Circular No. 68-TC/TCDN guides the management and use of certain financial support funds from the State for state-owned enterprises.

CIRCULAR

OF THE MINISTRY OF FINANCE NO. 68 TC/TCDN ON SEPTEMBER 25, 1997 GUIDING THE MANAGEMENT AND USE OF CERTAIN FINANCIAL SUPPORTS
FINANCIAL SUPPORTS FROM THE STATE
STATE ENTERPRISES

To implement Decree No. 59/CP dated October 3, 1996 of the Government on financial regulations and business accounting for state-owned enterprises, and Decree No. 56/CP dated October 2, 1996 of the Government on state-owned enterprises engaged in public services, the Ministry of Finance guides the management and use of financial supports from the State for state-owned enterprises as follows:

I. GENERAL PROVISIONS

1. The subjects to which the provisions of this Circular apply are state-owned enterprises as defined in Article 2 of Decree No. 56/CP dated October 2, 1996 of the Government on state-owned enterprises engaged in public services and those stipulated in Article 1 of Decree No. 59/CP dated October 3, 1996 of the Government on financial management regulations and business accounting for state-owned enterprises, hereinafter referred to collectively as state-owned enterprises.

2. Forms of financial support from the State budget for state-owned enterprises include subsidies, price supports, interest rate support on loans, investment support, and support for capital sources to repay maturing debts when enterprises borrow funds for effective business development but encounter financial difficulties in the early years.

a. Subsidies are financial supports from the State budget provided to enterprises for production, supply of goods or services, or orders according to State policy when revenue is insufficient to cover costs.

b. Price supports are fixed financial supports from the State budget calculated per unit of product, commodity, or service provided to state-owned enterprises for production or supply of goods or services consumed based on assigned tasks, orders, or State policies.

c. Interest rate support on loans is financial support from the State budget aimed at offsetting part or all of the interest on loans when enterprises borrow from credit institutions for production, goods, or service provision according to State guidelines and policies.

d. Investment support is financial support from the State budget provided to enterprises to expand their scale of operations or deepen investments when deemed necessary by the State.

e. Support for capital sources to repay debts is financial support from the State budget to repay maturing debts when enterprises borrow funds for effective business development, contributing increasingly to the State budget but encountering financial difficulties.

3. State-owned enterprises receiving subsidy, price support, interest rate loan support, investment support, and support for capital sources to repay maturing debts must use these funds correctly, for intended purposes, and effectively.

4. Implementation of financial support is regulated as follows:

a. For enterprises established by the Prime Minister and central ministries and sectors, the source of support is allocated from the central budget upon decision by the Prime Minister (or authorized agencies under the Prime Minister's delegation).

b. For enterprises established by provincial People's Committees or directly governed cities (or established with the Prime Minister's authorization), the source of support is allocated from local budgets (except for support for state-owned enterprises already allocated from the central budget annually or direct support to enterprises pursuant to the Prime Minister's Decision).

5. In cases of floods, natural disasters, enemy threats, fires, pests, epidemics, etc., due to unforeseeable causes, specific solutions will be addressed according to current regulations.

II. SPECIFIC PROVISIONS

1. Regarding enterprises receiving financial subsidies:

1.1. Conditions for state-owned enterprises to be considered for subsidies:

- Goods or services must fall within the subsidy list prescribed by the Prime Minister.

- There must be a plan approved by the agency responsible for establishing the enterprise.

- They must ensure the quantity, quality, and time frame of assigned tasks or orders. Any changes in quantity or structure of goods must be agreed upon in writing by the establishment agency and included in the annual State budget plan.

- The level of subsidy must be specified by the competent authority.

- They must comply fully with financial management and tax payment regulations.

1.2. Issuance of financial subsidies:

Based on the approved annual subsidy plan, the finance agency will temporarily provide the enterprise with 70% of the subsidy according to the implementation progress. Upon completion of the work or fiscal year, the state-owned enterprise receiving the subsidy must report the results of implementing the business tasks supported financially to the planning assignment agency or ordering agency and the finance agency at the same level. These agencies are responsible for reviewing and evaluating the results regarding quantity, quality, and economic and social effectiveness of the products or services subsidized:

- If the enterprise fails to meet the quantity and quality requirements of the plan or order, the finance agency, after consultation with the planning assignment agency or ordering agency, will decide to recover funds that did not yield benefits and excess funds to be returned to the budget or transferred to the next year's allocation.

- If the enterprise fulfills the assigned quantity and quality indicators but still falls short, the finance agency will supplement the shortfall within the approved budget estimate.

Cases involving price fluctuations and urgent tasks outside the assigned plan will be reviewed and resolved individually within the total subsidy amount allocated in the plan or included in the next year's budget estimate.

1.3. Management and accounting of financial subsidies:

- Financial plan: Annually, based on regulations and guidelines of the Ministry of Finance, and based on the State's assigned tasks for product production and service provision, enterprises shall build their financial income and expenditure plans, including financial subsidy plans to report to the enterprise establishment decision-making body and the same-level finance authority. Within the approved annual budget revenue and expenditure estimate, the enterprise establishment decision-making body is responsible for reviewing, consolidating, and submitting to the competent authority for consideration and decision.

- Accounting for financial subsidies: Enterprises are allowed to account for financial subsidy expenses under the enterprise's subsidy and price support revenue. This subsidy amount is not subject to business income tax.

2. For enterprises receiving financial price support:

2.1. Conditions for state-owned enterprises to be considered for price support:

- The list of products or services eligible for price support must be decided by the enterprise establishment decision-making body.

- Products or services receiving price support must ensure quantity, quality, time, and product prices according to State regulations or orders. In cases where there are changes in quantity or product structure, such changes must be agreed upon in writing by the enterprise establishment decision-making body.

- The level of price support for each product or service must be stipulated by the competent authority.

- They must comply fully with financial management and tax payment regulations.

2.2. Issuance of price support funds:

Based on the annually approved price support plan for each product or service, the finance authority will temporarily allocate 70% of the price support amount according to the implementation progress of each product or service. Upon completion of all work or at the end of the fiscal year, state-owned enterprises receiving price support must report on the results of implementing the business tasks for supported products or services. The planning assignment authority or the finance authority is responsible for checking the results of implementation and the economic and social effectiveness of the supported products or services.

- If the enterprise fails to meet the required quantity and quality standards for products or services according to the plan or order, the finance authority, after consultation with the planning assignment authority or the ordering authority, will decide to recover ineffective expenditures and excess payments to the budget or convert them into allocations for the following year.

- If the enterprise fully meets the assigned quantitative and qualitative indicators but still falls short, the finance authority will supplement the shortfall within the approved plan and budget estimate.

In cases of price fluctuations and other urgent tasks outside the assigned plan, the finance authority will jointly with the planning assignment authority examine and resolve each specific case within the total price support amount recorded in the plan or included in the next year's budget estimate.

2.3. Management and accounting for price support funds:

- Financial plan: Annually, based on regulations and guidelines of the Ministry of Finance, and based on the State's assigned tasks for producing supported products or providing supported services, enterprises shall build their financial income and expenditure plans, including the price support plan for products or services to report to the enterprise establishment decision-making body and the same-level finance authority. The enterprise establishment decision-making body is responsible for reviewing, consolidating, and reporting to the Prime Minister (or authorized agency) for consideration and decision.

- Accounting for price support funds: Enterprises are allowed to account for price support funds under the enterprise's subsidy and price support revenue. This price support amount is not subject to business income tax.

Enterprises shall separately account for this price support expense for each supported product or service provided by the State.

3. For enterprises receiving interest rate support on loans:

3.1. Conditions for enterprises to receive interest rate support on loans:

- Products or services must be decided by the Prime Minister or an authorized agency.

- They must ensure quantity, quality, time, and product or service prices according to State regulations. In cases of changes in quantity or prices, such changes must be agreed upon in writing by the interest rate support granting authority.

- Interest rate support must be allocated within the annually approved State budget plan.

3.2. Issuance of interest rate support on loans:

Quarterly, based on the actual interest expenses incurred for products or services provided (confirmed by the lending bank or credit organization), the finance authority will issue interest rate support. At the end of all work or the fiscal year, state-owned enterprises receiving interest rate support on loans must report on the results of implementing the supported products or services.

3.3. Management and accounting for interest rate support on loans:

- Financial plan: Annually, based on government regulations and guidelines from the Ministry of Finance, and based on the State's assigned tasks for producing or providing supported services, enterprises receiving interest rate support on loans shall build their financial income and expenditure plans, including the interest rate support plan to report to the enterprise establishment decision-making body and the same-level finance authority. The enterprise establishment decision-making body is responsible for reviewing, consolidating, and reporting to the Prime Minister (or authorized agency) for decision.

Within the approved annual budget revenue and expenditure estimate, the Prime Minister (or authorized agency) decides the level of interest rate support for each product, service, or type of enterprise.

- Accounting for interest rate support on loans: Enterprises may use interest rate support funds to offset production costs for supported products or services.

Enterprises shall separately account for this interest rate support expense for each supported product or service.

4. Enterprises receiving investment support:

4.1. Conditions for state-owned enterprises to receive investment support:

- A newly established enterprise has not yet been provided with initial capital as prescribed.

- Public service enterprises currently operating that genuinely lack capital to fulfill their assigned tasks.

- Enterprises undertaking important tasks such as winning international bids for infrastructure construction; purchasing agricultural products for export, producing raw materials to replace imports... are facing difficulties in terms of capital.

- Enterprises engaged in economically efficient business operations with high growth in product sales, generating profits, and increasing tax payments (including income tax) but lacking working capital.

- The investment support amount must be allocated in the annual state budget plan approved by the competent authority.

4.2- Allocation of investment support:

4.2.1- State budget supports investment for the construction and acquisition of fixed assets: Based on the investment plan approved by the agency deciding the establishment of the enterprise; the enterprise shall enjoy the investment support amount for the acquisition of fixed assets in accordance with Decree No. 42/CP dated July 16, 1996 of the Government on the Charter for Investment Management and Construction and Decree No. 43/CP dated July 16, 1996 of the Government on the Issuance of Bidding Regulations in Construction.

4.2.2- State budget supports working capital for the acquisition of current assets (Working Capital).

a) The basis for consideration of support is:

- The decision on the establishment of the enterprise by the competent state agency.

- A business registration certificate.

- Financial statements and financial disclosure of the enterprise in the year prior to investment (if it is an operating enterprise).

- Registered production and business plan.

b) After reviewing each enterprise, if the enterprise meets the conditions stipulated by the state regarding support, after consultation with the agency deciding the establishment of the enterprise, the financial agency decides the level of support. This investment support amount is recorded as an increase in state capital, and the enterprise is responsible for managing and preserving the capital according to the current financial management regime.

5- Providing capital sources for enterprises to repay maturing debts when enterprises raise funds for effective investment and business operations but face financial difficulties in the early years:

Conditions for support:

- It is a state-owned enterprise whose assets have been invested using raised capital and which genuinely enhances efficiency in production, sells products, operates profitably, and increases its tax payments to the state budget compared to before raising investment capital.

- The enterprise raises capital for investment in accordance with the project approved by the competent authority.

- After the enterprise has mobilized all legitimate sources of capital and still lacks sufficient funds to repay maturing debts.

- The amount supported in a year does not exceed the additional tax payments to the state budget made by the enterprise compared to before raising investment capital.

- This support amount must be allocated in the annual state budget plan already approved.

Allocation and accounting:

Based on the subsidy limit recorded in the annual state budget plan; based on the need for support capital to repay maturing debts determined according to the above principle and the degree of growth in tax payments to the state budget, the financial agency decides the allocation level of the support amount for the enterprise.

This support amount is recorded as state budget capital by the enterprise, and the enterprise is responsible for managing and preserving the capital according to the current financial management regime.

III. INSPECTION AND DISCIPLINARY ACTION

1- State-owned enterprises receiving financial support must implement financial reporting and financial disclosure systems as prescribed in Circular No. 06-TC/TCDN dated February 24, 1997 of the Ministry of Finance on financial management regulations for public service enterprises and Circular No. 73-TC/TCDN dated November 12, 1996 of the Ministry of Finance on guidelines for preparing, publicly announcing, and annually auditing financial reports of state-owned enterprises.

2- State-owned enterprises receiving financial support are responsible for clearly analyzing the management and use of state financial support; at the same time, they regularly report the progress of implementing production or service supply tasks supported financially.

The enterprise director is responsible before the state and law for the accuracy and honesty of financial reports.

3- The financial agency is responsible for regularly or periodically inspecting and auditing the management and use of state support funds for enterprises.

Enterprises receiving state support funds are responsible for providing full information, data, and relevant documents related to state support funds to functional agencies.

Any violation causing economic loss, improper expenditure, misuse, or non-compliance with regulations will result in administrative disciplinary action, compensation, or criminal liability追究责任，视乎损失和违规程度由设有管理委员会的企业（对于设有管理委员会的企业）或总经理、董事（对于没有管理委员会的企业）根据法律规定处理。

IV. IMPLEMENTATION PROVISIONS

1- Based on the provisions of this Circular, Ministries, agencies equivalent to Ministries, People's Committees of provinces and centrally governed cities, and state-owned enterprises shall implement appropriate forms of support according to their assigned business or public service tasks. Cases differing from previous regulations must be agreed upon in writing by the Ministry of Finance before implementation.

In addition to the provisions of this Circular, enterprises must also comply with other financial management regulations and laws.

2- This Circular takes effect from the date of issuance. All provisions contrary to this Circular are abolished. During implementation, any issues encountered should be reported by Ministries, provincial and municipal People's Committees, and state-owned enterprises to the Ministry of Finance for study and appropriate amendments.