Circular No. 21-TC/CNA guides the amendment and supplementation of the state revenue collection system, profit distribution, and the establishment of enterprise funds according to Decision No. 146-HÐBT dated August 25, 1982 of the Council of Ministers.

CIRCULAR

DIRECTIVE NO. 21-TC/CNA OF SEPTEMBER 1, 1982 ISSUED BY THE MINISTRY OF FINANCE GUIDING THE AMENDMENTS AND SUPPLEMENTS TO THE SYSTEM OF STATE ENTERPRISE INCOME COLLECTION, PROFIT DISTRIBUTION, AND ESTABLISHMENT OF ENTERPRISE FUNDS PURSUANT TO DECISION NO. 146-HĐBT OF AUGUST 25, 1982 OF THE COUNCIL OF MINISTERS

The Council of Ministers issued Decision No. 146-HĐBT dated August 25, 1982, amending and supplementing Decision No. 25-CP dated January 21, 1981 of the Council of Ministers. The Ministry of Finance guides the accounting of production costs, determination of state enterprise income levels, and implementation of profit distribution and establishment of enterprise funds in production and business sectors according to the above-mentioned decision as follows:

I. ACCOUNTING FOR COSTS, DETERMINATION OF ENTERPRISE PROFITS, AND STATE ENTERPRISE INCOME LEVELS

A. FOR PRODUCTS MADE WITH MAIN MATERIALS PROVIDED BY THE STATE

The accounting for costs and determination of fixed profits, planned profits, actual profits, and state enterprise income levels shall be carried out strictly in accordance with the current regulations based on the state-guided prices.

B. FOR PRODUCTS MADE WITH MATERIALS FOUND ON ONE'S OWN INITIATIVE TO COMPLEMENT THE PLANNED SUPPLEMENTARY PART

1. Accounting for production costs and unit product cost:

In principle, the quantity and unit cost of products made with materials found on one's own initiative must be accounted for separately based on full cost calculation including actual purchase price of raw materials, adequate depreciation of basic assets, major repairs, and other costs as uniformly prescribed by the State.

The separate accounting for unit product cost of products made with materials found on one's own initiative can be implemented through various accounting methods depending on the specific conditions of each enterprise.

For enterprises that meet any of the following conditions:

- Organizing a separate production line;

- Using materials of different types from those provided by the State;

- Producing products not of the same type as those produced using materials provided by the State, the separate accounting for unit product cost will be conducted from the initial recording stage to the final stage of production cost aggregation and unit product cost calculation.

For enterprises that do not meet these conditions and produce products that include both materials provided by the State and additional materials found on their own initiative, the quantities of products produced under the State-provided material plan and the supplementary plan using self-found materials will be determined based on the proportion of corresponding material costs (by quantity or by unified guided price) involved in producing such products.

To simplify unnecessary complex calculations while ensuring the accuracy of accounting data, the separate accounting for unit product cost in this case may be carried out as follows: all production costs, including costs of self-found materials, are accounted for at the guided price. The price difference of self-found materials is separately accounted for and allocated into the unit product cost of the supplementary plan.

The unit product cost of the supplementary plan made with self-found materials is the guided price unit product cost plus or minus (±) the price difference of self-found materials, calculated as follows:

2. Fixed profit of the supplementary plan:

The fixed profit of products made with self-found materials is calculated based on the absolute value of the fixed profit of similar products made with materials provided by the State.

If the products made with self-found materials do not match the products produced by the enterprise using State-provided materials and thus have no available fixed profit to apply, the fixed profit of similar products produced by another enterprise can be applied. If there are no matching products in other enterprises, the fixed profit of similar products produced by the enterprise after deducting the fluctuation factor of raw materials can be applied.

Example: A detergent factory has its main product made with State-provided raw materials, with a cost excluding raw materials being Z(B) and a fixed profit L(B) (in absolute value). However, it also produces toothpaste made with self-found raw materials, with a cost excluding raw materials being Z(K). The fixed profit L(K) of toothpaste made with self-found materials would be:

L(B) x Z(K)

L(K) =

Z(B)

3. Wholesale price of the enterprise for products made with self-found materials:

After determining a reasonable cost for products made with self-found materials (calculated fully based on the self-found raw material price) and determining the fixed profit per unit product, the wholesale price of the enterprise is calculated as follows:

4. Industrial wholesale price for products made with self-found materials: Industrial wholesale price for products made with main materials found on one's own initiative:

The industrial wholesale price for products made with self-found materials is calculated based on the industrial wholesale price of products made with main materials provided by the State.

5. Determination of state enterprise income level:

The difference between the industrial wholesale price and the enterprise wholesale price is the state enterprise income level. The formula is as follows:

In cases where products made with self-found materials have higher prices than the State-guided prices, leading to increased costs and enterprise wholesale prices, the enterprise still sells the products at the unified industrial wholesale price and the state enterprise income collection agency reduces the amount to be paid accordingly with the increase in material purchase prices. Conversely, if self-found materials purchased at lower prices than the State-guided prices result in reduced costs and enterprise wholesale prices, the price difference of these materials is the additional state enterprise income level to be paid into the State budget.

Based on the cost structure, factory selling price, and industrial wholesale price established by the enterprise, the enterprise must determine the state revenue level for products produced by the enterprise and submit it to the financial authority for review. The Ministry of Finance reviews the state revenue levels for central enterprises, while provincial and municipal finance bureaus review the state revenue levels for local enterprises.

In cases where the enterprise has not yet established the cost structure, factory selling price, and industrial wholesale price to serve as the basis for officially determining the state revenue level, the enterprise (including both central and local enterprises) must temporarily calculate the state revenue level and submit it to the provincial or municipal finance bureau for temporary approval to promptly pay the monthly state revenue. When selling products, the enterprise must pay according to the approved state revenue level. After quarterly settlement, the enterprise will recalculate the actual state revenue level to be paid in accordance with price differences that have occurred in the supplementary plan using self-sourced materials.

When determining the state revenue level for products produced using self-sourced materials, if the factory selling price increases to a level where the state no longer collects state revenue, the enterprise must report this to the superior management authority and the same-level financial authority for examination and decision.

Generally, the enterprise must ensure sufficient compensation for production and business costs without incurring losses when producing with self-sourced materials (except for items subject to government loss subsidy policies).

For products not considered essential in the supplementary plan using self-sourced materials, if the actual cost exceeds the industrial wholesale price but there is still social demand and it is deemed that state trade can sell at a higher retail price, the enterprise may request relevant authorities to adjust the factory selling price and industrial wholesale price to ensure coverage of production costs and profit for the enterprise.

If an enterprise accepts raw materials from another state-owned organization for processing into finished goods, the processing enterprise shall be entitled to a fixed profit margin and state revenue equivalent to the state revenue and fixed profit margin of similar products produced using materials supplied by the state.

If an enterprise accepts raw materials from collective organizations or private entities for processing into finished goods, the processing enterprise shall be entitled to processing costs, a fixed profit margin, and taxes payable under the current commercial and industrial tax regime.

Therefore, units, organizations, or individuals providing processing must settle with the processing enterprise the processing costs, fixed profit margin, and state revenue or product tax. The processing enterprise is responsible for paying state revenue or product tax to the state budget on behalf of the units, organizations, or individuals providing processing.

In cases where an enterprise accepts short-term processing stages with processing costs being too small compared to the total production costs, the payment of state revenue or tax on such products may be made by the party providing processing when selling the products, as decided by the state revenue collection authority.

C. REGARDING BY-PRODUCTS

Enterprises organizing by-product production must register the product type, cost, and selling price with their direct supervisory authority. For by-products, enterprises must pay state revenue equal to 10% of the sales revenue:

Thus, the actual profit of by-products is calculated as follows:

Profit = Sales Revenue - Actual Cost - State Revenue 10%

To encourage enterprises to utilize waste materials and surplus labor, if the cost of by-products increases (due to objective reasons such as unstable production, rising raw material prices, etc.), and the realized profit is lower than the fixed profit margin of similar products or there is no profit left, the enterprise may request the superior management authority and the same-level financial authority to reduce or exempt the aforementioned state revenue.

In this case, the enterprise must ensure sufficient compensation for production costs, repayment of debts and bank interest if any, and non-lossful operation.

II. DISTRIBUTION OF PROFITS AND ESTABLISHMENT OF ENTERPRISE FUNDS

A. REGARDING THE PART OF THE PLAN SUPPLIED WITH MAIN MATERIALS BY THE STATE

1. If the enterprise fulfills the legal plan indicators of the state plan, in addition to setting aside development funds according to the current system, the enterprise may set aside profits for incentive and welfare funds at the following rates:

- For heavy industries, construction, transportation, timber extraction, and marine fishing enterprises, two funds (welfare and incentives) amounting to 24% of the total wage fund for the year of workers and staff engaged in the state-supplied materials plan production and business activities (excluding unreasonable expenses in the wage fund such as defective product wages, excess downtime wages beyond permitted limits, and expenses contrary to current wage policy, etc.).

- For light industries and food processing enterprises, two funds (welfare and incentives) amounting to 20% of the total wage fund for the year of workers and staff engaged in the state-supplied materials plan production and business activities (excluding unreasonable expenses in the wage fund such as defective product wages, excess downtime wages beyond permitted limits, and expenses contrary to current wage policy, etc.).

The distribution ratio between the incentive fund and the welfare fund is 70% for the incentive fund and 30% for the welfare fund.

If the enterprise does not need additional working capital within the standard limit, the remaining profit will be submitted to the state budget.

The enterprise will be reviewed for working capital within the standard limit to ensure activities under the main production plan and by-product production plan. Any shortfall in the budget allocation part must be planned for supplementary sources such as reallocating surplus funds from areas with excess to those with shortages, and if the profit contribution to the budget still falls short, the budget will provide additional funding according to the approved plan. During production, any increase in working capital above the standard limit and outside the plan will be resolved through bank loans.

2. The enterprise achieves profit exceeding the plan.

If the enterprise's submitted profit exceeds the plan, it shall be allocated to the enterprise fund at the following rates:

- For enterprises in heavy industry, construction, transportation, wood extraction, and marine fishing industries, sixty percent of the excess submitted profit shall be allocated to the enterprise funds.

- For enterprises in light industry and food processing industries, fifty percent of the excess submitted profit shall be allocated to the enterprise funds.

Thus, the total amount of excess submitted profit will include both the actual amount submitted to the state budget exceeding the plan and the amount allowed to remain and allocated to the enterprise funds according to the aforementioned ratio of excess submitted profit.

- In both cases, the allocation exceeding the plan shall be supplemented to the funds at the following rates:

- Sixty percent for the award fund,

- Twenty percent for the welfare fund,

- Twenty percent for the production development fund.

The remaining profit will be submitted to the state budget.

When determining the completed and exceeded profit plan submitted to the state budget, it is necessary to exclude profit increases due to objective reasons (such as changes in industrial wholesale prices, wholesale material prices by the State, enterprises raising prices in violation of current regulations, producing products not meeting specifications, fines collected from other units not included in the enterprise's profit planning...).

The above profit increases must be fully submitted to the state budget.

3. In the case where the enterprise fails to meet three main indicators of the plan stipulated below, for each percentage point not met regarding an indicator, two percent of the basic allocation amount of each fund shall be deducted:

- Value of goods output achieved.

- Main products meeting specified quality standards.

- Profit and payments to the budget (based on realized profit).

B. PART OF THE PLAN COMPLEMENTED BY ENTERPRISES SEEKING MATERIALS FOR PRODUCTION

Enterprises in heavy industry, construction, transportation, wood extraction, and marine fishing industries shall allocate sixty percent, and enterprises in light industry and food processing industries shall allocate fifty percent of the realized profit from this part of the plan to supplement the funds at the following rates:

- Sixty percent for the award fund;

- Twenty percent for the welfare fund,

- Twenty percent for the production development fund.

The remaining profit will be submitted to the state budget.

If the enterprise fails to complete the profit submission plan for the production part supplied with materials by the State without a valid reason, the enterprise must use the realized profit from the supplementary production part obtained through self-sourced materials to make up for the shortfall (and when reviewing the completion of the State-supplied materials production plan, it will be considered as completing the profit submission plan). The remaining amount will then be considered as the realized profit from the supplementary production part obtained through self-sourced materials to be allocated according to the aforementioned regulations.

C. In the case where the enterprise produces using foreign currency loans from banks to import primary materials for export products:

1. The enterprise complies with the State's regulations on exports, imports, banking credit, and foreign exchange management. All revenues and expenditures must be clearly recorded and converted to Vietnamese Dong according to the exchange rate set by the State (enterprises are not allowed to allocate enterprise funds using foreign currency).

2. The portion of profit earned by the enterprise from borrowing foreign currency from the bank for production shall be recorded separately, and after fulfilling all tax obligations to the State according to current regulations and repaying the foreign currency loan and interest to the bank, enterprises in heavy industry, construction, transportation, wood extraction, and marine fishing industries may allocate sixty percent to establish enterprise funds, while enterprises in light industry and food processing industries may allocate to establish enterprise funds.

The retained profit for the enterprise shall be distributed to the funds in the following ratio:

- Sixty percent for the award fund,

- Twenty percent for the welfare fund,

- Twenty percent for the production development fund.

The remaining profit shall be paid into the State budget.

D. In the case where the enterprise has production profits from by-products made from scrap materials, after paying the state revenue as stipulated in Point C, Section I above, the enterprise in all industries may allocate 70% of the actual profit from the by-product production to supplement the funds in the following ratio:

- Sixty percent for the award fund,

- Twenty percent for the welfare fund,

- Twenty percent for the production development fund.

The remaining profit (30%) shall be paid into the State budget by the enterprise.

E. In the event that the enterprise violates economic and financial management systems and policies of the State as follows, for each violation under any plan (production using state-supplied materials, production using self-sourced materials; by-product production plan), depending on the degree of violation, the amount allocated to each fund corresponding to the relevant plan of the enterprise shall be reduced by:
2 to 5%.

Causing damage to material assets, capital, and money;

Causing fatal accidents due to management deficiencies or lack of responsibility;

Violating economic contracts, product delivery systems, distribution and purchase prices set by the State;

Violating accounting, statistical reporting systems, and financial discipline in budget submission.

III. THE RELATIVE CONTROL LEVEL OF THE INCENTIVE AND WELFARE FUNDS

If the total amount of the incentive and welfare fund extracted from different sources (main production, by-product production) throughout the year exceeds six months' average wage of the enterprise's production and business staff, the excess amount (from the seventh month onwards) shall be retained by the enterprise at 30%, transferred to the superior level at 20% to establish a centralized financial reserve fund, and the remaining amount (50%) shall be paid into the State budget.

Profits submitted to the superior management authority to establish a financial reserve fund for the Ministry, Department, Bureau, or Association of Enterprises under their management. Principles for establishing and using the financial reserve fund will be separately regulated by the Ministry of Finance.

The portion retained for the enterprise shall be distributed to the funds in the following ratio:

- Sixty percent for the award fund,

- 20% welfare fund,

- Twenty percent for the production development fund.

The bonus from the enterprise completing export tasks according to special bonus incentives for exports shall not be included in the relative control level and may be supplemented to the enterprise's funds in the following ratio:

- Sixty percent for the award fund,

- 20% welfare fund,

- Twenty percent for the production development fund.

If the enterprise fails to complete the main production plans and by-product production plans, resulting in excessive deductions from the incentive and welfare funds, failing to reach an average of 60 dong per person for both funds combined, the State budget shall provide supplementary funding to meet this average (the amount of 60 dong per person to be added to either the incentive fund or the welfare fund shall be decided by the enterprise director).

IV. IMPLEMENTATION PROVISIONS

This Circular applies only to centrally and locally owned state-owned industrial enterprises in all sectors. For construction, transportation, agriculture, timber extraction, marine fishing enterprises, the respective ministries shall consult with the Ministry of Finance to apply profit distribution and fund allocation systems suitable for their specific conditions. This Circular does not apply to distribution, circulation, service, cultural, health, educational enterprises, administrative and public service agencies, and separate regulations will be established.

Previous provisions regarding state revenue collection, profit distribution, and incentive and welfare fund allocations in Circulars No. 3-TC/CNXD dated March 28, 1978, and No. 4-TT/TC dated March 18, 1981, issued by the Ministry of Finance, which conflict with the provisions of this Circular, are hereby abolished.

This Circular takes effect from September 1, 1982, and shall be applied to profit distribution and establishment of enterprise funds in 1982.