Regulations on distribution of incomes generated within a year of public administrative units in Vietnam

1. What is financial autonomy mechanism of public administrative units in Vietnam?

In Clause 1, Article 3 of Decree No. 60/2021/ND-CP (effective from August 15, 2021). There are stipulations:

1. “financial autonomy mechanism of public administrative units” means a set of regulations on autonomy to the implementation of list of public administrative services; prices, fees and roadmap for pricing public administrative services; classification of financial autonomy levels; autonomy to use financial sources; autonomy to perform joint-venture, cooperation or association activities; management and use of public assets and other relevant regulations.

2. Regulations on distribution of incomes generated within a year of public administrative units in Vietnam

In Article 18 of Decree 60/2021/ND-CP on financial autonomy mechanism of public administrative units, there are provisions on distribution of incomes generated within a year of public administrative units, as follows: 

At the end of the fiscal year, after posting all revenues and recurrent expenses covered by funding which the autonomy to use is delegated to the public administrative unit into accounting records, making depreciations of fixed assets, making contribution to the fund for salary reform as prescribed in Point b Clause 1 Article 16 hereof, paying taxes and other amounts payable to state budget as prescribed, the positive difference between revenues and recurrent expenses (if any) shall be used in the following order:

1. Contribution to the fund for development of administrative operations

a) A public administrative unit that self-covers from 70% to less than 100% of recurrent expenses: at least 20%;

b) A public administrative unit that self-covers from 30% to less than 70% of recurrent expenses: at least 15%;

c) A public administrative unit that self-covers from 10% to less than 30% of recurrent expenses: at least 10%.

2. Contribution to the fund for supplementation of income and payment of increased income

a) While the Government's regulations on salary policies under the Resolution No. 27-NQ/TW are not available, the contribution to the fund for supplementation of income is restricted to twice less than the sum of scale-, rank- or position-based salary fund, salary-based contributions and allowances as stipulated by the Government.

b) When the Government’s regulations on salary policies under the Resolution No. 27-NQ/TW come into force, the public administrative unit shall comply with the followings:

- A public administrative unit that self-covers from 70% to less than 100% of recurrent expenses shall be allowed to make payment of increased income which shall not exceed 0,8 times the fund for minimum wages of its public employees and workers;

- A public administrative unit that self-covers from 30% to less than 70% of recurrent expenses shall be allowed to make payment of increased income which shall not exceed 0,5 times the fund for minimum wages of its public employees and workers;

- A public administrative unit that self-covers from 10% to less than 30% of recurrent expenses shall be allowed to make payment of increased income which shall not exceed 0,3 times the fund for minimum wages of its public employees and workers.

3. Contribution to reward fund and welfare fund:

Contribution amounts to both funds are as follows:

a) A public administrative unit that self-covers from 70% to less than 100% of recurrent expenses: total contribution amounts shall not exceed the sum of 2,5-month salaries or wages paid by the unit within a year;

b) A public administrative unit that self-covers from 30% to less than 70% of recurrent expenses: total contribution amounts shall not exceed the sum of 2-month salaries or wages paid by the unit within a year;

c) A public administrative unit that self-covers from 10% to less than 30% of recurrent expenses: total contribution amounts shall not exceed the sum of 1,5-month salaries or wages paid by the unit within a year.

4. Contributions to other funds as prescribed by specialized laws.

5. The remaining positive difference between revenues and expenses (if any) after all funds have been established in accordance with regulations shall be added to the fund for development of administrative operations.

6. The use of such funds shall comply with regulations in Clause 2 and Clause 3 Article 14 hereof. Specific contribution amounts and procedures for use of the funds specified in this Article shall be decided by the head of public administrative unit in accordance with their regulations on internal expenses and relevant laws, and must be publicly announced within the unit.

Best Regards!