Joint Circular No. 19/1999/TTLT/BLDTBXH-BTC guiding supplementary provisions to Circular No. 18/1998/TTLT-BLDTBXH-BTC dated December 31, 1998 on determining the actual wage fund in state-owned enterprises.

CIRCULAR

JOINT CIRCULAR NO. 19/1999/TTLT-BLDTBXH-BTC OF THE MINISTRY OF LABOR, WAR INVALIDS AND SOCIAL AFFAIRS AND THE MINISTRY OF FINANCE ON AUGUST 14, 1999 GUIDING SUPPLEMENTARY CIRCULAR NO. 18/1998/TTLT-BLDTBXH-BTC ON THE DETERMINATION OF THE WAGE FUND TO BE IMPLEMENTED IN STATE ENTERPRISES

Circular Joint No. 18/1998/TTLT-BLDTBXH-BTC dated December 31, 1998 of the Joint Ministry of Labor, War Invalids and Social Affairs and the Ministry of Finance has not provided specific guidance on determining the wage fund to be implemented for independent enterprises directly under ministries managing industries and sectors, localities, and independent accounting units under State-owned corporations 91/TTg and 90/TTg, leading to inconsistent implementation among enterprises. Based on the actual situation, the Joint Ministry of Labor, War Invalids and Social Affairs and the Ministry of Finance provides supplementary guidance as follows:

I. FOR ENTERPRISES IN GENERAL:

1/ When reviewing wage rates, competent authorities at the appropriate level of management must consider the conditions for applying the additional factor to increase the minimum wage as stipulated in Decree No. 28/CP dated March 28, 1997 of the Government and Circular No. 13/LDTBXH-TT dated April 10, 1997 of the Ministry of Labor, War Invalids and Social Affairs, and then issue a decision assigning wage rates with profit targets (which must be based on the previous year) as a basis for reducing the wage fund to be implemented.

2/ If the enterprise's actual profit is lower than the assigned profit target when deciding on wage rates by the competent authority, the wage fund to be implemented must be reduced according to the provisions in Section II of Circular Joint No. 18/1998/TTLT-BLDTBXH-BTC.

II. FOR STATE-OWNED CORPORATIONS 91/TTg AND 90/TTg:

1/ According to the provisions in Point 3, Section III of Circular Joint No. 18/TTLT-BLDTBXH-BTC, the effective wage rate for determining the wage fund to be implemented for units under State-owned corporations 91/TTg and 90/TTg is the decision assigning wage rates by the Chairman of the Board of Directors or General Director (for enterprises without a Board of Directors) corresponding to the budget revenue and profit targets of the units, but the total must not exceed the wage rate reviewed by the competent authority. Now, further detailed guidance is provided as follows:

a) The wage fund to be implemented for independent accounting units within State-owned corporations is determined according to the wage rate assigned by the Chairman of the Board of Directors or General Director of the corporation corresponding to the profit target assigned. In case the actual profit of the unit is lower than the assigned profit target, the wage fund must be reduced according to the provisions in Section II of Circular Joint No. 18/1998/TTLT-BLDTBXH-BTC.

b) State-owned corporations 91/TTg and 90/TTg have the responsibility to:

- Send the decision assigning wage rates by the competent authority to the Provincial Tax Bureau where the corporation is headquartered as a basis for determining the wage fund to be implemented for the entire corporation;

- Send the decision assigning wage rates for each unit to the Provincial Tax Bureau where the unit is headquartered as a basis for determining the wage fund to be implemented for the unit.

c) State-owned corporations 91/TTg and 90/TTg have the responsibility to aggregate the wage fund to be implemented and the actual profit of each unit and the centralized accounting portion of the corporation. The reduction of the wage fund to be implemented is handled as follows:

- If the actual profit of the corporation is lower than the profit corresponding to the assigned wage rate, the wage fund to be implemented must be reduced according to the provisions in Section II of Circular Joint No. 18/1998/TTLT-BLDTBXH-BTC. The Chairman of the Board of Directors or General Director of the corporation will review and allocate the reduced wage fund among the units of the corporation.

- If the actual wage rate of the entire corporation exceeds the assigned wage rate reviewed by the competent authority, the Chairman of the Board of Directors or General Director of the corporation must adjust the reduction of the wage fund to be implemented for each unit to ensure it does not exceed the assigned wage rate reviewed by the competent authority. The corporation is responsible for sending a list of units required to reduce their wage fund to the Provincial Tax Bureau where the corporation is headquartered and where the units are headquartered to adjust the wage fund to be implemented.

III. DETERMINATION OF THE WAGE FUND TO BE IMPLEMENTED IN 1999:

1999 is the first year that state enterprises implement the Value Added Tax Law (VAT). When reviewing wage rates for 1999, the competent authority has calculated and adjusted them to the same level for comparison with the actual profit of 1998 and assigned wage rates. Therefore, the determination of the wage fund to be implemented in 1999 is based on the assigned wage rate and the profit target corresponding to the assigned wage rate reviewed by the competent authority according to the level of management.

IV. This circular takes effect from the date of issuance to determine the wage fund to be implemented for enterprises from 1998 onwards and replaces Clause b, Point 1, Part C, Section IV of Circular No. 13/LDTBXH-TT dated April 10, 1997 of the Ministry of Labor, War Invalids and Social Affairs. Specifically, Point 2, Section II of Circular Joint No. 18/1998/TTLT-BLDTBXH-BTC dated December 31, 1998 of the Joint Ministry of Labor, War Invalids and Social Affairs and the Ministry of Finance is amended as follows:

- "When the actual profit is lower than the profit target corresponding to the assigned wage rate reviewed by the competent authority according to the level of management, the enterprise must reduce the wage fund corresponding to the difference between the actual profit and the profit target corresponding to the assigned wage rate according to one of the two methods below:"

- The symbol Pnt: Actual profit of the previous year is now changed to Pkh: Profit target corresponding to the assigned wage rate reviewed by the competent authority according to the level of management.

The ministries managing industries and sectors, the People's Committees of provinces and centrally governed cities, and the State General Corporations 91/TTg and 90/TTg are responsible for guiding enterprises under their management to comply with the above regulations. Any difficulties encountered during implementation should be reported to the Joint Ministry of Labor, Invalids and Social Affairs - Ministry of Finance for study and resolution.