Joint Circular No. 37/TT-LB guiding the profit distribution regime for state-owned agricultural production enterprises

CIRCULAR

JOINT MINISTRY OF FINANCE - AGRICULTURE DECREE NO. 37/TT-LB DATED DECEMBER 30, 1982 GUIDELINES FOR THE DISTRIBUTION REGIME OF PROFITS FOR STATE-OWNED AGRICULTURAL ENTERPRISES

Pursuant to Decision No. 146-HĐBT dated August 25, 1982 of the Council of Ministers supplementing Decision No. 25-CP dated January 21, 1981.

Considering the characteristics of agricultural production.

The Joint Ministry of Finance - Agriculture hereby provides guidelines for the distribution regime of profits for state-owned agricultural enterprises implementing economic accounting as follows.

I. PRINCIPLES FOR BUILDING AND DETERMINING THE RESULTS OF IMPLEMENTING PRODUCTION PLANS USING STATE-PROVIDED MATERIALS AND SELF-SOURCED MATERIALS IN THE AGRICULTURAL SECTOR

1. Land is one of the main raw materials for agricultural production enterprises. Based on this characteristic and to enable agricultural production enterprises to conduct production, the State supplies certain materials such as fuel, chemical fertilizers, pesticides, machinery and equipment, protein feed, minerals; other materials are provided by the State for the enterprises to produce and exploit locally such as manure, green manure, concentrate feed, roughage, pastures, seeds, and animal traction (buffalo, cattle...). All these materials must be considered as State-provided materials for planning the production of products and accumulation for the State.

2. Enterprises using self-sourced materials for planting and breeding separately must account for production costs and profit or loss separately.

For enterprises using self-sourced materials in addition to State-provided materials to intensify production and increase product yields, where it is difficult to distinguish the results of production and finance from each source of materials, the following planning, statistics, and accounting work shall be carried out:

The enterprise shall establish a plan for submitting products and accumulating funds corresponding to the State-provided materials. If there is additional self-sourced material, the products and accumulations created must necessarily be higher than the State plan. The enterprise may register to exceed the State plan regarding the number of products and accumulations produced with self-sourced materials. When settling the excess over the plan, it may be due to various subjective efforts (improving technology, strengthening management, self-sourcing materials...); however, to simplify accounting work, all these achievements are accounted for as exceeding the State plan.

3. Agricultural production results depend not only on human subjective influence but also on soil fertility. To encourage enterprises to both extract products and reduce costs while effectively implementing intensive cultivation of orchards and livestock herds, ensuring long-term benefits, the State will stabilize the level of product submission and accumulation from 3 to 5 years for enterprises with stable production tasks and relatively stable material supply conditions, but this level must not be lower than the average level achieved in 1980-1981-1982.

Any excess over the stabilized level, regardless of the cause, shall be considered as exceeding the State plan.

II. ACCOUNTING FOR COST PRICE, FACTORY PRICE, AND WHOLESALE PRICE OF AGRICULTURAL PRODUCTS

1. Cost Accounting:

a) For products produced using State-provided materials, the enterprise shall account for cost prices according to the State's guidance price.

b) For products organized for separate production using self-sourced materials, costs must be accounted for individually based on actual purchase prices.

c) For products produced using both State-provided and self-sourced materials:

All types of materials used in production (including self-sourced materials) shall be accounted for in the cost price according to the State's material supply price, plus transportation and storage costs (if any) to include in the cost price for the portion of products under the State plan.

- The enterprise shall separately account for the price difference of self-sourced materials (actual purchase price (-) State material supply price) and distribute this difference to products produced using self-sourced materials (referred to collectively as products exceeding the plan). Thus, the cost price of products produced using self-sourced materials will equal the cost price of products produced using State-provided materials plus (or minus) the price difference between the two types of materials.

2. Prescribed Profit:

a) The principle for determining prescribed profit must be sufficient to cover enterprise fund expenses, self-compensation outside cost price, repayment of bank loans, and approximately 15-20% to be paid to the State budget.

In Circular No. 327-VGNN/THBB dated August 27, 1981, the State Price Commission has stipulated that the prescribed profit ratio equals 125% of the total cost price of agricultural products. When calculating according to this ratio, if the amount of prescribed profit is excessively high or low compared to the above requirements, the enterprise must prepare a recalculation plan and submit it to the Joint Ministries (for central enterprises) or the Chairman of the People's Committee of the province or centrally-administered city (for local enterprises) for review and decision.

b) For products produced using self-sourced materials, the prescribed profit (in absolute terms) is equal to the prescribed profit of products produced using State-provided materials.

3. Factory Price and Wholesale Price of Agricultural Products:

Up until now, the State has not specified factory prices or wholesale prices for state-owned agricultural products (except for raw rubber), thus most agricultural products are currently temporarily settled at the directed procurement price for collective areas. Recently, the cost of many items has exceeded the aforementioned directed procurement price, causing many agricultural enterprises to incur losses. Currently, the Ministry of Agriculture, together with the State Price Commission and related sectors, are urgently studying and building factory prices and wholesale prices for agricultural products in accordance with Decision No. 95-HĐBT dated September 26, 1981 of the Council of Ministers and the current State pricing management system.

Until new regulations are issued, the Joint Ministries temporarily provide the following guidance:

a) For raw rubber:

The State has established a wholesale price for materials, the Rubber General Department will collaborate with the State Price Commission and the Ministry of Finance to study and build factory prices, determine the state revenue level according to the current system.

b) For other agricultural products:

If the goods are sold at the collective area purchase price directive and there is still revenue to be paid to the state budget, sufficient profit to cover the enterprise fund quotas, and expenses outside the cost price, then they shall continue to be sold at that price until new regulations are issued.

For goods sold at the collective area purchase price directive that incur losses, or have no reserves, insufficient profit to cover the enterprise fund quotas, and expenses outside the cost price, the enterprise must review and analyze to eliminate unreasonable expenses, and find ways to reduce production costs.

Based on the recalculated cost price, the enterprise may add the prescribed standard profit margin as stipulated in point 2, section a above to establish a temporary enterprise price for submission to the competent authority for approval. The enterprise can use this temporary enterprise price to settle accounts with the recipient until new regulations are issued.

c) For products produced using self-sourced materials (commonly referred to as over-plan products). Since the actual price of self-sourced materials is usually higher than the price of state-supplied materials, the cost price of products made from self-sourced materials is higher than the cost price of products within the state plan. To ensure that products made from self-sourced materials have the same absolute standard profit margin as those within the state plan, the enterprise price for these products will be calculated as the total cost price of the product plus the standard profit margin (which is equal to the enterprise price of the product within the state plan plus the price difference between the two types of materials). The enterprise can settle accounts with the recipient at this price.

If the temporary enterprise price is too high, commercial agencies do not buy it, nor does society accept it (meaning it cannot be consumed or if consumed, it incurs losses), then the enterprise must consider changing its production direction, and the state budget will not subsidize losses or enterprise funds.

III. DISTRIBUTION OF PROFITS AND ESTABLISHMENT OF ENTERPRISE FUNDS.

1. For the portion of the plan supplied with state-provided materials or within the stable plan level:

If the unit completes the legal indicators of the state plan, the stable level of product delivery and accumulation, in addition to establishing the development fund according to the current system, will also set aside profits to establish a reward fund and welfare fund equal to 24% of the total wage fund for the year of workers producing products supplied with state-provided materials (excluding unreasonable items in the wage fund such as defective products, excess downtime wages beyond the allowed limit, and other items contrary to the current national wage policy) where 70% is allocated to the reward fund and 30% to the welfare fund. After setting aside these funds, the remaining profit will be submitted to the state budget.

2. For the profit generated from self-sourced materials accounted for by the enterprise or the profit exceeding the state plan, the enterprise may allocate 60% of this profit to supplement the funds in the following proportions:

- 60% for the reward fund.

- 20% for the welfare fund.

- 20% for the development fund.

The remaining profit will be submitted to the state budget.

Subjective factors (such as changes in material prices due to state decisions) must be excluded when reviewing, recognizing, and announcing the completion of the plan.

3. In cases where the enterprise fails to complete three main legal indicators: the value of realized production output; primary products delivered according to quality standards, profit, and tax payments (realized profit shortfall or failure to meet profit payment targets and tax payments), for each percentage point of non-completion of a main indicator, 2% of the basic amount of each fund must be deducted.

If the enterprise fails to complete the profit payment plan for products produced with state-provided materials without a valid reason, it must make up the planned profit shortfall, and only the remaining profit will be considered as excess profit from self-sourced materials. If the self-sourced materials are organized separately for production, cost accounting, and profit and loss, the enterprise can use the self-sourced profit to make up for the shortfall in the state plan profit. If the shortfall is made up, when reviewing the completion of the state-provided materials plan, it will be considered as completing the profit payment plan.

4. For by-product production:

When selling by-products, the enterprise must pay taxes (or state revenues) according to the current system. Profits from by-product production will be allocated 70% to the funds and distributed as follows:

- 60% for the reward fund.

- 20% for the welfare fund.

- 20% for the development fund.

The remaining profit will be submitted to the state budget.

5. For units producing export goods by borrowing foreign currency from banks to import key materials:

Units must comply with the state's regulations on exports, imports, banking credit, and foreign exchange management. All income and expenditure must be recorded separately and converted into Vietnamese Dong according to the official exchange rate set by the state. The profit earned by the unit from borrowing foreign currency from the bank for production, after repaying the loan and interest, and fulfilling all tax obligations according to the current system, will be allocated 60% to the funds (no allocation in foreign currency) and distributed as follows:

- 60% for the reward fund.

- 20% for the welfare fund.

- 20 for the encouragement of production development fund.

The remaining profit will be submitted to the state budget.

6. Penalties for violations of economic and financial management systems and policies:

If during the planning year, the unit violates economic and financial management systems and policies such as product delivery systems, pricing policies, economic contracts, statistical reporting, and tax payments, for each violation within the plan (main production plan, by-product production plan), depending on the severity of the violation, the reward fund and welfare fund will be reduced by 2 to 5% of the amount allocated.

7. Control levels for the reward and welfare funds:

If the reward fund and welfare fund of the enterprise for the entire year, when combined from different sources (main production, auxiliary production), exceed six months' actual average annual wage of production workers, then the enterprise may retain thirty percent of the excess, remit twenty percent to higher authorities to establish a centralized financial reserve fund, and remit fifty percent to the state budget. The thirty percent retained by the unit shall be distributed among the funds according to the ratio of the excess over the plan.

If the enterprise fails to complete the main and auxiliary production plans, resulting in a significant reduction in the amount allocated to the reward fund and welfare fund, such that the combined average per capita of both funds does not reach sixty units, then the state budget will provide supplementary funding to meet this average level.

This Circular applies to agricultural production enterprises in all sectors, including central and local enterprises (state-owned farms, economic accounting stations), and takes effect from January 1, 1983. Specifically, the distribution of profits to establish enterprise funds shall be implemented starting in 1982, based on the results of the production and financial plans assigned for 1982.