Circular No. 22/TC-CN stipulates the regulations on expenditures outside production costs and the handling of certain items related to production costs for state-owned enterprises.

CIRCULAR

ISSUED BY THE MINISTRY OF FINANCE NUMBER 22/TC-CN ON MARCH 19, 1987

REGULATING THE SYSTEM OF EXPENSES OUTSIDE COST AND HANDLING

CERTAIN ITEMS RELATED TO COST

OF STATE ENTERPRISES

To implement Decision No. 76-HĐBT dated June 26, 1986 of the Council of Ministers on the temporary financial autonomy of basic economic units, the Ministry of Finance guides the system of expenses outside cost and circulation fees (hereinafter referred to collectively as cost), and handling certain items related to cost of state enterprises, including economic service units with business accounting (hereinafter referred to briefly as enterprises) as follows:

1. Training expenses:

a) For newly established enterprises, enterprises expanding construction, modernizing through the installation of new equipment, all training expenses for production workers, management staff, vocational training, etc., accompanying the project will be covered by the capital investment for basic construction.

b) For enterprises currently in production, expenses for schools and training centers beside the Enterprise Associations, General Companies, Companies, and enterprises to train new workers, mentor, improve skills, upgrade technical levels, professional qualifications, or provide knowledge enhancement for cadres, workers, and employees in a work-study format... according to approved plans must be accounted for in the product cost.

Specifically, for schools under Enterprise Associations, General Companies, and Companies that do not have centralized economic accounting, training expenses will be mobilized from affiliated enterprises, deducted from the product cost based on the need to supplement labor indicators of those enterprises, or according to a percentage of the annual salary fund of cadres, workers, and employees of each affiliated enterprise. The specific level of mobilization shall be decided by the superior management authority of the enterprise.

In addition, depending on the demand for labor and the ability to secure funds, enterprises may use the production development incentive fund to open additional training classes beyond the national plan's quota.

c) The budget only provides funding for regular training schools directly under Ministries, General Departments, People's Committees of provinces, cities, and centrally-administered municipalities assigned training quotas by the State.

In cases where some Enterprise Associations, General Companies, and basic economic units are far from cultural and social centers and need to establish training schools and are assigned training quotas by the State but cannot self-fund these costs from the cost (meaning higher cost than selling price), the budget will provide funding from the education service fund.

Expenses for training schools and classes beside enterprises, or directly under Ministries, General Departments, People's Committees of provinces, cities, and centrally-administered municipalities must follow the expense standards determined by the joint ministries (Ministry of Finance, Ministry of Labor and Social Affairs, Ministry of Higher Education and Vocational Training).

2. Medical expenses:

Expenses for factory clinics, including salaries of medical staff and common medication costs for factory cadres, workers, and employees, are accounted for in the product cost.

For hospitals, convalescent homes, and multi-specialty clinics managed by Enterprise Associations, General Companies, Companies, and enterprises, all regular expenses including administrative and operational costs are accounted for in the product cost.

Specifically, for hospitals and convalescent homes under Enterprise Associations, General Companies, and Companies without centralized economic accounting, expenses for these hospitals and convalescent homes are mobilized from affiliated enterprises, deducted from the product cost based on a percentage of the annual salary fund of cadres, workers, and employees of each affiliated enterprise. The specific level is decided by the superior management authority of the enterprise.

Units and enterprises can use welfare funds to support additional non-routine expenses of health facilities they manage such as purchasing additional medical equipment, repairing medical equipment, and supplementing part of the food allowance for patients staying at these facilities.

Expenses for cadres, workers, and employees taking vacations at rest houses of Enterprise Associations, General Companies, and Enterprises are funded from the unit's welfare fund.

The budget only provides funding for hospitals and convalescent homes directly under Ministries, General Departments, People's Committees of provinces, cities, centrally-administered municipalities, districts, and counties assigned hospital bed quotas by the State. In cases where some Enterprise Associations, General Companies, and enterprises are far from cultural and social centers and transportation routes and organize hospitals and convalescent homes and are assigned annual hospital bed quotas by the State but cannot self-fund these costs from the cost or circulation fees (meaning higher product cost than selling price), the budget will provide funding from the health service fund.

Expenses for hospital beds, convalescent home beds, and outpatient clinic beds regardless of the source of funding must comply with the general standards set out in the joint circulars of the Ministry of Health and the Ministry of Finance.

3. Expenses for military training:

Workers and officials who take time off for regular annual military training still receive their wages, which the enterprise can account for in the product cost. Any additional allowances (if any) are paid from the welfare fund.

Expenses for reserve military personnel who are cadres, workers, and employees when concentrated for training or combat readiness checks according to the Ministry of Defense's plan, such as uniforms, food, accommodation, and other expenses starting from the day the training unit receives the reserve personnel, are covered by the defense training budget. Wages and regular allowances, travel expenses, and travel subsidies (including both outbound and return trips) for reserve military personnel who are cadres and workers of enterprises are accounted for in the product cost.

In special cases requiring the mobilization of enterprise self-defense forces due to war needs, the funding and expenditure shall be handled according to the specific regulations of the joint ministries of National Defense and Finance.

4. Expenses for collective dining services:

Costs for collective dining halls, third-shift dining halls, hazardous dining halls, and mid-shift dining halls include salaries and allowances of staff serving and managing these dining facilities, as well as electricity and water costs, which are recorded in the product cost.

Enterprises may collect from employees eating daily at collective dining halls an amount equal to 5% of their meal allowance (excluding third-shift, hazardous, and mid-shift meal allowances) to reduce the dining service costs included in the product cost.

Enterprises may use welfare funds to purchase equipment and utensils for dining services.

5. Expenses for experts:

For expenses related to experts in construction investment projects, such expenses shall be covered by the construction investment capital.

The expenses for experts in production, business, and economic-accounting public institutions, including salaries and other expenses, shall be recorded in the product cost or circulation fees.

Common experts of Ministries or sectors, and experts in non-economic-accounting public institutions shall be funded by public institution capital.

Salaries and other expenses for staff serving experts, including interpreters, shall be covered by the same sources of capital as those for experts.

6. Interest paid to banks on working capital loans and settlement loans:

The interest paid to banks on working capital loans and settlement loans, after deducting interest income from bank deposits, shall be recorded in the product cost.

Penalties and compensation received due to credit transactions shall be recorded in the enterprise's profit and loss account (retained earnings portion).

In cases where enterprises borrow from banks for basic construction investments or fixed asset acquisitions, the source for repaying the principal loan is the depreciation fund of the borrowed fixed assets.

Additionally, if enterprises need to repay the principal loan quickly and the depreciation fund is insufficient, they may use their own investment capital for basic construction to repay the loan.

The source for repaying interest on loans for basic construction investments and fixed asset acquisitions shall be taken from the enterprise's general profits (before distribution between the State and the enterprise).

7. Allowances for surplus labor awaiting work and termination benefits:

Enterprises have the responsibility to arrange production and utilize surplus labor capacity to produce additional products for society. In cases where surplus employees cannot be reassigned to other jobs or transferred to other locations, enterprises may allow them temporary leave to seek employment or wait for termination procedures. During this period, employees on temporary leave will receive unemployment allowance, which enterprises can record in the product cost.

Employees who are terminated due to organizational restructuring, health reasons, voluntary resignation, disciplinary actions, and who are not entitled to disability benefits or retirement benefits, shall receive termination benefits. The expenses for termination benefits shall be recorded in the product cost.

The duration and amount of temporary leave unemployment allowance and termination benefits shall be in accordance with current regulations stipulated in Circulars guiding the implementation of Directive No. 331-CT dated November 8, 1985, issued by the Council of Ministers, and Circular No. 21-TT/LB dated November 16, 1985, issued jointly by the Ministry of Labor, Finance Ministry, and Vietnam General Confederation of Trade Unions.

8. Regular hardship allowances and emergency hardship allowances:

Regular hardship allowances and emergency hardship allowances for enterprise employees shall be provided from the social assistance fund according to Directive No. 331-CT dated November 8, 1985, issued by the Chairman of the Council of Ministers, and Circular No. 21-TT/LB dated November 16, 1985, issued jointly by the Ministry of Labor, Finance Ministry, and Vietnam General Confederation of Trade Unions.

9. Relocation allowances:

Relocation allowances for employees and new hires assigned to work long-term at state-owned enterprises, construction sites, farms, and forestry stations located in mountainous areas, islands, and newly developed economic zones shall be implemented according to Decision No. 150-CT dated April 26, 1985, issued by the Chairman of the Council of Ministers, and Circular No. 9-LĐ/TT dated August 5, 1985, issued by the Ministry of Labor. The employing unit may record relocation allowances in the product cost or in the basic construction investment budget (if it pertains to a basic construction investment project).

This Circular takes effect from January 1, 1987, and all previous provisions contrary to this Circular are hereby abolished.

Any issues encountered during implementation should be promptly reported to the Ministry of Finance for research and resolution.