Has the Circular on the evaluation of activities, establishment of occupational risk provisions, and reporting policies of valuation enterprises in Vietnam been issued yet?
Has the Circular on the evaluation of activities, establishment of occupational risk provisions, and reporting policies of valuation enterprises in Vietnam been issued yet?
On May 16, 2024, the Minister of Finance issued Circular 38/2024/TT-BTC stipulating the evaluation of operations of valuation companies; setting up professional risk provisions, and reporting policies on valuation activities of valuation companies and expenses for the appraisal council's valuation activities.
Circular 38/2024/TT-BTC specifies in detail:
- Point e, Clause 10, Article 14 of the Price Law 2023 on the evaluation of operations of valuation companies;
- Points e and h, Clause 2, Article 53 of the Price Law 2023 on setting up professional risk provisions and reporting policies on valuation activities of valuation companies;
- Clause 1, Article 65 of the Price Law on expenses related to the valuation activities of the appraisal council.
Has the Circular on the evaluation of activities, establishment of occupational risk provisions, and reporting policies of valuation enterprises in Vietnam been issued yet? (Image from the Internet)
What are the contents of the evaluation of valuation companies' operations in Vietnam?
Article 3 of Circular 38/2024/TT-BTC stipulates the evaluation of valuation companies' operations as follows:
Evaluation of valuation companies' operations
1. Evaluation contents
a) Maintaining conditions for valuation operations;
b) Compliance with the legal provisions on valuation and fulfilling the obligations of valuation companies;
c) Participating in coordinating the implementation, construction, and deployment of legal normative documents on prices and valuation drafted and organized by the Ministry of Finance;
d) Participating in coordinating international cooperation activities;
dd) Participating in coordinating state management activities on prices and valuation conducted by Ministries, sectors, and local agencies;
e) Participating in coordinating scientific research activities in the field of valuation.
- Evaluation period from January 01 to December 31 of the year preceding the evaluation.
From April 15 to May 31 each year, the Price Management Department organizes the evaluation of valuation companies that meet the following conditions:
a) Having a certificate of eligibility for valuation services before the evaluation period;
b) Satisfying conditions for valuation company operations for 6 months or more during the evaluation period;
c) Satisfying conditions for valuation company operations during the evaluation period.
Valuation companies are responsible for submitting reports as stipulated in Point a, Clause 1, Article 5 of this Circular as a basis for the evaluation of valuation companies' operations.
- The evaluation is carried out by scoring based on the evaluation contents from the information sources:
a) Information, data in reports stipulated in Point a, Clause 1, Article 5 of this Circular;
b) Information, data obtained during state management of valuation regarding valuation companies and appraisers;
c) Feedback from ministries, sectors, local agencies, organizations, and individuals (if any).
Evaluation contents based on detailed scores for individual criteria components (detailed in Appendix I issued with this Circular).
The evaluation aims to improve the quality of valuation companies' operations. The evaluation results are publicly announced by the Price Management Department on the Ministry of Finance's website before June 30 each year. The evaluation results do not reflect the quality of specific appraisal certificates or valuation reports from appraisers or valuation companies.
Thus, the evaluation of valuation companies' operations includes:
- Maintaining conditions for valuation operations;
- Compliance with the legal provisions on valuation and fulfilling the obligations of valuation companies;
- Participating in coordinating the implementation, construction, and deployment of legal normative documents on prices and valuation drafted and organized by the Ministry of Finance;
- Participating in coordinating international cooperation activities;
- Participating in coordinating state management activities on prices and valuation conducted by Ministries, sectors, and local agencies;
- Participating in coordinating scientific research activities in the field of valuation.
What is the rate for setting up professional risk provisions if the valuation company in Vietnam does not purchase professional liability insurance for valuation?
Article 4 of Circular 38/2024/TT-BTC stipulates the professional risk provisions for valuation companies as follows:
Professional risk provisions for valuation companies
Valuation companies that do not purchase professional liability insurance for valuation must set up professional risk provisions with an annual rate of 1% of valuation service revenue (excluding value-added tax), deducted at the end of the fiscal year and accounted for as a provision for liabilities.
If the professional risk provisions of a company exceed 10% of the average valuation service revenue (excluding value-added tax) over the last 3 years, the company must revert the excess amount to other income.
Companies must develop and issue internal regulations for managing and using professional risk provisions.
If a company ceases valuation operations, any unused provision balance must be accounted for as other income.
Thus, the rate for setting up professional risk provisions when valuation companies do not purchase professional liability insurance for valuation is 1% of the valuation service revenue (excluding value-added tax).
