Guidance on Settlement of Interest Rate Compensation for Ordering New Construction and Upgrading of Ships in Vietnam

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According to Clauses 6 and 7, Article 1 of Circular 123/2018/TT-BTC amending and supplementing Circular 114/2014/TT-BTC, it is regulated that at the end of the financial year, commercial banks determine the actual interest rate subsidy difference for loans ordered for new constructions and upgrades of offshore fishing vessels and offshore fishing logistic vessels within the year in Vietnam. They then request the state budget for subsidy, as follows:

- The actual interest subsidy for a disbursement is calculated by the sum of the product between the subsidy interest rate and the corresponding loan balance with the actual outstanding days, according to the following formula:

Actual interest subsidy for a disbursement	=		x	Sum of the products between loan balances (corresponding to the equivalent loan interest rate) and actual outstanding days
365 days

In which: The subsidy interest rate difference is regulated in Article 4 of Circular 114/2014/TT-BTC and is calculated on a percentage per annum basis; n is the number of outstanding days in the period entitled to the interest rate subsidy difference.

- The actual interest subsidy for a loan is the total actual interest subsidy for all disbursements of that loan.

- The total subsidy interest amount is the sum of the actual interest subsidies of all loans under the subjects stipulated in Decree 67/2014/ND-CP and the guidance of the State Bank of Vietnam.

Guidelines on the dossier for interest subsidy settlement are implemented according to Circular 123/2018/TT-BTC. To be specific:

- A summary report on the interest subsidy settlement proposal data of each loan, audited by an independent auditor or the State Audit, in accordance with Appendix 01/BC attached to this Circular.

- Official Dispatch proposing the Ministry of Finance to settle the interest subsidy, in which the proposed amount does not exceed the amount confirmed by the auditing body.

- Documents (originals or certified copies by the commercial bank) including: credit contracts, promissory notes, or equivalent documents to identify and prove the customer is eligible for the interest subsidy loan, loan implementation status, outstanding loans, restructured loan maturity due to objective reasons, force majeure, debt collection; detailed lists used to determine the subsidy interest amount; shipbuilding or upgrading contracts. These documents are stored at the head office of the commercial bank to facilitate verification of settlement if necessary.

- The Chairman of the Board of Directors and the General Director of the commercial bank are legally responsible for the validity and accuracy of the settlement dossier and the data proposed to the state budget for interest subsidy.

See additional regulations in Circular 123/2018/TT-BTC, effective from January 31, 2019.

Thu Ba

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