Joint Circular No. 38/TT-LB guiding the profit distribution regime for the Civil Aviation Administration of Vietnam pursuant to Decision No. 146-HĐBT dated August 25, 1982 of the Council of Ministers.

JOINT CIRCULAR

||| OF THE MINISTRY OF FINANCE - VIETNAM CIVIL AVIATION GENERAL DEPARTMENT NO. 38/TT-LB OF DECEMBER 30, 1982 GUIDING THE IMPLEMENTATION OF THE PROFIT DISTRIBUTION REGIME FOR THE VIETNAM CIVIL AVIATION GENERAL DEPARTMENT ACCORDING TO DECREE NO. 146-HĐBT OF AUGUST 25, 1982 OF THE STATE COUNCIL OF MINISTERS

After the State Council of Ministers issued Decision No. 146-HĐBT on August 25, 1982 amending and supplementing Decision No. 25-CP, the Ministry of Finance issued Circular No. 21-TC/CNA on September 1, 1982 guiding the accounting of production costs, determining state revenue levels, implementing profit distribution regimes, and setting up enterprise funds in production and business sectors. To unify the implementation of profit distribution regimes and the establishment of enterprise funds in the civil aviation sector, in addition to the general provisions in Circular No. 21-TC/CNA mentioned above, the Ministry of Finance and Vietnam Civil Aviation General Department provide additional guidance on the following points.

 I. DETERMINATION OF PLANS AND PROFITS OF THE VIETNAM CIVIL AVIATION GENERAL DEPARTMENT

 A. DETERMINATION OF PLANS

Due to the main economic and technical characteristics of the civil aviation industry, materials used by the industry, whether supplied by the state according to plans or self-exploited by other agencies and enterprises, are all under unified state management. Therefore, the Vietnam Civil Aviation General Department only has primary production plans and secondary production plans.

1. The primary production plan includes:

a) Business operations (main business):

- Passenger and cargo transportation domestically and internationally.

- Operations of aircraft dedicated to serving the travel of Party and State leaders (special aircraft).

- Specialized flight operations at the request of certain industries, such as geological exploration, oil and gas, aerial photography; agricultural services (pesticide spraying, weed control, etc.).

- Services related to international flights arriving in Vietnam, including general agency ticket sales, landing and takeoff services, technical services, commercial services, and allocation of passenger and cargo transport rights.

- Revenue from services related to the transit of foreign aircraft through Vietnamese airspace. This revenue is temporarily allocated 30% to the Vietnam Civil Aviation General Department, with the remaining 70% belonging to the state budget. (In the future, if the Vietnam Civil Aviation General Department's accounting shows that these costs exceed 30%, the two Ministries will adjust the ratio accordingly).

- Activities related to transportation such as airport entry and exit fees, ticket cancellation penalties, warehousing services for goods transported according to state targets, etc.

b) Service and passenger support businesses (other business):

- Selling fuel to international aircraft arriving in Vietnam.

- Passenger and cargo transportation by road between airports and cities, and other types of road transportation.

- Catering, cafeteria services, souvenir sales, local export sales, meal preparation for international airlines, etc. (part supplied by the state with raw materials).

- Other services such as room rental, hotel rental, telegraph and telephone rentals, etc.

2. The secondary production plan involves utilizing excess capacity of the General Department for business and service activities outside of assigned state tasks, including:

- Warehousing services for goods transported by foreign aircraft.

- Utilizing waste materials to produce consumer goods.

- Operating retail businesses serving passengers, such as specialty processing, flower and fruit sales, haircuts, clothing, electrical repairs, and other services....

B. DETERMINATION OF PROFITS OF THE VIETNAM CIVIL AVIATION GENERAL DEPARTMENT

The profits of the Vietnam Civil Aviation General Department are the total profits of the primary production plan and the secondary production plan (as described in point A above), where:

- Primary production plan profit is the difference between planned revenue from main business operations (transportation and services) and the costs associated with these activities.

- Secondary production plan profit is the difference between revenue and costs after deducting 10% of sales as state revenue.

II. DISTRIBUTION OF PROFITS AND ESTABLISHMENT OF ENTERPRISE FUNDS

When reviewing the completion of plans and establishing enterprise funds, the General Department must base its review on the legal standards set forth in Decree No. 143-CP of May 13, 1980 of the State Council of Ministers. Specifically regarding labor indicators and wage funds, the Vietnam Civil Aviation General Department works with the State Planning Commission and relevant agencies to specify these for the industry.

1. If the Vietnam Civil Aviation General Department completes the assigned state plan (primary production plan), then based on the degree of plan completion, the profits from the primary production plan of the General Department are distributed as follows:

- Allocate 4‰ (four thousandths) of the value of fixed assets currently used in main business operations to the development fund.

- Allocate 24% of the total annual wage fund of production and business staff, excluding unreasonable expenses in the wage fund such as products not in accordance with regulations and other expenses not in accordance with policies and regulations, to welfare and reward funds.

The remaining profit after deducting approved non-production costs, if the Vietnam Civil Aviation General Department does not need to supplement the approved working capital quota and pay bank interest, must be fully submitted to the state budget.

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

2. For profits exceeding the plan.

If the civil aviation industry achieves profits exceeding the plan (actual profits exceed planned profits), after fulfilling the state budget obligations according to the plan, the actual profits exceeding the plan are allocated 60% to the enterprise fund and 40% to the state budget.

When determining excess profits, factors due to external causes must be excluded, and only increases due to the General Department's own efforts should be considered.

Example of calculating bonus distribution for excess profits:

Of the profit realized exceeding five million (thirty-five million minus thirty million), one million was due to the State's increase in tariff rates, while four million was achieved through the aviation industry's efforts to improve labor productivity and reduce costs.

Based on the implementation of the plan according to the figures mentioned above, the excess profit over the plan will be allocated to enterprise funds as follows:

- The profit exceeding the plan level is (thirty-five million minus thirty million) minus one million equals four million.

- The profit allocated to enterprise funds is four million times sixty percent equals two point four million.

- The profit paid to the state budget is four million times forty percent equals one point six million.

In reality, the Civil Aviation Administration has paid thirteen million to the state budget, including ten million from planned profits, one million from increased tariffs, and the remaining surplus profit (compared to the plan) is zero point four million (two million minus one point six million). However, because other payments fell short of the plan by zero point two million (five million minus four point eight million), the actual surplus profit compared to the plan is only zero point two million (zero point four million minus zero point two million). In this case, the Civil Aviation Administration can only allocate a maximum of two point four million from the realized profit. The surplus profit of zero point two million will be refunded by the state budget or deducted from the profit payable next year.

The amount extracted from the profit exceeding the plan will be allocated to enterprise funds at the following ratios:

- Sixty percent for the award fund,

- Twenty percent for the welfare fund,

- Twenty percent for the production development fund.

3. In cases where the plan is not completed:

If the Civil Aviation Administration fails to meet three main production and business targets stipulated by the regulations, then for each percentage point (%) not met regarding a target, two percent of the amount to be allocated according to the basic allocation rate of each fund must be deducted:

- Passenger and cargo transportation volume (measured in passenger-kilometers and ton-kilometers).

- Passenger transportation volume on key routes between Hanoi and Ho Chi Minh City and Hanoi and Bangkok (measured in passenger-kilometers).

- Realized profit and payments to the state budget.

To analyze the degree of completion of the aforementioned three plan targets, it is necessary to base on statistical and accounting reports. When determining the degree of completion of the transportation volume target, it must ensure the principle that excess passenger transportation volume cannot offset shortfalls in cargo transportation volume and vice versa. For the profit realization and payment targets to the state budget, calculations must be based on the actual figures generated according to the plan. Any additional profits must be fully remitted to the state treasury.

4. Deductions for violations of regulations and policies.

In addition to deductions for failing to complete the three main production and business targets stipulated by regulations, if the Civil Aviation Administration of Vietnam violates state economic and financial management policies and systems listed below, deductions ranging from two percent to five percent of the allocation rate of each fund will be made depending on the severity of the violation:

- Causing damage to state assets, materials, and capital.

- Occurrence of fatal accidents due to management deficiencies or lack of experience.

- Violation of economic contracts, distribution systems, procurement, and state pricing policies.

- Violation of accounting-statistical reporting systems and fiscal discipline.

III. LIMITATION OF THE TWO AWARD AND WELFARE FUNDS

If the total amount of the award and welfare funds extracted from all sources (completing the plan and exceeding the plan) throughout the year for the entire civil aviation sector exceeds six months' average annual salary of production and business staff, the excess amount beyond six months' salary (from the seventh month onwards) will be distributed as follows:

- Seventy percent will be remitted to the state treasury.

- Thirty percent will be supplemented to enterprise funds.

The portion retained for enterprise funds will be distributed as follows:

- Sixty percent for the award fund.

- Twenty percent for the welfare fund.

- Twenty percent for the production development fund.

If the Civil Aviation Administration fails to complete the plan and the deduction of the award and welfare funds is too large, resulting in an average per capita total of both funds less than sixty dong, the state budget will subsidize to reach the average of sixty dong per person per year. The allocation of sixty dong into the award fund or welfare fund will be determined by the Director of the Civil Aviation Administration of Vietnam.

IV. ORGANIZATION FOR REVIEWING THE PLAN AND ALLOCATING ENTERPRISE FUNDS

The review of plan completion must be based on Decision No. 112-CP dated July 22, 1964, of the Council of Ministers on reviewing, recognizing, and announcing the completion of the state plan, and Circular No. 465-TTg dated December 7, 1976, of the Prime Minister on reviewing, recognizing, and announcing the completion of the state plan. Point 4 of the circular assigns the responsibility to the General Statistics Office to coordinate with the Ministry of Finance to discuss with national-level agencies to review, recognize, and announce the completion of the plan. To ensure the objectivity of the review of plan completion for the Civil Aviation Administration, this review will be conducted by a committee consisting of the General Statistics Office, the Ministry of Finance, the National Planning Commission, and the State Bank. During the review of the plan, the Administration has the responsibility to present the situation of implementing state plan indicators, creating favorable conditions for state agencies to understand the actual situation of the Administration, evaluate the results of plan implementation accurately, and assist the Administration in gradually improving its economic management capabilities. The results of the plan completion review will be recorded in a protocol. If any member of the committee does not agree with the protocol, the Administration will report to request the Council of Ministers' opinion. After obtaining the agreement of the committee members to recognize the completion of the state plan, the Civil Aviation Administration of Vietnam will work with the Ministry of Finance on the procedures for allocating enterprise funds according to current regulations. The review of plan completion and the allocation of enterprise funds for grassroots units will be decided by the Civil Aviation Administration of Vietnam based on the principle that the total allocation rate of enterprise funds of grassroots units shall not exceed the allocation rate of enterprise funds of the entire civil aviation sector. This circular takes effect from the date of signature.

The review and approval of the completion of plans and the establishment of enterprise funds for basic units shall be decided by the General Department of Civil Aviation of Vietnam on the principle that the total amount of contributions to enterprise funds of basic units must not exceed the contribution level of enterprise funds of the entire civil aviation industry.

This Circular takes effect from the date of issuance.