Circular No. 499/TCDN of 2002 of the Ministry of Finance stipulates the management and accounting of corporate income tax (CIT) exemptions and reductions at state-owned enterprises converting to joint-stock companies. This document guides the use of CIT exemption and reduction funds to increase charter capital or supplement the development investment fund of the company.
Scope of application
State-owned enterprises implementing ownership conversion to joint-stock companies
Key points
- When state-owned enterprises convert ownership, they must account for CIT exemptions and reductions in charter capital or the development investment fund (Articles 1 and 2).
- In cases where CIT exemptions and reductions are converted into shares, the enterprise must obtain approval from the Shareholders' Meeting to increase charter capital corresponding to the amount of tax exempted and reduced (Article 1).
- Additional shares resulting from CIT exemptions and reductions shall be distributed to shareholders according to their contribution ratio and the value of the increased share capital corresponding to the state's contribution in the enterprise (Article 1).
- If there is no adjustment to increase charter capital, the entire amount of CIT exemptions and reductions shall be accounted for in the development investment fund to supplement business capital (Article 2).
- Enterprises may not use CIT exemptions and reductions for purposes other than increasing charter capital or the development investment fund, such as welfare funds, bonuses, or dividends to shareholders (Article 2).
🌐 Social impact of this document
- To enhance the capital of joint-stock companies after ownership conversion through the use of CIT exemptions and reductions.
- To prevent the misuse of CIT exemptions and reductions for inappropriate purposes, ensuring financial transparency during the ownership conversion process.
- State-owned enterprises will have to comply strictly with regulations on managing and accounting for CIT exemptions and reductions.
❓ Frequently asked questions
Can the amount of corporate income tax exemptions and reductions be converted into shares?
Yes, but it requires approval from the Shareholders' Meeting and registration of business changes as prescribed.
If there is no adjustment to increase charter capital, how will the amount of CIT exemptions and reductions be utilized?
This amount will be accounted for in the development investment fund to supplement business capital.
May enterprises use the amount of CIT exemptions and reductions for other purposes?
No, enterprises may not use this amount for welfare funds, bonuses, or dividends to shareholders.
Full text
LETTER
OF THE MINISTRY OF FINANCE NO. 499 TC/TCDN ON JANUARY 16, 2002
REGARDING THE MANAGEMENT AND ACCOUNTING OF CORPORATE INCOME TAX AMOUNTS ELIGIBLE FOR WAIVERS AND REDUCTIONS AT STATE OWNED ENTERPRISES IMPLEMENTING TRANSITION TO PRIVATE OWNERSHIP
EXEMPTION AND REDUCTION AT STATE OWNED ENTERPRISES IMPLEMENTING OWNERSHIP TRANSFER
Dear: - Ministries, ministerial-level agencies, government agencies
- People's Committees of provinces and centrally governed cities
- State-owned Corporations established pursuant to Decision No. 91/TTg
The Ministry of Finance has issued Circular No. 6230 TC/TCDN dated December 10, 1999 and Circular No. 1297 TC/TCDN dated April 10, 2000 guiding the implementation of investment incentives and the utilization of corporate income tax reduction amounts for joint-stock companies. According to these documents, the entire amount of corporate income tax eligible for reduction by state-owned enterprises implementing ownership transition under Decree No. 44/1998/NĐ-CP dated June 29, 1998 and Decree No. 103/1999/NĐ-CP dated September 10, 1999 of the Government shall be used to increase the capital of the company according to the proportion of shareholders' contributions. To unify the management and accounting of corporate income tax reduction amounts at state-owned enterprises implementing ownership transition, the Ministry of Finance provides guidance as follows:
1. In cases where this amount is converted into shares of the Company, it must be approved by the Shareholders' Meeting on increasing the registered capital corresponding to the amount of corporate income tax waived and procedures for business registration in accordance with the Enterprise Law must be completed.
Additional shares from the corporate income tax reduction amount are distributed to shareholders according to their contribution ratio. Among them, the value of additional shares corresponding to the state's capital contribution at the enterprise is determined as the state's investment capital at the enterprise as stipulated in Point 2, Section I of Circular No. 64/2001/TT-BTC dated August 10, 2001 of the Ministry of Finance guiding the implementation of the Management Regulations of State Capital at Other Enterprises.
2. In cases where the joint-stock company does not increase its registered capital, the entire amount of corporate income tax reduction is accounted for in the Development Investment Fund, increasing the operating capital of the Company. The company may not account for this amount in the Welfare and Reward Fund to distribute to employees or shareholders as dividends.
We request all Ministries, sectors, People's Committees of provinces and centrally governed cities, and State-owned Corporations to guide and direct joint-stock companies to implement in the spirit outlined above.
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