Circular No. 206/2012/TT-BTC guiding the establishment, management, and use of centralized funds of the Vietnam National Coal-Mineral Industries Group

CIRCULAR

Guidelines for the establishment, management, and utilization of centralized fundsof the GroupVietnam National Coal-Mineral Industries Holding Corporation Limited

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Pursuant to the Law on Corporate Income Tax No. 14/2008/QH12 dated June 3, 2008 of the National Assembly of the Socialist Republic of Vietnam;

Pursuant to the Decree No. 118/2008/NĐ-CP dated November 27, 2008 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Pursuant to Decision No. 989/QĐ-TTg dated June 25, 2010 of the Prime Minister regarding the transfer of Vietnam National Coal-Mineral Industries Holding Corporation Limited from a state-owned company to a limited liability company wholly owned by the State;

Pursuant to Decision No. 418/QĐ-TTg dated March 21, 2011 of the Prime Minister approving the Charter on organization and operation of Vietnam National Coal-Mineral Industries Holding Corporation Limited;

Implementing the directive of the Deputy Prime Minister in Circular No. 8560/VPCP-KTTH dated December 1, 2011 of the Government Office on centralized funds of Vietnam National Coal-Mineral Industries Holding Corporation Limited;

The Minister of Finance hereby issues this Circular amending and supplementing certain Articles of Circular No. 133/2015/TT-BTC dated August 31, 2015, issued by the Minister of Finance guiding the financial management mechanism for the Vietnam Chamber of Commerce and Industry (hereinafter referred to as Circular No. 133/2015/TT-BTC).

The Minister of Finance issues this Circular guiding the establishment, management, and utilization of centralized funds of Vietnam National Coal-Mineral Industries Holding Corporation Limited.

Article 1. Scope of application and scope of regulation:

1. The scope of application of this Circular includes Vietnam National Coal-Mineral Industries Holding Corporation Limited (VINACOMIN), units engaged in coal-mineral exploration and processing, and units benefiting from centralized funds within Vietnam National Coal-Mineral Industries Holding Corporation Limited.

2. The scope of regulation of this Circular covers the establishment, management, and utilization of centralized funds at VINACOMIN, including:

a) Coal-Mineral Exploration Fund.

b) Coal-Mineral Environmental Protection Fund.

c) Mine Rescue Fund.

d) Training and Healthcare Fund.

đ) Labor Structure Reform Fund.

Article 2. Sources of formation and ratio for establishing the funds.

1. Centralized funds shall be included in deductible expenses when determining taxable income of VINACOMIN and units producing and processing coal-minerals, with specific ratios as follows:

a) The Coal-Mineral Exploration Fund shall be calculated at a maximum of not more than 2% of the total revenue of units producing and processing coal-minerals;

b) The Coal-Mineral Environmental Protection Fund shall be calculated at a maximum of not more than 1.5% of the total revenue of units producing and processing coal-minerals;

c) The Mine Rescue Fund shall be calculated at a maximum of not more than 0.1% of the total revenue of units producing and processing coal-minerals;

d) The Training and Healthcare Fund shall be calculated at a maximum of not more than 0.3% of the total revenue of units producing and processing coal-minerals;

đ) Revenue of units processing coal-minerals for calculating and establishing the fund is sales revenue minus the value of purchased coal-minerals sold during the period.

e) Revenue of units producing coal shall be calculated according to the enterprise accounting regulations.

2. The Labor Structure Reform Fund shall be calculated from the annual salary fund of VINACOMIN and units producing and processing coal-minerals. The ratio shall be a maximum of not more than 1% of the total salary fund of the parent company and units producing and processing coal-minerals.

The Board of Members of Vietnam National Coal-Mineral Industries Holding Corporation Limited shall take the lead and coordinate with the Trade Union Industry Executive Committee to establish rules for calculating, managing, and utilizing this fund in compliance with relevant laws and the Charter of the Group.

3. Principles for calculating centralized funds: The Board of Members of the Group decides the specific ratio for calculating centralized funds annually but must ensure the following conditions:

a) The ratio for calculating centralized funds shall not exceed the levels specified in Clause 1 and Clause 2 of this Article.

b) The level of calculation for centralized funds shall not exceed the budgeted revenue and expenditure plan for centralized funds of the Group for the year after reaching an agreement with the Ministry of Industry and Trade (including surplus funds carried over from the previous year).

c) Calculating into costs to provide sources for VINACOMIN to establish centralized funds shall not cause enterprises to incur losses. Enterprises experiencing production and business losses shall not be allowed to calculate into costs to provide sources for VINACOMIN to establish centralized funds.

4. Surplus of centralized funds: The surplus of centralized funds of VINACOMIN shall be transferred to the next year with a maximum of not more than 10% of the total budgeted expenditure for centralized funds of the next year. If the surplus exceeds 10% of the total budgeted expenditure for centralized funds of the next year, the excess shall be returned to taxable income at the parent company.

5. Based on the decision approving the production and business plan, the revenue and expenditure plan for centralized funds of VINACOMIN, and the implementation status of the production and business plans of units subject to cost calculations for providing sources for VINACOMIN to establish centralized funds, quarterly, the Board of Members of VINACOMIN shall notify the allocation plan for costs to be included in business expenses for enterprises to implement, with the calculation time being the end of each quarter in the year.

Article 3. Content of expenditure, management and use of centralized funds.

1. Content of expenditure and use of funds

a) Coal-Mineral Exploration Fund.

- Expenditure for geological survey and exploration of coal and mineral deposits: Expenditure for establishing applications to obtain permission for exploration, expenditure for compiling final reports on exploration results, expenditure for engineering geological surveys, hydrogeological surveys, meteorological and hydrological surveys of coal and mineral deposits.

- Expenditure for exploration and supplementary exploration to increase reserves serving investment projects.

- Expenditure for resource development exploration.

- Expenditure for compiling reports on resource conversion and reserve allocation.

- Expenditure for topographic mapping (including aerial photography methods), monitoring ground movement, acceptance of coal and mineral deposit volumes.

- Expenditure for building geological databases of coal mines and other mineral mines.

- Expenditure for constructing lava maps, coal quality maps, and other mineral quality maps.

The aforementioned expenditures are limited within the territory of Vietnam. If funding is used to serve exploration activities abroad, it must be approved by the Prime Minister.

b) Coal-Mineral Environmental Protection Fund.

- Expenditure for construction and investment in systems for collecting, storing, treating, and recycling waste, as well as systems for preventing and controlling environmental pollution.

- Expenditure for environmental restoration and landscape improvement at waste dumps, mining sites, and other production areas; environmental restoration and landscape improvement in affected areas.

- Expenditure for building drainage systems, water treatment facilities, dams, levees, culverts, and transportation infrastructure related to environmental protection work.

- Expenditure for resolving and mitigating environmental incidents and natural disasters.

- Expenditure for operating and using facilities invested in to treat environmental pollution.

c) Mine Rescue Fund.

- Expenditure for purchasing special equipment for mine rescue operations such as fire trucks, ambulances, water pumps, air compressors, etc.

- Regular expenses for the operation of the Mine Rescue Center under Vinacomin including: salary costs, allowances, social insurance, health insurance, unemployment benefits, trade union fees, midday meals, major repairs, regular maintenance of fixed assets; administrative management costs; industrial safety and health costs, typhoon and flood prevention, disaster relief, environmental protection costs; business license tax, fees, and other costs.

- Costs for mine rescue operations including: specialized materials and tools for mine rescue; chemicals and tools for mine rescue...

d) Training and Healthcare Fund.

- Expenditure for training technical workers and college students includes:

+ Expenditure for training specialized professions of the Group including: Underground Coal Mining Engineering, Underground Coal Mine Construction Engineering, Underground Coal Mine Electrical and Mechanical Engineering, Metallurgy, Chemicals.

+ Expenditure for purchasing equipment and facilities for schools and teaching aids for schools.

+ Expenditure for compiling teaching materials for specialized subjects; organizing skill competitions for specialized subjects both domestically and internationally.

- Expenditure for training and upgrading managerial and technical staff.

- Expenditure for healthcare:

+ Regular support expenditure for medical centers and hospitals of the Group.

+ Examination and treatment of occupational diseases (such as pneumoconiosis...).

d) The Labor Structure Reform Fund includes:

- Support expenditure for employees retiring early.

- Support expenditure for employees who leave with one-time compensation.

- Specific levels of support for each category mentioned above shall be decided by VINACOMIN but shall not exceed the state's regulations on labor surplus policies due to restructuring state-owned enterprises.

e) Expenditures for coal and mineral exploration, environment, mine rescue, training, health care, and labor structure reform that have been compensated from other sources shall not be allocated from centralized funds at VINACOMIN.

2. Procedure for using funds.

a) At units using the Fund

- Annually, units using centralized funds base their needs for new mine construction, capacity expansion of existing mines; assess the impact of coal and mineral production and business activities on the environment; plan the activities of the Mine Rescue Center; investment needs at training institutions, medical centers, and plans for labor structure reform to organize the preparation of centralized fund usage plans for approval by the Group.

- Based on the approved centralized fund usage plans, units implement and organize specific execution:

+ Prepare detailed budgets for expenditures.

+ Advance payments, payment for completed work volume or regular expenditures for investment, health care, and labor structure reform.

- At year-end, units prepare final expenditure reports according to the approved plans, annual final expenditure reports of units must be audited before being submitted for Group approval.

- Units using the fund must retain decisions approving proposals, plans, budgets, budget allocation decisions, original vouchers, economic contracts, settlement files, and final expenditure reports as required.

b) At the Group: Based on the goals, strategies, and development planning for the industry already approved by the Prime Minister, the Group prepares plans for centralized fund revenue and expenditure, and allocates annual exploration, surveying, and environmental project plans; training, healthcare; mine rescue, and labor structure reform plans to units; while approving proposals, plans, and budgets for each unit.

- Organize supervision, inspection, and acceptance confirmation of the value of work completed for each proposal and plan.

- Implement advance payments according to the plan, settle all expenditures from the fund for units annually based on the final settlement figures.

- Retain documents regarding plans, decisions approving budgets, recognition results, acceptance confirmation records of work value for each proposal and plan, retain files and decisions approving final settlements; approve final settlements for each environmental project for units, inspect and confirm completion of environmental projects for units upon completion of phases or acceptance transfer into use.

- Manage funds, record centralized fund revenues and expenditures of Vinacomin.

3. VINACOMIN is responsible for:

a) Establishing and issuing standards for expenditure on training technical workers in specialized trades; standards for expenditure on occupational disease treatment as prescribed to serve as the basis for funding allocation to using units.

b) Develop specific management and usage procedures for each centralized fund in accordance with this Circular and relevant laws.

c) The organization managing centralized funds at VINACOMIN shall perform the following tasks:

- Prepare plans for revenue and expenditure of centralized funds.

- Manage, allocate, and monitor centralized funds.

- Consolidate and settle accounts of centralized funds as prescribed.

- Inspect and supervise units using funds to ensure they comply with intended purposes, contents, and timeframes.

d) Open separate bank accounts at commercial banks to track and clearly record revenues, expenditures, and surplus of centralized funds, with interest generated from deposits in these accounts being recorded as increases in corresponding funds.

Article 4. Revenue and Expenditure Plans for Centralized Funds.

1. Plan Preparation: Annually, VINACOMIN prepares revenue and expenditure plans for centralized funds for the following year and submits them to the Ministry of Industry and Trade and the Ministry of Finance before September 30 of the plan preparation year. Within thirty working days from receiving the written communication and complete documentation on the revenue and expenditure plans for centralized funds from VINACOMIN, the Ministry of Industry and Trade will take the lead in soliciting written opinions from the Ministry of Finance to provide written agreement to VINACOMIN.

2. Allocation of Revenue and Expenditure Plans for Centralized Funds: After obtaining the written agreement from the Ministry of Industry and Trade, VINACOMIN is responsible for allocating revenue and expenditure plans for centralized funds to the parent company and other units within the Group for implementation. The latest date for allocation of the plan is December 31 of the plan preparation year.

Article 5. Accounting for Funds and Bookkeeping.

VINACOMIN is responsible for maintaining accounting records, clearly and fully recording all revenues and expenditures; organizing the storage of documents and vouchers in accordance with legal regulations.

Organize the accounting process for calculating, preparing, managing, utilizing, and settling accounts for centralized fund expenses according to the accounting system applicable to the Vietnam Coal-Mineral Industry Group, which has been unified and guided by the Ministry of Finance.

Article 6. Settlement of Funds and Management of Assets Formed from Centralized Fund Sources.

1. For Units Utilizing Funds from Centralized Funds: At the end of the fiscal year, units utilizing funds from centralized funds of VINACOMIN must prepare and submit settlement reports to VINACOMIN. The main contents of the settlement report include:

a) Total sources of funds allocated from centralized funds during the year.

b) Expenditures made in accordance with the specified uses of centralized funds as stipulated in Clause 1, Article 3 of this Circular.

c) Variances, reasons, and recommendations from the units.

2. For VINACOMIN: Upon receipt of the settlement reports on fund utilization from the units, VINACOMIN is responsible for reviewing and approving the settlement of funds for the units utilizing the funds.

3. Based on the Decision Approving the Settlement of Funds by VINACOMIN:

a) VINACOMIN shall record a reduction in the source of funds from centralized funds corresponding to the settlement amount of the utilizing units.

b) Units utilizing funds from centralized funds:

- Shall record a reduction in the source of funds for regular expenditures that do not form fixed assets.

- Expenditures forming fixed assets from training, health care funds, and other units shall follow and account for according to the accounting system for administrative and public institutions as prescribed by the Ministry of Finance.

c) Assets formed from exploration funds for coal and mineral resources are geological documents:

- Documents serving immediate investment and development projects are recorded as reductions in construction project values.

- Documents not immediately used for investment and development projects, VINACOMIN is responsible for storing or transferring to geological units within the Group for storage as prescribed. When the Group needs to use them, their value will be reassessed according to regulations and included in the total investment budget for construction projects.

- In cases where exploration projects for coal and mineral resources have risks due to insufficient conditions to produce geological documents for industrial exploitation projects, the Group shall record a reduction in the source of funds from the corresponding fund based on the volume of work completed and settled in the exploration and survey projects.

d) Fixed assets formed from environmental protection funds for coal and mineral resources such as wastewater treatment stations, dams, retaining walls, culverts, transportation routes outside mine boundaries, specialized equipment, water spraying vehicles, protective forest belts...VINACOMIN assigns specialized environmental management enterprises within the Group to manage, maintain, operate, and utilize these assets according to regulations.

Article 7. Reporting System and Record Keeping.

After approving the final accounts report and adjusting the centralized funds' accounting, within no more than ninety days from the end of the fiscal year, Vietnam National Coal-Mineral Industries Group Corporation shall be responsible for compiling and submitting the final accounts report of the centralized funds to the Ministry of Industry and Trade and the Ministry of Finance for consolidation, inspection, and supervision as directed by the Prime Minister.

The final accounts report of the centralized funds of VINACOMIN must fully and truthfully reflect the figures at the time of preparation, the income and expenditure situation, the balance of the centralized funds, existing issues and difficulties during implementation, and recommendations for appropriate measures to address them.

VINACOMIN is responsible for preserving and storing accounting books, vouchers, and related documents concerning the income and expenditure of the centralized funds in accordance with current accounting regulations to serve the inspection and supervision work of relevant agencies.

Article 8. Handling Violations.

1. All expenditures not in accordance with the system, expenditures without valid and legitimate vouchers must be reversed; the person who ordered such incorrect expenditures must compensate and bear legal responsibility.

2. For expenditures from the centralized funds of VINACOMIN that have been approved by the Group but are found to be in violation through the inspection and supervision work of the Ministry of Finance, the Ministry of Industry and Trade, and auditing agencies, depending on the nature and severity of the violation, organizations and individuals committing the violation will be subject to disciplinary action, administrative penalties, or criminal prosecution; if damage is caused, compensation must be made according to the law.

Article 9. Implementation Provisions.

This Circular takes effect from January 12, 2013.

During implementation, if there are any difficulties, Vietnam National Coal-Mineral Industries Group Corporation is requested to promptly submit a written report to the Ministry of Finance for consideration and supplementation to ensure compliance./.