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

 CIRCULAR

Guidelines for the management and use of certain financial support from the State for state-owned enterprises

Implementing Decree No. 59/CP dated October 3, 1996 of the Government on the 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 issues guidelines for the management and use of financial support 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 support from the State budget provided to enterprises for producing products, supplying services, or fulfilling orders according to state policy when revenue is insufficient to cover costs.

b. Price supports are fixed-rate financial support from the State budget calculated per unit of product, goods, or service provided to state-owned enterprises for producing products or supplying services based on state-assigned tasks, orders, or 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 to produce products, goods, or supply services in accordance with state policies and directives.

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 financial support in the form of subsidies, price supports, interest rate support on loans, investment support, and support for capital sources to repay debts must use such support for the intended purposes and ensure effectiveness.

4. The implementation of financial support is regulated as follows:

a. For enterprises established by the Prime Minister and central ministries and agencies, where the Prime Minister (or authorized agencies under his delegation) decides on support, the source of support shall be funded from the central budget.

b. For enterprises established by the People's Committee Chairmen of provinces and centrally-administered cities (or authorized by the Prime Minister to establish), where the decision on support is made, the source of support shall be funded from the local budget (except for support for state-owned enterprises already allocated from the central budget according to annual plans or direct support to enterprises pursuant to the Prime Minister's Decision).

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

II. SPECIFIC PROVISIONS

1. Regarding state-owned enterprises receiving financial subsidies:

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

- The 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 agency responsible for establishing the enterprise 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 regulations and revenue submission to the state budget.

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 amount according to the progress of the plan. Upon completion of the entire work or fiscal year, the state-owned enterprise receiving the subsidy must report the results of implementing the subsidized business tasks to the agency assigning the plan or placing the order and the finance agency at the same level. These agencies are responsible for inspecting and evaluating the results regarding quantity, quality, and economic and social efficiency 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 consulting with the agency assigning the plan or placing the order, will decide to recover the unproductive funds and excess payments to the state budget or transfer them to the next year's allocation.

- If the enterprise fulfills all assigned quantitative and qualitative 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 examined 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 develop their financial revenue and expenditure plans, including financial subsidy plans to be reported 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 shall be responsible for reviewing, compiling, and submitting these plans to the competent authority for examination and approval.

- Accounting for financial subsidies: Enterprises are allowed to account for financial subsidies as part of their subsidy and price support revenues. These subsidies are 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 as stipulated or ordered by the State. 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 specified by the competent authority.

- They must comply fully with financial management regulations and revenue submission to the state budget.

2.2. Allocation 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 funds according to the progress of implementing the plan for each product or service. Upon completion of all work or the fiscal year, state-owned enterprises receiving price support must report the results of their business performance for supported products or services. The planning assignment authority or the finance authority is responsible for checking the implementation results and 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 as planned or ordered, the finance authority, after consulting with the planning assignment or ordering authority, will decide to recover ineffective expenditures and excess payments to the budget or transfer them to the allocation plan for the following year.

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

In cases of price fluctuations or other urgent tasks outside the assigned plan, the finance authority will jointly 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 with the planning assignment authority.

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 subsidized products or providing subsidized services, enterprises shall develop their financial revenue and expenditure plans, including price support plans for products or services to be reported to the enterprise establishment decision-making body and the same-level finance authority. The enterprise establishment decision-making body shall be responsible for reviewing, compiling, and reporting these plans to the Prime Minister (or authorized agency) for examination and approval.

- Accounting for price support funds: Enterprises are allowed to account for price support funds as part of their subsidy and price support revenues. These price support funds are not subject to business income tax.

Enterprises shall separately account for the price support expenses for each subsidized 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 as stipulated by the State. 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 budget plan by the competent authority.

3.2. Allocation of interest rate support on loans:

Quarterly, based on the actual interest expense incurred for products or services provided (confirmed by the bank or lending organization), the finance authority will allocate the interest rate support. At the end of all work or the fiscal year, state-owned enterprises receiving interest rate support on loans must report the results of their implementation for each supported product or service.

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 services, enterprises receiving interest rate support on loans shall develop their financial revenue and expenditure plans, including interest rate support plans to be reported to the enterprise establishment decision-making body and the same-level finance authority. The enterprise establishment decision-making body shall be responsible for examining, compiling, and reporting these plans to the Prime Minister (or authorized agency) for approval.

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 to offset production costs for supported products or services.

Enterprises shall separately account for the interest rate support expenses 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 business activities that are economically efficient, with high growth in product sales, generating profits, and increasing tax payments (including corporate income tax) but lacking business capital.

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

4.2- Allocation of investment support funds:

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 fund 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- The state budget supports working capital for the purchase 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 individually, 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 will determine the level of support. This investment support fund will be 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 capital 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 are genuinely productive in production, selling products, generating profits, and increasing state budget payments 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 its legitimate sources of capital and still lacks sufficient funds to repay maturing debts.

- The amount of support in a year cannot exceed the additional state budget payments made by the enterprise compared to before raising investment capital.

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

Allocation and accounting:

Based on the subsidy limit recorded in the 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 state budget payments, the financial agency will decide the level of allocation of the support fund for the enterprise.

This support fund will be 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 HANDLING WORK

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, publishing, and auditing annual 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 must regularly report on 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 truthfulness 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 violations causing economic losses, improper expenditures, misuse, or non-compliance with regulations will result in administrative disciplinary actions, compensation, or criminal liability追究责任，视违规和损失的程度而定。

IV. IMPLEMENTATION PROVISIONS

1. Based on the provisions of this Circular, Ministries, ministerial-level agencies, People's Committees of provinces and centrally-administered 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 people's committees, and state-owned enterprises to the Ministry of Finance for study and appropriate amendments.