Joint Circular No. 93-TT/LB guiding the implementation of the temporary charter on financial revenue collection and profit distribution for state-owned enterprises in the domestic trade sector and the decision regarding local budget revenues from agricultural product and food submission.

JOINT CIRCULAR

Guidelines for the implementation of the provisional charter on financial collection system and profit distribution regime for state-owned enterprises in the internal trade sector and the decision on local budget revenue from the submission of agricultural products and food

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On December 4, 1969, the Council of Ministers issued Decree No. 235-CP promulgating the provisional charter on the financial collection system and profit distribution regime for state-owned enterprises in the internal trade sector, and Decision No. 258-CP dated December 24, 1969 regarding local budget revenue from the submission of agricultural products and food, to be implemented from January 1, 1970. Based on the provisions in these documents of the Council of Ministers, the Joint Ministry of Finance - Internal Trade - State Bank of Vietnam provides specific guidelines for implementation as follows:

Part 1:

FINANCIAL COLLECTION REGIME FOR STATE-OWNED TRADING ENTERPRISES

1. Up until now, the state budget has mobilized the net social income generated at industrial production enterprises, at both stages: production and circulation. From now on, to concentrate on collecting at the production stage the majority of the aforementioned net social income, the state will reorganize the industrial wholesale price system and the trading wholesale price system. The reorganization of the price system aims to incorporate into the industrial wholesale price the business tax revenue and the majority of the previous trading profits collected from first and second-tier trading enterprises (wholesale and retail). Therefore, trading enterprises will no longer have to pay business tax, while such enterprises, when dealing with goods from central or local industrial enterprises, will only be granted a fixed commercial discount sufficient to cover circulation costs (fixed rate), enterprise profit (fixed rate), and commission paid to cooperative consumer societies (fixed rate).

According to Article 4 of the provisional charter, "Trading enterprises dealing with industrial goods purchased from central or local industrial enterprises shall do so according to the industrial wholesale price. The industrial wholesale price is the retail price minus (-) the commercial discount."

a) The retail price is the price sold to consumers, set by the state (or an agency authorized by the state): for goods from central industrial enterprises (or processing), it takes the central system I retail price; for goods from local industrial enterprises (or processing), it takes the local production system I retail price (main market of the province, city).

b) The commercial discount is uniformly set for the entire trading sector, distributed among product categories and groups. The total commercial discount for the trading sector includes: first-tier commercial discount, second-tier commercial discount (wholesale and retail). The commercial discount for each tier includes: fixed trading circulation cost, fixed enterprise profit, and commission allocated to cooperative consumer societies acting as agents for selling industrial goods.

- For goods from central industrial enterprises (or processing), the total commercial discount for the trading sector is applied.

- For goods from local industrial enterprises (or processing), if consumed locally, the second-tier local commercial discount is applied; if sold to first-tier trading enterprises or other regions where the goods are centrally distributed and managed in terms of price, the total commercial discount for the trading sector is applied (in this case, if there is a loss at the production stage, the provincial or municipal administrative committee must report to the Ministry of Finance for examination and resolution); if the goods are not centrally distributed and managed in terms of price, the provincial or municipal administrative committee of production sets the industrial wholesale price and both parties (buyer and seller) negotiate the price.

2. For trading enterprises dealing with imported industrial goods, they shall follow Circular No. 70-TC/NT dated March 23, 1970 of the Ministry of Finance.

3. For technical materials and production supplies, trading enterprises purchase at the wholesale price of technical materials minus (-) the commercial discount, and sell at the unified national price (wholesale price of technical materials) as decided by the Prime Minister's Decision No. 60-TTg dated June 28, 1969.

Some technical materials and production supplies are sold both at the supply price to enterprises, construction sites, agencies, hospitals, schools... and at the retail price to consumers (construction materials, tools, electrical appliances... as listed in this circular), trading enterprises base the supply price to calculate the purchase price, sale price, and inventory value, and when selling at the retail price, they must pay the difference between the retail price and the supply price into the budget (first-tier trading enterprises pay into the central budget, second-tier trading enterprises pay into the local budget).

4. Generally, for industrial consumer goods sold at the retail price, trading enterprises base the retail price to calculate the purchase price, sale price, and inventory value; in cases where certain individual items are sold at the supply price as specified by the state, such as salt, fuel oil, etc., trading enterprises receive budget compensation for the difference between the retail price and the supply price (the central budget compensates first-tier trading enterprises; the local budget compensates second-tier trading enterprises).

5. Specifically, for some other industrial consumer goods like bicycles, bicycle parts, imported MSG, etc., which the state has a policy to sell at two prices: supply price and free retail price, trading enterprises base the supply price to calculate the purchase price, sale price, and inventory value, and:

a) First-tier trading enterprises settle with industrial enterprises (or foreign trade enterprises) at the supply price minus (-) the total commercial discount for the trading sector; second-tier trading enterprises settle with first-tier trading enterprises at the supply price minus (-) the second-tier commercial discount (wholesale and retail).

b) For bicycles sold at the retail price determined freely, the difference between the supply price and the freely determined retail price must be paid into the state budget at the time of sale.

Annually, after the State approves the total sales quota for bicycles and spare parts, including the sales quota at the supply price (annual plan quota divided by quarter), the Ministry of Commerce informs the Ministry of Finance, the State Bank, provincial administrative committees, and subsequently, whenever there is a change in the sales quota, it promptly informs the aforementioned agencies.

Starting from January 1, 1970, each month, the first-tier trading enterprises send to the State Revenue Collection Bureau under the Ministry of Finance a list detailing the number of bicycles and bicycle spare parts sold to second-tier enterprises (separately analyzing the quantity sold at the supply price and sold at the freely determined retail price).

Trading enterprises responsible for retail sales of bicycles and spare parts must meticulously organize record-keeping and documentation; prepare a list of the difference in proceeds from selling at two prices and pay 50% to the central budget (75% for Hanoi and Hai Phong cities), and 50% to the local budget (25% for Hanoi and Hai Phong cities). The provincial administrative committees shall specify the appropriate payment schedule.

For other goods that the State has a policy to sell at two prices like bicycles and bicycle spare parts, the above regulations shall also apply.

6. Industrial products belonging to consumer goods, if trading enterprises sell them to other enterprises for production raw materials (buying sugar to produce confectionery), shall apply Article 7, Chapter II of the Interim Regulations to determine purchase and sale prices.

Catering, repair, service enterprises (independent economic accounting) purchasing food items (beer bottles, lemon juice, wine, meat, etc.) for processing and selling to customers, purchasing watch parts, fountain pens, bicycles, etc., for repair and replacement services for customers, shall follow the local retail price minus (-) trade discount for retail sales.

7. Trading enterprises purchasing industrial goods produced by small-scale industry cooperatives and handicraft cooperatives when goods enter the warehouse shall apply the same pricing method as for industrial goods purchased from production enterprises. If there is a surplus difference between the payment price to the cooperative and the warehouse entry price of the enterprise, the enterprise shall pay it into the state budget; if there is a shortage, the enterprise shall be compensated by the state budget. The budget of the level where the trading enterprise belongs shall handle it.

8. Trading enterprises operating industrial goods taken from the national material reserve must settle with the national material reserve agency according to the wholesale industrial selling price.

9. Wholesale prices within the trading system:

- The wholesale price of first-tier trading enterprises is the retail price in the main market of the province or city minus (-) the trade discount for second-tier enterprises (wholesale and retail).

- The wholesale price of second-tier trading enterprises is the retail price at the location of the retail enterprise minus (-) the trade discount of the retail trading enterprise.

The regional price difference arising from applying the above wholesale trading price system: first-tier trading enterprises shall pay into the central budget the regional price difference between the central system I price and the local system I price; second-tier trading enterprises shall pay into the local budget the regional price difference within this scope, which must be accounted for separately and fully paid into the budget, not combined with the enterprise's profit; in cases where there is a shortage (-) within a province, the regional price being lower than the local market price, the budget shall compensate.

10. While the State has not improved the financial collection system for processing production enterprises, these enterprises:

- If they are independent economic accounting enterprises, they still pay taxes and profits as stipulated in Circular No. 27-LB dated December 10, 1964, jointly issued by the Ministry of Finance, the Ministry of Commerce, and the State Bank.

- If they are dependent units not yet independent economic accounting, they shall separately account for the processing production part and still apply the "processing margin" and processing profit payment system as stipulated in Circular No. 27-LB dated December 10, 1964. Specifically:

a) Processing margin is the difference between the planned cost (or cost formula) and the directed warehouse entry price. For goods subject to commodity tax, the processing margin includes the commodity tax. When goods enter circulation storage, the trading enterprise must prepare a warehouse entry list, and the bank will lend money based on the warehouse entry price (excluding the loan amount for raw materials calculated at cost). The remaining amount, the enterprise records in the settlement account and immediately pays the processing margin to the state budget.

Directed warehouse entry price for goods:

- For first-tier trading enterprises, it is the central system I retail price minus (-) the entire industry trade discount.

- For second-tier trading enterprises engaged in wholesale, it is the main market retail price of the producing locality minus (-) the second-tier trade discount (wholesale and retail); if it is a retail enterprise, then minus (-) the retail trade discount.

- For second-tier trading enterprises accepting processing for first-tier enterprises, it is the main market retail price of the producing locality minus (-) the entire industry trade discount.

b) Processing profit is the difference between the planned cost (or cost formula) and the actual cost. If the enterprise cannot calculate the actual cost immediately, to ensure timely payment of processing profit to the state budget.

- The three financial, commerce, and state bank agencies shall base on the actual processing profit ratio from the previous settlement period to set the planned profit ratio on the planned cost as the basis for calculating periodic profit payments (monthly); after the settlement, adjustments shall be made according to reality.

11. Livestock breeding, service, repair, catering, transportation enterprises continue to apply the current tax and profit collection system.

12. Trading enterprises must fully remit to the State budget all amounts due for price differences (Articles 3, 4, 5, 7, 9, and 10) as well as taxes (Article 11) according to the payment schedule set by the Ministry of Finance (for first-tier trading enterprises) or the provincial administrative committee (for second-tier trading enterprises), each month once or twice, and at the same time must be promptly provided with sufficient funds from the State budget to cover losses arising from pricing policies.

Within the first five days of each month, trading enterprises must complete the formal report detailing the full amount due for remittance to the State budget or the amount compensated by the budget, and the amount compensated in the previous month; based on this, the enterprise will balance accounts and remit the entire amount due to the State budget as well as receive adequate compensation from the budget.

13. Regarding revenue transferred from the central government's budget to the local budget for the sale of centrally-managed industrial goods.

The Ministry of Finance will transfer from the central government's budget to the local budget an amount equal to four percent (4%) of the sales volume of centrally-managed industrial goods sold by first-tier domestic trade enterprises to local domestic trade enterprises.

a) At the beginning of the year, the Ministry of Domestic Trade sends to the Ministry of Finance (trade departments and bureaus send to finance departments and bureaus) the plan for the circulation of goods within the domestic trade sector (annual plan divided by quarter), specifying the sales volume of centrally-managed industrial goods allocated to each locality (excluding sales volumes of technical materials and production supplies); subsequently, whenever there is a change in the aforementioned plan, it must be promptly notified to the finance department.

b) Based on the aforementioned goods circulation plan, the Ministry of Finance establishes a plan to transfer revenues that the locality is entitled to receive to the local budget; and each month, based on reports on purchasing and payment situations of each province and city towards first-tier trading enterprises, the Ministry of Finance will transfer from the central government's budget to the local budget the revenues that the locality is entitled to receive.

c) Finance departments and bureaus also base their plans for revenue collection by the local budget and settle the revenue of the local budget at the end of each quarter, based on the formal reports from trade departments and bureaus regarding the sales volume of industrial goods purchased and payments made to first-tier trading enterprises.

14. Revenue from the local budget concerning the submission of agricultural products and food (Decision No. 258-CP, Articles 1, 4, and 5).

1. Revenue from the submission of agricultural products and food is calculated as a percentage (%) of the state-guided purchase price (or the purchase price guided by the agency authorized by the state). This revenue must be remitted to the local budget where the production and submission take place.

2. State-owned economic organizations: domestic trade procurement companies, foreign trade procurement companies, health (medicinal materials) companies; industrial enterprises..., under the management of central sectors, which procure agricultural products and food listed in Article 1 of Decision No. 258-CP, must bear this revenue.

State-owned economic organizations managed by localities, if they purchase agricultural products and food listed in Article 1 of Decision No. 258-CP from other localities, must also bear this revenue.

The collection method is stipulated as follows:

a) All organizations at the central or local level mentioned above, if directly purchasing from agricultural cooperatives, people, state-owned farms..., without going through procurement organizations like those mentioned below in point b, must immediately remit the aforementioned revenue when paying for the goods.

b) Second-tier trading enterprises, companies (in localities) engaged in export trade,... which purchase agricultural products and food and then hand them over to central sectors or other localities, must remit the aforementioned revenue after selling the goods and receiving payment.

3. The collection system for the submission of agricultural products and food in the domestic trade sector changes with transaction prices; the calculation of new transaction prices is as follows:

a) Based on the procurement cost of the purchasing unit to re-determine the new transaction price (selling price) of the purchasing unit when it sells:

- The procurement cost (standard) of the purchasing unit is the state-guided purchase price plus (+) procurement fee (standard) plus (+) profit (standard). For enterprises under the domestic trade sector, the standard procurement fee plus (+) standard profit is the procurement surplus distributed from the overall industry standard rate of 9.5% set by the state.

- The new transaction price (selling price) of the purchasing unit is the procurement cost standard (mentioned above) plus (+) the revenue from the submission of agricultural products and food.

b) Enterprises in the domestic trade sector also transact with each other based on the new purchase price and selling price:

First-tier trading enterprises dealing with agricultural products and food through trading enterprises:

- Purchase from second-tier enterprises according to the transaction price as specified in point a above;

- Sell according to the wholesale price of first-tier trading enterprises, i.e., the retail price minus (-) the discount of second-tier local enterprises buying goods. The difference (increase or decrease) between the wholesale price of first-tier trading enterprises and the procurement cost (new purchase price plus (+) first-tier trading enterprise discount) is resolved by the central government budget: first-tier trading enterprises remit to the central government budget or receive compensation from the central government budget.

Second-tier trading enterprises dealing with agricultural products and food through second-tier procurement enterprises in other provinces according to the transaction price specified in point a above. When selling, the difference (increase or decrease) between the local retail price and the procurement cost is resolved by the local consumption budget.

4. For agricultural products and food not included in the list in Article 1 of Decision No. 258-CP, if second-tier trading enterprises purchase and hand over to central state-owned economic organizations or other localities, the current transaction price remains unchanged; however:

- The standard procurement cost is calculated as specified in point 3 above.

- And the difference (increase or decrease) between the transaction price and the procurement cost (second-tier trading enterprise) is resolved by the local budget.

5. The provisions above shall not apply to agricultural products and foodstuffs of centrally-owned economic organizations operating in localities (central state farms, central forestry enterprises, central fishing fleets, etc.).

6. Regarding procedures for payment and submission:

a) Units submitting revenue from the delivery of agricultural products and foodstuffs must proactively prepare a declaration form (attached model) with full details including:

Quantity of agricultural products and foodstuffs, itemized according to the list specified in Article 1 of Decision No. 258-CP;

Delivery price, if the purchasing organization at the locality sells the goods; or purchase price plus the revenue from the delivery of agricultural products and foodstuffs, if the centrally-owned economic organization purchases directly without going through local purchasing organizations;

Amount to be paid into the State budget;

The declaration form also serves as a payment authorization to submit to the budget, which must be made in six copies (one for the local revenue collection agency, four sent to the local State Bank, and one retained by the unit).

Local purchasing organizations, when selling goods, must prepare a declaration detailing the quantity of agricultural products and foodstuffs sold, listing each sales invoice, and must submit this declaration on the day of delivery if payment is made via "collection on behalf"; if payment is made by check (within authorized limit or advance payment) or in cash, then the declaration must be submitted no later than the day of delivery.

If payment is made via "collection on behalf," the deadline for submitting revenue from the delivery of agricultural products and foodstuffs is the date when, according to the regulations of the State Bank, the proceeds from the sale must enter the account of the enterprise selling at the bank. If payment is made by check (within authorized limit or advance payment) or in cash, then the revenue must be submitted no later than the next day after receiving the check or cash.

Other centrally-owned economic organizations purchasing agricultural products and foodstuffs directly without going through local purchasing organizations must prepare a declaration for each purchase transaction, submit the declaration and pay the revenue from the delivery of agricultural products and foodstuffs no later than the next day after paying for the purchase.

b) The State Bank, upon receipt of the aforementioned declaration, must monitor and urge the timely payment of goods and ensure that enterprises fully and promptly pay the amount due into the local budget after receiving the proceeds from the sale, and must:

- Deduct from the accounts of purchasing organizations and transfer the amount due to the local budget immediately after receiving the proceeds from the sale into the enterprise's account.

- Deduct from the accounts of other centrally-owned economic organizations (as stipulated in point a above) and transfer the amount due to the local budget after these organizations have paid for their purchases. When these organizations deduct funds from their accounts to pay sellers, the bank must urge the prompt submission of the revenue from agricultural products and foodstuffs to the local budget.

c) The local revenue collection agency must verify the declaration and urge the timely submission of the revenue from the delivery of agricultural products and foodstuffs to the budget.

7. The collection and submission of revenue by enterprises and the compensation provided by the State budget (in cases where losses arise due to pricing policies, such as pork, vegetables, etc.) shall proceed as prescribed in Article 12 above.

8. Disciplinary measures for the submission of revenue from agricultural products and foodstuffs shall be carried out as prescribed in Article 6 of Decision No. 258-CP.

9. Provisions in Circular No. 18-TC/TQD dated January 14, 1970 of the Ministry of Finance, which conflict with the provisions in Point 14 of this joint circular, are hereby abolished.

15. The deduction of profits from trading enterprises into the State budget shall proceed as follows:

1. All independent accounting state trading enterprises must contribute profits to the budget (enterprises at Level I contribute to the central budget; enterprises at Level II contribute to the local budget) according to plans and based on actual payments, using the final settlement statement or balance sheet of the enterprise.

The profit contribution referred to here is the profit mentioned in Article 14 of the Interim Charter; in addition, the enterprise must also contribute all interest income from ancillary activities such as processing, production, etc.

2. The plan for profit contribution to the budget (annual plan divided into quarters and months) is a statutory target assigned by the State to the enterprise, which the enterprise must ensure to fulfill fully and on time.

The Ministry of Commerce and the trade departments must notify each enterprise of the profit contribution plan to the budget after the financial revenue and expenditure plan has been officially approved; simultaneously sending copies to the relevant financial agencies and banks at the same level to ensure the implementation of the collection plan by local revenue agencies and banks.

Once the financial revenue and expenditure plan of the enterprise is officially approved, the enterprise must send a copy of its annual profit contribution plan (divided into quarters) to the local revenue agency and bank. Based on this plan, the local revenue agency will urge and inspect the submission of contributions to the budget; if the plan is lower than the plan communicated by the superior agency, it will still be collected according to the plan communicated by the superior agency, while reporting to the superior agency for resolution.

Based on the annual profit contribution plan and the production and business tasks for each quarter, the enterprise prepares a quarterly profit contribution plan (divided into months) and sends it to the revenue agency and local bank by the end of the last month of each quarter, serving as the basis for profit contribution for the following quarter.

During the period before the financial revenue and expenditure plan is officially approved, the Ministry of Commerce and the Ministry of Finance, along with the trade departments and financial departments, temporarily set the quarterly profit contribution plan (divided into months) for trading enterprises (both Level I and Level II), and notify the trading enterprises, revenue agencies, and local banks before the first day of the quarter, serving as the basis for submission to the budget until the official profit contribution plan is issued.

If within the first week of the first month of the quarter, the trading enterprise and the local revenue agency have not received the aforementioned notification, they must jointly set a temporary quarterly profit contribution plan for that month, and send a copy to the local bank, to serve as the basis for submission when the payment is due.

3. The enterprise must proactively calculate and remit to the State Budget at least 10% of the planned profit; the remaining portion, if insufficient for distribution to the enterprise's funds according to the prescribed regulations, shall be supplemented by the State Budget up to the required amount: this additional supplement shall not exceed the amount of profit that the enterprise has remitted to the State Budget.

The schedule for remitting profits to the State Budget shall be determined by the Ministry of Finance (for level I) and the provincial or municipal administrative committees (for level II), based on the nature of each enterprise's operations and the quantity of profits that the enterprise must remit to the State Budget, specifying the number of times the enterprise must remit within a month.

Upon the due date, the enterprise must proactively issue a payment authorization to the State Bank to deduct and transfer from its account to the State Budget.

At the end of the month, quarter, and year, the enterprise must proactively settle according to the actual realized profit and remit any shortfall to the State Budget without waiting for local revenue collection agency inspection.

The enterprise must prepare and submit to the local revenue collection agency comprehensive reports on various types of profits of the enterprise, the distribution, establishment, and utilization of the enterprise's funds according to the plan and actual implementation.

The local revenue collection agency must verify the settlement: if the amount remitted (according to the plan) is lower than the amount required, it shall notify the enterprise to immediately remit the shortfall; simultaneously, it shall notify the State Bank to deduct from the enterprise's deposit account and transfer to the State Budget without waiting for the enterprise's payment authorization; if the amount remitted exceeds the amount required, the excess may either be deducted from the next planned profit remittance period or refunded to the enterprise immediately upon request.

In case of disagreement between the enterprise and the revenue collection agency regarding the determination of the profit amount to be settled, the enterprise must remit according to the level notified by the revenue collection agency; concurrently, it must report to the commerce authority and higher-level financial authority for review (Ministry of Internal Trade and Ministry of Finance for level I, finance bureaus/offices for level II).

The State Bank must deduct from the enterprise's account and remit to the State Budget immediately the following day after receiving the payment submission notice from the enterprise. If the enterprise's account does not have sufficient funds for remittance, the bank must deduct according to the priority order established by the State and transfer to the State Budget; subsequently, as funds enter the enterprise's account, they will continue to be deducted according to the State's priority order and transferred to the State Budget until the full amount the enterprise is required to remit is reached. The financial authority must closely coordinate with the State Bank to effectively implement this deduction and remittance.

For enterprises confirmed to have loss plans subsidized by the State Budget to cover the enterprise's funds, such subsidies shall be implemented according to quarterly plans, in the first month of each quarter.

4. Disciplinary measures for the collection of profit remittances as stipulated in Article 15 (Chapter II) of the Interim Charter.

16. The remittance of basic depreciation:

a) Commercial enterprises engaged in industrial goods trade, agricultural product procurement, foodstuffs, as well as independent economic accounting service, repair, and transportation enterprises, applying the new profit distribution system prescribed in the new charter, must remit 30% of their basic depreciation to the State Budget (level I remits to the central budget, level II remits to the local budget).

b) Other units under the internal trade sector operating independently but not yet applying the aforementioned profit distribution system, must remit 100% of their basic depreciation to the State Budget.

c) Commercial enterprises must remit basic depreciation to the State Budget once a month according to the plan and settle according to actual figures when quarterly and annual settlements are made. If there is no plan, provisional remittance shall be made according to the previous month's or quarter's level.

Part II:

DISTRIBUTION AND USE OF PROFITS FOR COMMERCIAL ENTERPRISES

I. COMMISSIONS.

17. The fixed commissions for the entire internal trade sector are defined in the Interim Charter (Article 16 - Chapter III) and in Directive No. 132-TTg dated December 4, 1969 of the Prime Minister (attached to this circular is a table of commission distribution).

If it is later found that the levels of commissions set by the Ministry of Internal Trade for commercial enterprises at level I, as well as for those at level II, are unreasonable (either too high or too low), then the Ministry of Internal Trade for level I, and the commerce bureaus/offices for level II, shall be responsible for adjusting the discrepancies among commercial enterprises within their jurisdiction based on:

- Ensuring that the total level does not exceed the national limit set by the State for the entire internal trade sector (9.5% for 1970).

- Maintaining the ratios of commissions and trade surpluses announced by the Ministry of Internal Trade as the basis for setting wholesale prices, import purchase prices, and wholesale trade prices between level I and level II...

II. DISTRIBUTION OF PROFITS FOR COMMERCIAL ENTERPRISES.

According to the Interim Charter (Articles 17, 18, 21, and 26), the new profit distribution system applies to purely circulating commercial enterprises operating independently, such as industrial goods trading enterprises (including scrap material companies and county buying-selling cooperatives), agricultural product procurement enterprises, and foodstuff procurement enterprises. Other activities in the internal trade sector (service, repair, transportation enterprises) operating independently, although not yet having profit levels set by the State, also allocate from "realized profits" to establish enterprise funds. For other remaining activities, whether operating independently or still being dependent units (production, processing, livestock farming, catering...), regulations will be specified later.

18. The profit of commercial enterprises serves as the income source to ensure the establishment of enterprise funds: development incentive fund, welfare fund, reward fund, and the remittance of a portion of the profit to the State Budget.

Once established, these enterprise funds will replace the previous system of dedicated capital allocation and enterprise funds.

The provisions previously stipulated that commercial enterprises should allocate from their profits to cover expenses for the State budget are now replaced by direct allocations from the State budget (Circular No. 141-TTg dated December 29, 1969 of the Prime Minister).

- There shall be distinctions based on the requirements and capabilities of each type of enterprise regarding equipment upgrades and technological improvements.

- There shall be distinctions based on the different levels of arduous labor, complexity or simplicity, and whether there is contact with toxic substances affecting the health of workers and officials...

1. The profit of a commercial enterprise includes planned profit, profit exceeding the plan, and profit outside the plan.

a) Planned profit is the profit approved by the management authority and the financial department for the enterprise based on the planning indicators set by the Ministry of Internal Trade (for level I) or the provincial administrative committee (for level II), which are recorded in the annual financial plan of the enterprise.

The following items, when preparing the plan, shall not be included in the planned profit but if they occur during implementation, they shall be included in actual profit: surplus assets, missing assets, asset losses, depreciation of goods due to poor quality, stagnant goods, etc., caused by subjective reasons, after processing (as per Decree No. 49-CP dated April 9, 1968 on material responsibility system and Circular No. 199-TT/LB dated May 4, 1967 issued jointly by the Ministry of Internal Trade, Ministry of Finance, and the State Bank).

b) Profit exceeding the plan is the difference between realized profit and planned profit.

c) Profit outside the plan is the profit obtained by the enterprise in addition to fulfilling its business production tasks according to the plan assigned by superiors, through activities not listed in the plan assigned by the Ministry of Internal Trade (for level I) or the provincial administrative committee (for level II). Examples include:

- Operating sideline businesses (pickling vegetables, preserving fruits, raising pigs, chickens at food stores...),

- Utilizing waste materials or using the combined capacity of the enterprise to produce goods not listed in the plan,

- Collecting various packaging materials not belonging to the enterprise's capital,

- Waste materials and by-products separated from basic production and business operations and converted into products outside the plan must be valued to reduce production costs and basic business expenses.

However, to encourage enterprises to utilize waste materials and by-products, the state temporarily does not nationalize products produced and processed outside the plan using these materials. The difference between the wholesale industrial price and the product cost is considered as profit outside the plan. The Ministry of Finance, together with the Ministry of Internal Trade (for level I) and the municipal administrative committee (for level II), will determine when these activities stabilize and incorporate them into the state budget expenditure and begin collection.

2. State-owned commercial enterprises operating purely on independent economic accounting shall allocate profits to establish enterprise funds and pay a portion of the profit to the state budget as stipulated in Article 18 (Chapter III) of the provisional charter.

All profits from sideline businesses of enterprises not yet operating on independent economic accounting must be fully paid into the state budget.

3. For commercial enterprises approved as having no planned profit or suffering planned losses (due to compliance with state price policies...), the resolution shall be as provided in Article 19 (Chapter III) of the provisional charter.

III. ALLOCATION AND USE OF ENTERPRISE FUNDS

19. Development Incentive Fund.

1. The Development Incentive Fund is used for:

- Reinforcing and expanding existing facilities (warehouses, shops...), constructing small projects not included in the state’s basic construction plan (adding store rooms, warehouses, wells, fences...);

- Purchasing individual equipment, transportation, loading and unloading, and storage tools for existing facilities (small cranes, conveyor belts, carts, shelves, counters, measuring devices...);

- Expenditures on occupational safety and hygiene in business and production (hand tools, fans, raincoats, rubber boots...);

- Purchasing technical equipment for producing and processing products from waste materials and by-products; researching and improving business and production technology;

- Paying interest and principal on bank loans to increase fixed assets and improve business and production technology;

- Supplementing working capital increased from producing additional items outside the plan using waste materials and by-products.

If the enterprise has not used the available fund for the purposes mentioned above, it may temporarily use it for working capital needs as a self-owned source.

Enterprises can only use the Development Incentive Fund directly for the purpose of developing business and production; under no circumstances can this fund be used for welfare purposes (such as building or expanding housing, dining halls, kindergartens, clubs, canteens... or purchasing equipment and means serving cultural and sports activities...). On the other hand, the Development Incentive Fund cannot replace the state's centralized basic construction investment; new construction projects such as building new shops, warehouses, stations... as well as expansion projects requiring expensive equipment beyond the enterprise's capacity, shall be funded by the state budget.

2. The Development Incentive Fund is established at the rates specified in Article 21 (Chapter III) of the provisional charter.

3. Profit is the source for establishing the Development Incentive Fund; enterprises failing to achieve the planned profit target can only allocate the Development Incentive Fund based on the percentage of actual profit achieved; if an enterprise has a planned profit but fails to achieve any profit or incurs a loss upon implementation, no allocation shall be made.

The enterprise shall allocate a business development encouragement fund quarterly according to the plan and must settle according to the actual situation for the whole year when the enterprise submits the final settlement report. If the enterprise does not use up the fund at the end of the year, it can be transferred to the next year and recorded in the next year's plan for use.

4. The rights and responsibilities of the managing agency and the enterprise in using the business development encouragement fund shall be as stipulated in Article 24 (Chapter III) of the provisional charter.

20. Welfare Fund and Reward Fund.

1. The welfare fund is used for:

- Building and expanding housing, clubs, rest houses, health camps, kindergartens, dining halls, canteens, and sports facilities; constructing and repairing tunnels and performing other tasks serving the lives of workers and staff within the enterprise; contributing together with the State or other enterprises in the same locality to build additional housing for workers and staff...

- Improving cultural living conditions and caring for the health of workers and staff within the enterprise such as purchasing additional medical equipment and medicines for the enterprise's treatment facility, equipping dining halls, canteens, clubs, kindergartens; purchasing sports equipment; providing additional food for children in kindergartens when they are sick (including children at home if they do not have the conditions to send to kindergarten); expenses for organizing health camps...

- Additional costs outside the contributions of learners for supplementary cultural education and technical training at the enterprise; expenses for non-specialist cadres or workers attending meetings, short-term courses, participating in mass cultural activities, sports, and supplementary cultural education...

- Providing temporary loans to worker and staff collectives within the enterprise to increase self-sufficient production capital; - Granting emergency assistance to workers and staff within the enterprise; The welfare fund may not be used for the following expenses (Circular No. 115-TTg dated December 12, 1963)

2. The award fund is used for:

- Awarding advanced workers, model soldiers, and advanced work teams;

- Awarding outstanding workers and staff members who have achieved remarkable results in competition campaigns, exemplary cases of business and production improvement and management;

- Awarding managers, technical personnel, and specialized cadres working in the Party and mass organizations for their achievements in implementing and promoting the enterprise's plans and state plans.

3. The welfare fund and reward fund shall be established according to the provisions of Article 26 (Chapter III) of the provisional charter.

4. Trading enterprises must meet two conditions and three standards as stipulated in Articles 27 and 28 (Chapter III) of the provisional charter before being allowed to establish the welfare fund and reward fund.

5. The distribution of the two funds and the rights and responsibilities of the unit head and the enterprise trade union shall be as stipulated in Articles 29 and 30 (Chapter III) of the provisional charter.

21. To ensure that the establishment and use of enterprise funds (business development encouragement fund, welfare fund, and reward fund) comply with the regulations set forth in the charter.

a) Trading enterprises are responsible for strictly implementing the system of establishing and using enterprise funds and must create all necessary favorable conditions for financial agencies and state-owned commercial banks to fulfill their financial oversight duties regarding the establishment and use of enterprise funds.

Quarterly and annually, when enterprises submit reports on business and production settlements, they must simultaneously submit reports on the establishment and use of enterprise funds.

b) The Ministry of Commerce, commerce departments, and bureaus are responsible for guiding trading enterprises to use funds according to the regulations, aiming to maximize the effectiveness of each fund.

c) Financial agencies and state-owned commercial banks, through their financial oversight functions, need to create all favorable conditions for enterprises to use funds well and rigorously monitor the enterprises' establishment and use of funds; in cases where enterprises violate principles and regulations, they must promptly report to the higher-level managing agencies of the enterprises and, pending review, have the authority to temporarily suspend the enterprises from establishing and using funds.

d) Regarding the content and procedures for reviewing enterprise funds, the provisions in the circulars and directives of the Prime Minister (Circulars No. 434-TTg dated December 5, 1959, No. 34-TTg dated March 14, 1962, and Directives No. 33-TTg dated April 25, 1963, No. 23-TTg dated March 18, 1964) must be strictly followed.

Enterprises (with participation of the enterprise trade union) must analyze and evaluate the results of their operations for the entire year... and compare them with the conditions prescribed by the State to self-assess and propose the establishment of enterprise funds to the Ministry or the managing sector... (Circular No. 34-TTg dated March 14, 1962).

Ministries and local administrative committees, which manage enterprises, are responsible for implementing the rules on the establishment of enterprise funds and bear full responsibility for reviewing the establishment of enterprise funds for state-owned enterprises under their management. After approving the establishment of enterprise funds for enterprises, ministries and local administrative committees must report to the Ministry of Finance... (Circular No. 434-TTg dated December 5, 1959).

It is necessary to ensure the review of enterprise funds for enterprises that have submitted complete and timely annual final settlement reports; in cases of delayed settlement with valid reasons, the Ministry of Finance (for central enterprises) or local financial agencies (for local enterprises) may extend the deadline once for the enterprises (Directive No. 33-TTg dated April 25, 1963).

Before approving enterprise funds for units, the managing agency of the enterprise must discuss and reach consensus with the same-level financial agency.

If there is disagreement, each party must report its opinion to the same-level government for decision.

While awaiting the government's decision, the enterprise may only extract enterprise funds according to the opinion of the financial agency (Directive No. 23-TTg dated March 18, 1964).

Part 3:

SOME OTHER RELATED ISSUES

22. The calculation of depreciation of fixed assets will still follow the current system, with the following additions:

- Fixed assets that are unused or not needed shall still be subject to basic depreciation if they belong to the enterprise's fixed assets, but large-scale repair depreciation shall not be deducted. The Ministry of Commerce, commerce bureaus, and enterprises have the responsibility to transfer or propose the transfer of these fixed assets. Confirmation that these assets are unused or not needed for exemption from depreciation shall only be made if such assets are held on behalf of superiors or if the enterprise has proposed their transfer to superiors who have decided on the transfer.

- Fixed assets that have been fully depreciated but continue to be used must be revalued to calculate depreciation (including both basic depreciation and large-scale repair depreciation).

- Construction projects, protective shelters built during wartime, constructed solidly and permanently, are considered fixed assets, but no depreciation shall be deducted.

The use of basic depreciation is regulated as follows:

- Thirty percent of the amount of basic depreciation on fixed assets used in business production shall be allocated to the business development incentive fund.

- The remaining seventy percent shall be submitted by the enterprise to the Ministry of Commerce (for level I) or commerce bureaus (for level II) at forty percent, to be used for basic construction according to industry plans, outside the state-approved basic construction budget and capital allocation. The Ministry of Commerce or commerce bureaus must deposit this capital into the construction bank for disbursement when needed. The industry management department may only use this capital as direct basic construction capital to serve production and business: it cannot be used as another source of capital or as basic construction capital for administrative and public services.

Thirty percent shall be deposited into the central government budget (for level I) or local government budget (for level II).

23. For types of goods that are stagnant, insufficient, poor quality, or deteriorated, financial handling shall be as follows:

- If caused by subjective reasons of the industry or commercial enterprise, the loss shall be deducted from the enterprise's profit.

- If caused by other industries (such as industry, foreign trade, transportation...), those industries shall compensate according to economic contracts.

- If caused by objective factors that cannot be remedied, the state budget shall consider providing compensation.

24. After implementing the new system, the value of inventory in the commerce sector at both level I and level II will increase.

The Prime Minister has issued Directive No. 132-TTg dated December 4, 1969, regarding the calculation of working capital quotas, rearrangement of capital allocation and loans to match the new needs of the domestic trade sector. The Finance-Ministry of State Bank-Ministry of Commerce will study and specify the implementation of the above directive; pending this, the state budget will not reclaim the difference in value between new and old inventory values; it will be treated as temporary additional capital outside the 1970 quota.

Specifically for bicycles, bicycle parts, and imported noodles, now commercial enterprises account for inventory based on supply prices, the reduced amount will be provided by the budget to offset the previous loan from the bank, helping the enterprise repay the bank.

25. Based on Decree No. 235-CP dated December 4, 1969, issued by the Council of Ministers on the provisional financial revenue system and profit distribution regulations for state-owned enterprises in the domestic trade sector, Decision No. 258-CP dated December 29, 1969, issued by the Council of Ministers determining the revenue of the local budget from agricultural products and foodstuffs, and the provisions in this joint circular, the Ministry of Finance, State Bank, and Ministry of Commerce issue separate circulars to guide operational procedures.

The joint ministries request the provincial, city, and district administrative committees, commerce bureaus, finance bureaus, state-owned enterprise tax collection offices, and state bank branches to disseminate and guide all units to fully comply with the regulations of the Council of Ministers and the provisions in this circular; during the implementation process, promptly report to the joint ministries any issues requiring further research and supplementation.