THE MINISTRY OF FINANCE | THE SOCIALIST REPUBLIC OF VIETNAM |
No. 37/2019/TT-BTC | Hanoi, June 25, 2019 |
CIRCULAR
ON GUIDELINES FOR FINANCIAL REGIME FOR MICROFINANCE PROGRAMS AND PROJECTS OF POLITICAL ORGANIZATIONS, SOCIO-POLITICAL ORGANIZATIONS, NON-GOVERNMENTAL ORGANIZATIONS
Pursuant to Government's Decree No. 87/2017/ND-CP dated July 26, 2017 on functions, tasks, powers and organizational structure of the Ministry of Finance;
Pursuant to Decision No. 20/2017/QD-TTg dated June 12, 2017 of the Prime Minister on activities of microfinance programs and projects of political organizations, socio-political organizations, and non-governmental organizations;
At the request of Director of Department of Finance of Banks and Financial Institutions;
The Minister of Finance promulgates a Circular on guidelines for financial regime for microfinance programs and projects of political organizations, socio-political organizations, and non-governmental organizations.
Chapter I
GENERAL PROVISIONS
Article 1. Scope
This Circular provides guidelines for financial regime for microfinance programs and projects of political organizations, socio-political organizations, non-governmental organizations (hereinafter referred to as MF program/project).
Article 2. Regulated entities
1. MF programs/projects which are established and operating in Vietnam as prescribed in Decision No. 20/2017/QD-TTg dated June 12, 2017 of the Prime Minister on activities of microfinance programs and projects of political organizations, socio-political organizations, and non-governmental organizations (hereinafter referred to as Decision No. 20/2017/QD-TTg) and other relevant legislative documents.
2. Other relevant agencies, organizations, and individuals.
Chapter II
SPECIFIC PROVISIONS
Article 3. Capital of MF programs/projects
1. Capital of MF programs/projects
a) Capital intended for implementation of an MF program/project includes:
- Capital allocated, granted to MF program/project by political organizations, socio-political organizations, and/or non-governmental organizations;
- Contributed capital of organizations and individuals (if any);
- Aids, grant aids of organizations and individuals.
b) Difference upon asset revaluation means a difference between the book value of asset and value of asset revaluation under a decision made by the regulatory body or determined under other evaluations as per the law.
c) A fund allocated for preparation and implementation of MF program/project and other funds built up as prescribed.
d) Cumulative retained profits; unsettled cumulative losses (if any).
dd) Other capital under legal ownership of MF program/project as per the law.
2. Capital raised in certain forms
a) Taking compulsory saving deposits, voluntary saving deposits from microfinance clients as prescribed of the MF program/project. Total voluntary saving deposit may not exceed 30% of total allocated capital of the MF program/project.
b) Capital from entrustment for lending given by the Government, organizations or individuals as per the law.
c) Borrowed capital of credit institutions, financial institutions, other organizations as per the law.
d) Aids, grant aids, concessional loans of the Government, local and foreign organizations or individuals.
3. Other capital as per the law.
Article 4. Management and use of capital and assets of MF program/project
1. The MF program/project is responsible for managing and using its capital and assets as per the law and in accordance with specific guidelines in this Circular.
2. Monitor and do bookkeeping of these capital and assets independently of other capital and assets of the political organization, socio-political organization, or non-governmental organization.
3. The MF program/project shall do bookkeeping as prescribed by the Ministry of Finance; sufficiently, accurately, and promptly reflect the use and fluctuations of the capital and assets during the business process; stipulate liabilities and actions to be taken against each department and individual if they cause damage or loss to the capital and assets of the MF program/project.
4. With respect of leased assets, MF program/project is responsible for managing, maintaining or using as agreed in accordance with laws and regulations.
5. The loan loss reserves of the MF program/project shall be set aside and used in accordance with regulations applicable to microfinance institutions.
Article 5. Revenues
Revenues of the MF program/project include:
1. Revenue from interests and similar income, including:
a) Interests on deposits at credit institutions.
b) Interests on loans taken out by microfinance clients.
c) Other revenues from credit activities as per the law.
2. Revenue from services activities, including:
a) Revenue from entrustment for lending services.
b) Revenue from consulting services, support and training provided for microfinance clients related to area of microfinance activities.
c) Revenue from agents providing insurance products.
3. Revenue from exchange differences as prescribed in accounting standards and applicable regulations and laws.
4. Revenue from voluntary contribution, legal sponsorships of local and foreign organizations and individuals to be included in the income as per the law.
5. Other revenues as per the law, including:
a) Revenue from reversion of provisions.
b) Revenue from debts settled by loan loss reserves, written off debts, recovered debts creditors of which are lost or unidentifiable.
c) Revenue from fines imposed on clients, damages paid by clients because of their breaches of contracts.
d) Revenue from insurance payout subtracting the payment of insurance premiums.
dd) Revenue from liquidation of assets.
e) Other revenues.
Article 6. Revenue recognition principle
1. The recognition of and accounting for revenues, taxable corporate income shall conform to Vietnam’s accounting standards, the Law on Corporate Income Tax, guiding documents of the Law on Corporate Income Tax and relevant legislative documents.
2. Regarding revenues from interests and similar income:
a) Revenue from interests on microfinance loans: The MF program/project shall record the interest receivable arising in the period to income with respect of loans within the terms. Regarding receivable interests on overdue loans, the MF program/project is not required to record them to the income but record them off-balance sheet to urge the receipt, once they are collected, they shall be recorded to the income.
b) Revenue from deposits: receivable interests on deposits of the MF program/project at credit institutions within the terms.
3. Revenue from grant aids to carry out development programs, activities of the MF program/project apart from collection and payment: which is the actual amount at the time when the grant aid is received.
4. Regarding revenues earned from exchange differences due to reevaluation of foreign currencies and gold: the MF program/project shall recognize the revenues in accordance with accounting standards and relevant provisions of law.
5. Regarding revenue from other activities: proceeds from sale of products, goods, provision of goods arising in the period that clients accept to pay (with valid documents, if any), regardless of whether cash has been collected or not.
6. Regarding receivable revenues which were recorded to income but are considered uncollectible or uncollectible when they are due, the MF program/project shall record them as reduction in revenue, in case of within the accounting period, record them as expenses, in case of different accounting period and record them off-balance sheet to urge the collection. Once the revenue is collected, it must be recorded as income.
Article 7. Expenses
Expenses of the MF program/project include specific expenditures as follows:
1. Expenditure on interests and similar expenditures
a) Expenditure on interests on compulsory savings deposits.
b) Expenditure on interests on voluntary savings deposits.
c) Expenditure on interests on loans.
d) Other expenditures on credit activities.
2. Expenditure on services
a) Expenditure on telecommunications services.
b) Expenditure on fees for entrustment of lending.
c) Expenditure on financial consulting services related to area of microfinance activities.
d) Expenditure on commissions paid to agents, brokers, entrustors permitted by law, in which brokerage commissions shall be paid as follows:
- The MF program/project may pay commissions to brokerage activities permitted by law;
- The brokerage commission is to be paid to the third party (intermediary) and is not applicable to agents of the MF program/project; managers and personnel of the MF program/project;
- The brokerage commission shall be paid according to the contract or certificate between the MF program/project and the brokerage commission receiver, which at least contains: name of the receiver; content of spending; amount; method of payment; performance and completion time; responsibilities of contracting parties;
- Regarding brokerage expenditures to lease out assets (including assets foreclosed, assets used as payment for debt (if any)): the brokerage commission on leasing out each asset of the MF program/project may not exceed 5% of total amount obtained from such lease earned by the brokerage in the year;
- Regarding brokerage expenditure on sale of collateral: the brokerage commission on sale of each collateral of the MF program/project may not exceed 1% of the actual amount obtained from the sale of such collateral through brokerage;
- The MF program/project shall formulate regulations on expenditure on brokerage commissions to be consistently applied and public in the program/project.
dd) Expenditure on activities of insurance agents.
3. Expenditure on exchange differences as prescribed in accounting standards and applicable regulations and laws.
4. Expenditure on contribution and payment of operation, management and training cost for political organizations, socio-political organizations, and/or non-governmental organizations.
5. Expenditure on grants to programs, schemes, organizations and individuals to support community in conformity with guiding principles and objectives of the MF program/project.
6. Expenditure on taxes, fees and charges as per the law.
7. Expenditure on officials, personnel as per the law, including:
a) Expenditure on salaries, wages and salary-like amounts, including:
- Cost of salaries paid to full-time members of the management board, steering board, Director, the control board, remuneration to members;
- Cost of salaries and allowances paid to personnel of the MF program/project based on labor contracts or collective bargaining agreements.
b) Expenditure on salary-based contributions: contribution to social insurance, health insurance, unemployment insurance, trade union fee.
c) Expenditure on job-loss allowances paid to workers as per the labor law.
d) Expenditure on allowances paid to managers and workers who are assigned to work for the MF program/project as part-time jobs by political organizations, socio-political organizations, or non-governmental organizations.
dd) Expenditure on personal accident insurance.
e) Expenditure on personal protective equipment provided for those who need personal protective equipment while working.
g) Expenditure on costumes for personnel working for the MF program/project as prescribed.
h) Expenditure on shift meal.
i) Expenditure on healthcare, including expenditure on periodic medical examination for workers, provisional medicines and other healthcare expenditures as per the law.
k) Other expenditures for workers as per the law:
- Expenditure paid under regulations on female employees;
- Expenditure on paid annual leave as per the law;
- Expenditure on welfare for workers as per the law on corporate income tax;
- Other expenditures.
8. Expenditure on management and assignments
a) Expenditure on materials, printing documents.
b) Expenditure on per diem, petrol and oil.
c) Expenditure on instructions and training for officials and personnel; including training for collaborators and clients within the scope of microfinance activities.
d) Expenditure on postage and telephone.
dd) Expenditure on propagation, advertisement, marketing, sale promotion.
e) Expenditure on materials and books and newspaper.
g) Expenditure on electricity, water, office cleaning.
h) Expenditure on conference, protocol, festivities, foreign transactions.
i) Expenditure on consultancy, local and foreign experts.
k) Expenditure on audit.
l) Other expenditures:
- Expenditure on security, fire and explosion prevention, national defense and security;
- Expenditure on environmental protection: If the amount of expenditure in the year is large and effective in multiple years, it shall be allocated to the following years according to the principle that the allocation period may not exceed the number of years obtaining effectiveness from the expenditure on environment protection and the allocation does not lead to the lost result of financial performance of the year;
- Other expenditures as per the law.
9. Expenditure on assets:
a) Expenditure on fixed asset depreciation used in business under the regulations on management, use and fixed asset depreciation in enterprises.
b) Expenditure on maintenance and repair of fixed assets.
c) Expenditure on purchase and repair of tool and devices.
d) Expenditure on property insurance.
dd) Other expenditures on assets as per the law.
10. Expenditure on setting aside provisions as prescribed in Clause 5, Article 4 of this Circular.
11. Expenditure on outside asset rental.
12. Other expenditures
a) Expenditure on payment of fees for professional associations made by the MF program/project according to the fee rates prescribed by the associations.
b) Expenditure on budget for party organizations and union organizations in the MF program/project (expenditure other than the budget for party organizations and union organizations shall be covered by the regulatory sources of fund).
c) Expenditure on sale, liquidation of assets (if any), including residual value of the sold or liquidated assets.
d) Expenditure on recovery of written off debts, recovery of bad debts, including fees for debt collection to entities permitted to provide debt collection services as per the law, expenditure on debt purchase.
dd) Expenditure on remaining loss: the MF program/project shall record the remaining loss to the expenses after making up using compensation paid by the individual, group, or insurer; use the provisions set aside in expenses.
e) Expenditure on amounts accounted for as revenues but actually unearned.
g) Expenditure on community service as per the law.
h) Expenditure on fines for administrative violations except for those to be paid by individuals as per the law.
i) Other expenditures:
- Expenditure on liabilities recorded as income and creditors of which are lost at first and but are identified thereafter;
- Expenditure on fines, damages due to breaches of economic contracts under liability of the MF program/project;
- Expenditure on court fees, judgment enforcement charges under liability of the MF program/project;
- Other expenditures as per the law.
Article 8. Expense recognition principle
1. In calculating corporate income tax, expenses shall be determined in accordance with the Law on Corporate Income Tax and guiding documents thereof.
2. Expenses of the MF program/project are expenses actually incurred in the period related to the business activities of the MF program/project.
3. Expenses recorded to business expenses of the MF program/project shall conform to the matching principle between revenue and expenses and adequate lawful invoices and documents are required as per the law. The MF program/project may not record expenditures covered by other sources of fund to expense. The expenses shall be determined and recorded in accordance with Vietnam’s accounting standards and relevant laws and regulations.
Article 9. Policies on taxes, fees and charges
The MF program/project shall comply with laws and regulations on taxes, fees and charges.
Article 10. Profit sharing
Residual income of the MF program/project after subsidy of business loss of the previous year (if any) and discharge of liabilities to state budget as per the law shall be decided by the MF program/project provided that the profit may not be shared or used for activities other than microfinance activities in any form.
Article 11. Responsibilities of managing authorities of MF programs/projects
1. The Ministry of Finance shall promulgate and reply to difficulties in financial regime, bookkeeping, financial statement related to MF programs/projects.
2. The State Bank of Vietnam shall assume the prime responsibility for supervision of the implementation of financial regime of MF programs/projects; send annual reports on financial situation of MF programs/projects and violations thereof detected during the inspection and supervision process (if any) to the Ministry of Finance. The State Bank of Vietnam shall send the reports to the Ministry of Finance before March 31 of the following year.
3. Political organizations, socio-political organizations, and non-governmental organizations
a) Political organizations, socio-political organizations, and non-governmental organizations having MF programs/projects shall assume responsibilities prescribed in Article 20 of Decision No. 20/2017/QD-TTg.
b) Send reports prescribed in Article 14 of Decision No. 20/2017/QD-TTg and relevant regulations, take responsibility for the accuracy and truthfulness of these reports.
4. MF programs/projects
a) Comply with financial regime prescribed in Decision No. 20/2017/QD-TTg and specific provisions prescribed in this Circular and relevant legislative documents on financial management.
b) Send reports and totally take legal responsibility for the adequacy, timeliness and accuracy of the report figures as prescribed in Decision No. 20/2017/QD-TTg and guidelines in this Circular.
Chapter III
IMPLEMENTATION
Article 12. Entry in force
1. This Circular comes into force as of August 9, 2019.
2. Difficulties that arise during the implementation of this Circular should be reported to the Ministry of Finance for consideration./.
| PP. MINISTER |
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