Joint Circular No. 56/2000/TTLT-BTC-BGTVT guiding the financial management regime for state-owned enterprises operating public services in the vehicle inspection sector.

CIRCULAR

JOINT CIRCULAR OF THE MINISTRY OF FINANCE AND THE MINISTRY OF TRANSPORTATION
JOINT CIRCULAR NO. 56/2000/TTLT-BTC-BGTVT OF JUNE 14, 2000
GUIDELINES ON THE FINANCIAL MANAGEMENT REGIME FOR STATE ENTERPRISES ENGAGED IN PUBLIC SERVICES IN THE FIELD OF INSPECTION

WHEREAS, Decree No. 56/CP dated October 2, 1996 of the Government on state enterprises engaged in public services; Circular No. 06/TCDN dated February 24, 1997 of the Ministry of Finance guiding the financial management regime for state enterprises engaged in public services;

WHEREAS, Decree No. 27/1999/NĐ-CP dated April 20, 1999 of the Government amending and supplementing the Financial Management Regulations and Business Accounting for State Enterprises issued together with Decree No. 59/CP dated October 3, 1996 of the Government;

WHEREAS, Decree No. 04/1999/NĐ-CP dated January 30, 1999 of the Government on fees and charges under the State Budget; Circular No. 54/1999/TT-BTC dated May 10, 1999 of the Ministry of Finance guiding the implementation of Decree No. 04/1999/NĐ-CP dated January 30, 1999 of the Government on fees and charges under the State Budget;

WHEREAS, Decision No. 27/2000/QĐ-BTC dated February 24, 2000 of the Ministry of Finance on the establishment of fee levels for issuing technical inspection certificates and quality certificates for equipment and transportation vehicles.

BASED ON THE CHARACTERISTICS OF THE ACTIVITIES OF THE VIETNAM INSPECTION DEPARTMENT, THE MINISTRY OF FINANCE AND THE MINISTRY OF TRANSPORTATION ISSUE GUIDELINES ON THE FINANCIAL MANAGEMENT REGIME FOR STATE ENTERPRISES ENGAGED IN PUBLIC SERVICES IN THE VIETNAM INSPECTION DEPARTMENT AS FOLLOWS:

I. GENERAL PROVISIONS

1. The subject of this Circular is: The Vietnam Inspection Department and units under the Provincial Transport Departments and Local Transport and Public Works Departments that have been decided by competent authorities to be state enterprises engaged in public services (collectively referred to as public service inspection enterprises).

2. Public service inspection enterprises shall be responsible for using capital and resources allocated by the State to carry out inspection work according to current local fee and charge schedules prescribed by the State.

3. In addition to their assigned public service tasks, public service inspection enterprises may utilize land, capital, and State assets after completing their public service tasks and raising capital to organize scientific and technical services and consulting services appropriate to the enterprise's capacity and market demand provided that:

- They obtain written approval from the authority deciding the establishment of the enterprise.

- It does not affect the performance of inspection work assigned by the State.

- They register additional business activities according to current regulations.

- They separately account for the additional business operations.

- They fulfill tax obligations for the additional business operations according to the law.

II. MANAGEMENT AND USE OF CAPITAL AND ASSETS

1. Capital Investment.

Public service inspection enterprises shall be provided with initial registered capital by the State, not less than the minimum capital prescribed by the State, to construct, purchase, and acquire fixed and circulating assets suitable to the scale and tasks assigned.

Public service inspection enterprises currently operating, if truly lacking capital compared to the public service tasks assigned by the State (after mobilizing existing capital within the unit) shall be supplemented by the State as follows:

- For public service inspection enterprises making profits, they may be considered for a reduction in corporate income tax to supplement the unit's capital according to the law.

- For public service inspection enterprises not making profits or still lacking capital after considering a tax reduction, they may be considered for additional capital investment by the State.

Procedures for basic construction investment and circulating capital for public service inspection enterprises shall be carried out according to State regulations.

2. Capital Mobilization.

2.1 When there is a need to mobilize capital, seek joint venture funding, or mortgage land value attached to assets managed by the unit at Vietnamese banks to borrow funds for public service activities according to the law, public service inspection enterprises must prepare specific plans and submit them to the finance agency for comments before presenting them to the head of the authority deciding the establishment of the unit for decision.

2.2 In cases where public service inspection enterprises organize business activities outside their assigned public service tasks, they may borrow funds from credit organizations (commercial banks, financial companies, etc.), other enterprises, individuals (including employees of the enterprise) to serve business activities, but must comply with legal provisions and not change ownership forms.

2.3 Interest rates on mobilized capital shall be recorded as financial activity costs of the enterprise based on the actual interest rate recorded in the agreement or loan contract, but not exceeding the maximum interest rate ceiling set by the State Bank of Vietnam for the same type and duration of loans for credit organizations.

2.4 When mobilizing capital, the enterprise must carefully consider economic efficiency, ensuring the proper and effective use of mobilized capital, not using short-term loans for long-term investments. The enterprise must repay principal and interest according to the agreed terms when mobilizing capital.

The head of public service inspection enterprises shall be responsible to the State for preparing capital mobilization plans, using capital improperly or ineffectively leading to capital losses.

3. Investment Outside the Enterprise.

3.1 When there is a need to use capital, assets, land value, or land rental payments to invest outside the unit, public service inspection enterprises must prepare contribution plans or explain joint venture projects and submit them to the finance agency for comments before presenting them to the head of the authority deciding the establishment of the enterprise for approval.

3.2 Investing capital outside the enterprise shall not affect the assigned public service tasks, must comply with legal provisions, ensure principles of effectiveness, preservation, and development of capital, and increase revenue. When using land value to invest outside the unit, it must be carried out according to the provisions of the Land Law.

3.3 Public service inspection enterprises shall not use State-invested capital for monetary transactions such as purchasing bonds, bills, savings deposits...

3.4. The public utility inspection enterprise shall not be permitted to invest in enterprises not owned by the State where the manager, operator, or principal owner is the spouse, parent, or child of the Director or Chief Accountant of that state-owned enterprise.

4. The public utility inspection enterprise shall be responsible for maintaining accounting ledgers accurately recording all assets and capital currently held in accordance with the current accounting and statistical regulations; truthfully and promptly reflecting the usage and changes in assets and capital during the course of operations.

5. Transfer, liquidation, leasing, pledging, and mortgaging of assets.

5.1. The public utility inspection enterprise may sell off or liquidate unused or obsolete technical assets to recover funds for more effective business purposes.

When selling off or liquidating, the enterprise must establish an evaluation board to assess the technical aspects, appraise the value of the assets, and organize auctions in accordance with the law. The difference between the proceeds from the sale or liquidation of the assets and their remaining book value on the ledger, along with any costs associated with the sale or liquidation, shall be recorded in the enterprise's business results (other income).

5.2. Machinery and equipment, key assets essential to the operation of the public utility inspection enterprise, when sold or liquidated, must be approved in writing by the agency that established the enterprise.

5.3. For leased assets aimed at enhancing utilization efficiency and increasing revenue, the public utility inspection enterprise must still depreciate them according to prescribed regulations, monitor them, and recover them upon expiration of the lease term.

5.4. Assets pledged or mortgaged to borrow funds from financial institutions must be carried out strictly in accordance with the procedures stipulated by law. The public utility inspection enterprise shall not pledge, mortgage, or lease borrowed, rented, or entrusted assets from other enterprises without the consent of the asset owner.

6. Handling asset losses.

All asset losses must be documented by the public utility inspection enterprise to determine the extent, cause, and responsibility. Asset loss handling follows the principle that:

- If caused by subjective reasons of individuals or collectives, the person causing the loss must bear responsibility for compensation in accordance with the law. The head of the public utility inspection enterprise decides on the amount of compensation and is responsible for such decision.

- Insured assets will be compensated by insurance organizations.

- Remaining losses (after deducting the compensation paid by the person causing the loss and the insurance organization) can be covered by the financial reserve fund (if available), otherwise, they shall be recorded as extraordinary expenses for the period.

- In cases of asset losses due to force majeure (natural disasters, fires, etc.), the head of the public utility inspection enterprise shall develop a loss handling plan and report it to the finance authority and the establishment decision-making body.

After receiving comments from the establishment decision-making body, the finance authority shall decide on the handling or report accordingly.

7. Capital transfer, responsibility for capital preservation, asset revaluation, and management of receivables and payables shall be conducted in accordance with the provisions applicable to state-owned enterprises engaged in business activities.

III. FINANCIAL RESULTS AND HANDLING OF THE PUBLIC UTILITY INSPECTION ENTERPRISE'S RESULTS

A. FINANCIAL RESULTS

1. The revenue of the public utility inspection enterprise includes revenue from inspection activities and fees from issuing technical quality certification certificates for transportation equipment and vehicles; revenue from business activities and other activities.

1.1. Revenue from inspection activities includes:

a) Fees collected based on state-prescribed rates and price ranges from the following activities:

- Ship inspections as specified in Decision No. 203/TTg dated December 28, 1992 of the Prime Minister regarding ship inspections in Vietnam. - Road, rail, inland waterway, lifting equipment, construction machinery vehicle and equipment inspections.

- Offshore drilling platforms, marine structures, and floating vessel inspections.

- Boiler and pressure vessel inspections used on transportation equipment.

- Container inspections used in the transportation industry.

- Technical design project reviews for manufacturing, assembling, and modifying transportation equipment, offshore drilling platforms, and marine structures.

- Quality and safety inspections of goods transported by transportation equipment under Vietnamese law and international treaties to which Vietnam is a party.

- Quality management system and safety management system audits of enterprises producing products within the scope of technical inspections by the Vietnam Inspection Agency, as stipulated by Vietnamese law and relevant international treaties (ISM) to which Vietnam is a party.

- Technical investigations of accidents and incidents caused by transportation equipment.

- Income from joint ventures and cooperation with foreign inspection organizations. The income from joint ventures and cooperation depends on agreements between the Vietnam Inspection Agency and foreign inspection organizations or through international bidding.

b) Thirty-five percent of the fees collected from issuing technical quality certification certificates for transportation equipment and vehicles.

- Other income (if any).

- The collection content and fee levels mentioned above are regulated in Decision No. 27/2000/QD-BTC dated February 24, 2000 of the Ministry of Finance concerning the issuance of fee levels for technical quality certification certificates for transportation equipment and vehicles.

- The public utility inspection enterprise is exempt from value-added tax on the aforementioned fee income.

1.2. Revenue from business activities and other activities such as scientific and technical services, consulting services, and other production and business activities shall be handled in accordance with the provisions applicable to state-owned enterprises engaged in business activities.

1.3. The public utility inspection enterprise shall maintain complete records of all sources of income generated in accordance with the state-prescribed regulations. In cases where special receipts or invoices are used, registration with the Ministry of Finance (General Tax Department) is required.

1.3. The public service enterprise Inspection shall be responsible for maintaining books to fully record all sources of income arising in accordance with the State regulations. In cases where special receipts or invoices are used, registration with the Ministry of Finance (General Department of Taxation) shall be required.

2. The costs of the public utility enterprise Inspection include inspection activity costs, business operation costs, and other activities.

2.1. The contents of expenses for inspection activities include:

- Material costs, fuel, energy consumption during the inspection process; actual replacement parts used.

- Printing costs for inspection files, paper, certification books.

- Depreciation costs of fixed assets: All fixed assets of the public utility enterprise Inspection must be utilized in production and business operations and depreciation must be fully accrued according to state regulations to recover capital. After recovering the full capital, if the fixed assets are still in use, the enterprise does not need to accrue depreciation, but they must still be managed and used according to current regulations.

- Wages, salaries, and allowances with salary nature that must be paid to workers and staff performing inspection tasks and collecting management fees.

- Contributions to social insurance, health insurance, trade union funds of the enterprise according to current state regulations.

- Meal expenses during shifts for employees: determined by the head of the public utility enterprise Inspection in accordance with production and business efficiency, but the expense per person shall not exceed the minimum wage stipulated by the state for civil servants.

- Service purchase costs such as electricity, water, telephone, fax, outsourced repair services for fixed assets (SCTX & SCL), auditing, payment for technical document usage, patents, technology licenses, asset insurance, circulation permits, and other purchased services.

- Purchase costs for individual machinery, equipment, working tools (not yet meeting the criteria for fixed assets) directly serving inspection work.

- Inspection service costs such as travel expenses, mission expenses, rental fees for fixed assets, land rental fees, working location rental fees, protective clothing expenses, scientific research expenses, compilation and printing of procedures, norms, standards, technical documents, innovations, improvements, training, and supplementary expenses aimed at enhancing the skills of inspectors and knowledge of management staff, transportation expenses for incoming and outgoing delegations according to regulations, bank loan interest payments, administrative management expenses...

- Costs for foreign inspection organizations, domestic affiliated units, and cooperative units.

- Accident investigation costs.

- Other monetary costs such as reception, ceremonial, conference, transaction, diplomatic... expenses, the maximum level not exceeding the state's regulations.

Expenses for raw materials, purchased services, reception, ceremonial, conference... must have valid invoices and receipts according to the Ministry of Finance's regulations.

2.2. The contents of business operation costs and other activity costs are implemented according to the regulations applicable to state-owned enterprises engaged in business operations.

3. The public utility enterprise Inspection may use revenue to offset expenses, including:

- Inspection activity revenue is used to offset public utility activity costs, taxes, and other revenues from the state according to the law (excluding corporate income tax).

- Business operation revenue and other activity revenues are used to offset business operation costs, other activity costs, taxes, and other revenues from the state according to the law (excluding corporate income tax).

The public utility enterprise Inspection must ensure profitability in organizing business operations and cannot use profits from public utility activities to cover losses from business operations.

B. FINANCIAL RESULT HANDLING

1. For public utility enterprises Inspection that achieve profits in a year (including business and other activity profits), distribution shall be carried out in the following order:

a. Pay corporate income tax according to the law.

b. Pay fines for violations of state laws such as: tax law, traffic law, environmental law, commercial law, and administrative regulations..., after deducting compensation for collective or individual damage caused.

c. Deduct actual expenses incurred but not included in reasonable costs when determining taxable income.

d. Deduct unrecovered losses before tax.

e. Distribute profits to capital contributors according to the joint venture agreement (if any).

f. The remaining profit after deducting items a, b, c, d, and e, the Inspection sets up reserves as follows:

- Development Investment Fund: minimum contribution rate of 50%

- Financial Reserve Fund: contribute 10%, the balance of this fund shall not exceed 25% of the registered capital.

- Allocate up to two reward and welfare funds equal to 3 months' actual salary if the annual tax payment reported is higher than the previous year, or 2 months' actual salary if the annual tax payment reported is the same or lower than the previous year. The allocation ratio to each fund is decided by the head of the public utility enterprise Inspection after consulting with the trade union.

After deducting items a, b, c, d, and e, if the Development Investment Fund and Financial Reserve Fund have surplus after setting aside the two reward and welfare funds according to the prescribed amount, the remaining profit will be transferred entirely to the Development Investment Fund; if insufficient to set up the two reward and welfare funds equal to 2 months' actual salary, the public utility enterprise Inspection will receive state support for the shortfall.

2. For public utility enterprises Inspection where inspection revenue is insufficient to cover reasonable costs, after using 50% of business operation and other activity profits to offset the deficit, if there is still a loss, the state will provide support as follows:

- Subsidize the remaining loss.

- Provide two reward and welfare funds equal to 2 months' actual salary of the public utility enterprise Inspection.

Part on remaining profits from business operations and other activities shall be allocated to the development investment fund at 80% and the financial reserve fund at 20%.

3. Procedures, timing for establishing and purposes of using funds of public utility enterprises Inspection shall be carried out as for state-owned enterprises engaged in business operations.

4. Regulations on payment of fees into the State budget. Public utility enterprises Inspection shall be responsible for paying 65% of the revenue from fees for issuing technical quality certification certificates for equipment and transportation vehicles to the State budget. The collection and payment system shall be implemented according to the current regulations of the Ministry of Finance.

IV. FINANCIAL PLAN

1. Annually, based on assigned tasks and financial guidance from financial authorities, public utility enterprises Inspection shall prepare production plans, financial income and expenditure plans, subsidy and price support budget estimates, and report them to the enterprise establishment authority and the same-level financial authority. The enterprise establishment authority shall approve the annual plan for public utility enterprises Inspection after obtaining written agreement from the same-level financial authority.

2. Within the approved financial plan and subsidy and price support budget estimate for the year, the head of the enterprise establishment authority shall allocate the budget estimate and assign plans to public utility enterprises Inspection and send them to the same-level financial authority for coordination.

Public utility enterprises Inspection with subordinate units shall be responsible for allocating the assigned plans to subordinate units and sending them to local financial authorities where the subordinate units are located for coordinated monitoring and management of revenues, expenditures, and budget payments according to state regulations.

V. ACCOUNTING AUDIT, FINANCIAL REPORTING AND FINANCIAL DISCLOSURE

1. Preparing financial reports.

Quarterly and annually, public utility enterprises Inspection shall be responsible for preparing financial reports in accordance with current regulations and submitting them to the enterprise establishment authority, tax authority, same-level financial authority, and statistical agency. The head of public utility enterprises Inspection shall be accountable to the state and law for the accuracy and truthfulness of the financial reports.

2. Accounting audit and financial reporting review.

- Quarterly and annually, public utility enterprises Inspection shall be responsible for self-auditing accounting and financial reports.

- The enterprise establishment authority for public utility enterprises Inspection shall take the lead and coordinate with the same-level financial authority to organize the review and approval of the annual financial report of the enterprise.

- Financial authorities shall have the duty to inspect compliance with financial systems, accounting practices, revenue and budget payment discipline, and the accuracy and truthfulness of financial reports.

- Violations of accounting systems, financial income and expenditure systems, revenue and budget payment systems, and systems for establishing and using funds of public utility enterprises Inspection shall be subject to administrative and economic penalties according to the law.

3. Public disclosure of annual financial reports: Based on the annual financial report approved by the competent authority, public utility enterprises Inspection shall publicly disclose certain financial indicators before the meeting of workers and staff of the enterprise.

VI. IMPLEMENTATION PROVISIONS

1. In addition to specific provisions for public utility enterprises Inspection in this Circular, such enterprises shall also comply with other legal provisions applicable to state-owned enterprises.

2. This Circular replaces Joint Circular No. 97/1997/TTLT-BTC-BGTVT dated December 31, 1997 of the Ministry of Finance and the Ministry of Transport guiding financial management systems for state-owned enterprises engaged in public utility activities in the Inspection sector and shall take effect from March 10, 2000.

3. During implementation, any difficulties should be promptly reported to the Ministry of Finance and the Ministry of Transport for study and appropriate amendments and supplements.