1. State owned commercial banks and investment and development banks (hereinafter referred to as state-owned banks) are the entities subject to the provisions of this Circular.

2. State-owned banks are independent economic accounting units, funded with state capital, having financial autonomy, being responsible for material results of business operations, ensuring the preservation and development of state capital, and fulfilling all tax obligations to the state budget as prescribed by law.

3. State-owned banks implement the general financial regimes of state enterprises and the specific provisions set out in this Circular.

II. CONTENTS OF MANAGEMENT OF REVENUE AND EXPENSES

1. State Capital and Responsibility for Preservation:

a) The state capital under the control of state-owned banks for use, preservation, and development includes:

- Budget capital: including fixed capital, working capital, basic construction capital provided by the budget or originating from the state budget (such as price differences and amounts due to the budget but retained by the budget), capital received from aid, donations, or taken over from the previous regime.

- Additional capital of state-owned banks: comprising fixed capital, working capital, basic construction capital formed from retained profits, various funds of the bank (excluding welfare funds and reward funds).

b) Responsibilities for preserving and developing state-owned bank capital

- All state budget capital and additional capital supplemented after the time of capital transfer must be included in the total capital of state-owned banks and must be preserved.

- For additional capital, state-owned banks have autonomy in its use such as replacing and modernizing fixed assets, contributing to joint ventures and associations. However, this capital can only be used for business and service purposes, not for non-business and service purposes such as building welfare facilities, purchasing equipment and items for living and daily use.

- Annually, the State Bank and the Ministry of Finance together with state-owned banks will re-evaluate the capital that state-owned banks must preserve up to December 31. These figures will be used as the basis for auditing the annual preservation capital report and serving as the foundation for checking the level of capital preservation in the following year.

The determination of the level of capital preservation is carried out according to the documents issued by the state and the guidance of the Ministry of Finance.

- The General Director of state-owned banks is responsible to the state for managing and using capital. Any losses or shortages of capital will be handled according to the state's regulations depending on the circumstances.

- Investment and Development Banks are subject to management and inspection by financial authorities during the process of performing their functions of managing, lending, and allocating investment construction capital according to the state plan. Each year, they settle investment capital according to the content guided by the Ministry of Finance.

2. Revenue and expenses of state-owned banks:

a) Revenue of state-owned banks:

- Interest income from loans (fixed capital, working capital, overdue debts).

- Interest income from deposits

- Interest income from joint ventures and associations

- Income from foreign exchange and international business operations

- Service fees and commissions income from banking services

- Penalties from customers issuing checks exceeding account balances

- Other income from business activities (including income from leasing fixed assets).

State-owned banks must fully record all revenue according to the Statute on Accounting and Statistics and the Charter of Organizational Accounting issued by the state.

Interest income of state-owned banks is recorded as revenue at interest rates prescribed by the state. Interest income in foreign currency or gold (if any) must be converted into Vietnamese Dong according to the state exchange rate at the time of occurrence.

State-owned banks must ensure timely collection of all revenues as prescribed.

b) Operating expenses of state-owned banks:

+ Business operation expenses;

+ Payment of deposit interest to economic organizations, savings interest to residents, and other sources of capital mobilization.

+ Payment of loan interest to the State Bank and other credit institutions.

+ Payment of foreign loan interest (if any)

+ Expenses related to foreign exchange and international business operations

+ Payment of service fees and commissions for entrusted transactions

+ Other expenses related to business operations

+ Management expenses:

- Labor costs:

+ Wages paid at approved wage rates

+ Payments to social insurance

+ Expenditures for labor protection equipment for those entitled to such equipment according to state regulations.

- Other management expenses

+ Travel expenses according to state regulations

+ Depreciation expenses for fixed assets according to state regulations

+ Regular maintenance expenses for fixed assets; repair expenses for security and storage systems of cash not included in the source of major repairs and basic construction capital according to actual needs arising, but the expenditure level does not exceed the following ratios:

- Commercial banks: 5%

- Agricultural banks: 10%

- Investment and Development banks: 8%

- Foreign trade banks: 3%

(The ratio for regular maintenance expenses calculated based on the average annual value of fixed assets).

+ Expenses for necessary labor tools for business operations.

+ Uniform expenses for bank employees according to set standards.

+ Expenses for printed documents, office materials, warehouse supplies, transportation and handling, publicity and advertising, short-term vocational training, postal fees, telecommunications, etc.

+ Other reasonable expenses arising from business requirements.

State-owned banks must fully, accurately, and in accordance with regulations record all expenses as stipulated. For interest payments, state-owned banks record costs based on interest rates prescribed by the State. All expenses in foreign currency or gold (if any) must be recorded converted into Vietnamese Dong at the exchange rate prescribed by the State at the time of occurrence.

c) State-owned banks shall not record the following items as expenses:

+ Penalties payable to the State budget due to violations of tax laws and failure to report or provide financial data to relevant authorities.

+ Penalties payable to customers for material losses caused by state-owned banks.

+ Losses and damages to state property caused by individuals or collectives within state-owned banks.

+ Fixed asset purchases and basic construction expenses from basic construction funds.

+ Expenses covered by other sources of funding (to offset business risks, etc.).

If any of the above items occur, state-owned banks must use the appropriate source to cover them; if there is no remaining capital, they must deduct from retained profits (profits after fulfilling obligations to the State budget and setting aside reserve funds).

3. Obligations to pay the State budget of state-owned banks:

(+) State-owned banks must pay fully and on time into the State budget the following amounts:

+ Business income tax, profit tax, and revenue from using State budget capital.

+ Basic depreciation of fixed assets as prescribed by the State.

+ Other amounts payable as prescribed by regulations.

Regarding the obligation to pay taxes, it is stipulated as follows:

- Business income tax:

The taxable business income of state-owned banks is the interest received from borrowers or commissions earned from other service activities (as mentioned in point a, part 2; for investment and development banks, this includes interest from the State budget credit fund transferred to the bank for lending).

Branches of state-owned banks (provinces, cities, special zones) must directly pay business income tax to the local Treasury Office where the branch operates, and submit monthly reports as required by law (business income tax of banks does not fall under local budget regulation and is still unified to be paid to the central budget).

Financial authorities have the responsibility to check taxable income, issue certificates confirming tax payment to state-owned banks with stamps issued uniformly by the Ministry of Finance, which branches use as evidence to report tax collection status to the central state-owned bank.

- Profit tax:

The taxable profit of state-owned banks is the profit after excluding business income tax and revenue from using State budget capital.

Profit tax of state-owned banks is collected centrally by the central bank monthly; the central state-owned bank has the responsibility to pay profit tax at the location designated by the General Tax Department.

State-owned banks may not include in their business expenses to determine taxable profit or reduce taxable profit the items mentioned in point c, part 2.

The rates of business income tax and profit tax are implemented according to tax laws, specifically as follows:

The basis for calculating taxes, deadlines for tax payment, and procedures for paying business income tax and profit tax of state-owned banks are carried out according to Decree No. 351-HĐBộ trưởng, Decree No. 353-HĐBộ trưởng dated October 2, 1990 of the Council of Ministers and Circular No. 45-TC/TCT, No. 47-TC/TCT dated October 4, 1990 of the Ministry of Finance guiding the implementation of the aforementioned decrees.

- Revenue from using State budget capital is implemented according to Decree No. 22-HĐBT dated January 24, 1991 of the Council of Ministers and Circular No. 13-TC/TCT dated February 28, 1991 of the Ministry of Finance guiding the implementation of the aforementioned decree.

+ In cases where state-owned banks organize secondary production and business activities, they must pay taxes according to the tax laws applicable to each type of activity. Tax payment for these activities is carried out at the local level where the branches operate.

(+) Gold and silver trading activities directly affiliated with state-owned banks must be separately accounted for and taxed according to the tax rates prescribed for corresponding industries. Taxes of gold and silver trading companies directly affiliated with state-owned banks must be paid into the local Treasury Office where the company is headquartered.

State-owned banks may not use amounts due to the State budget for other purposes, including transferring to the State Bank in any form without the approval of the financial authority.

4. Distribution of profits and establishment of funds:

- Bank profit is determined as follows:

- After paying 50% profit tax, the remaining amount (considered as 100%) is distributed as follows:

+ 5% to establish additional capital reserve fund

+ 10% to establish special reserve fund (the special reserve fund is established at a rate of 10% until it reaches 100% of the registered capital).

+ The remaining 85% profit should first be used to pay penalties to the State budget and customers (if any), then used to establish three funds of the bank: technical and vocational development fund, welfare fund, and reward fund. The proportion of establishing these funds is determined by the General Director of the state-owned bank.

Specifically, the reward fund extracted in the year cannot exceed 50% of the total salary fund of the unit for the entire year. Apart from rewards from the remaining profit of the unit, banks may not use any other source to pay rewards to employees in any form.

- Temporary deductions are regulated as follows:

Quarterly, after confirming profit results and completing tax payments to the State, state-owned banks shall allocate fully into the supplementary capital reserve fund and the special reserve fund. Specifically, the three funds may only temporarily allocate up to a maximum of 70% of the remaining profits (after deducting the amounts allocated into the two aforementioned reserve funds).

At the end of the fiscal year, after financial settlement for the year has been recognized by the Ministry of Finance and after fulfilling all obligations to the State budget, state-owned banks shall officially allocate fully 100% to the three funds.

The management and utilization of the funds for technical and business development, welfare fund, and incentive fund shall be carried out in accordance with the current regulations of the State.

5. Depreciation of fixed assets, construction, and acquisition of fixed assets:

a) Fixed asset depreciation:

The depreciation system of fixed assets of state-owned banks shall be implemented according to Circular No. 33-TC/CN dated September 1, 1989, and Circular No. 33-TC/CN dated July 31, 1990, issued by the Ministry of Finance.

b) Transfer, lease, sale, and liquidation of fixed assets:

State-owned banks shall implement according to Circular No. 34-TC/CN dated July 31, 1990, issued by the Ministry of Finance.

c) Construction and acquisition of fixed assets:

The capital investment for basic construction of state-owned banks originates from the following sources:

- Basic depreciation of fixed assets retained in accordance with regulations

- Technical and business development fund

- Other sources of capital (including borrowed capital from the Investment and Development Bank)

State-owned banks are only allowed to carry out construction and acquisition of fixed assets within the scope of their own basic construction investment capital and may not use operating capital for such purposes.

III- SYSTEM OF PREPARATION AND REPORTING ON FINANCIAL PLAN IMPLEMENTATION

- State-owned banks shall prepare and report on plans and implementation of plans in accordance with the Accounting and Statistics Law of the State and specific provisions in Circular No. 40-TC/VP dated September 8, 1990, issued by the Ministry of Finance.

- By November 1 at the latest each year, state-owned banks must prepare and submit to the Ministry of Finance the documents of the next year's plan:

+ Capital source and usage plan

+ Income-expenditure-profit plan

+ State budget revenue submission plan

+ Basic construction investment plan

+ Fixed asset depreciation plan

+ Staffing, salary fund, and total income plan

+ Fund allocation plan

After the financial plan is approved by the competent authority, state-owned banks have the responsibility to promptly submit the official plan.

- Within 10 to 15 days after the month, state-owned banks must send a quick report on the previous month's business performance to the Ministry of Finance.

- Quarterly, by the 40th day of the subsequent quarter at the latest, state-owned banks must submit a report on the implementation of the previous quarter's plans to the Ministry of Finance.

- The annual financial settlement report must be completed and submitted to the Ministry of Finance no later than March 1 of the following year.

The annual financial settlement report must clearly reflect the financial activities of the state-owned bank and its dependent branches during the year, as well as the fulfillment of the obligation to pay the State budget according to the law.

The annual financial settlement report includes reports on the implementation of the approved financial plan, along with actual enterprise situation reports and the consolidated balance sheet of the state-owned bank.

- The Investment and Development Bank, in addition to submitting the above reports monthly, must also report on the payment of government budget investment capital transferred in that month and quarter; annually, it must settle the investment capital according to the guidance of the Ministry of Finance.

State-owned banks with foreign currency revenues, quarterly after completing tax payments to the State, shall sell the foreign currency received to the centralized foreign currency fund of the State at the ratio prescribed by the State. Foreign currency sold to the State shall be converted into US dollars.

IV- CONDITIONS FOR IMPLEMENTATION

- State-owned banks are responsible under the law for using State property and people's raised capital effectively; preserving and developing State capital and fulfilling the obligation to pay the State budget according to the law.

- State-owned banks are subject to inspection and audit by State financial authorities according to the Tax Law, Accounting and Statistics Law, and Inspection Law.

- This Circular takes effect from January 1, 1991, and replaces Circular No. 29-TC/CĐTC dated August 10, 1989, issued by the Ministry of Finance.

- State-owned banks are responsible for sending to the Ministry of Finance guiding documents for implementing this Circular within the scope of their industry.

Any difficulties encountered during implementation should be reported to the Ministry of Finance for timely review and amendment.