Scope of operation and criteria for classification of cooperatives in Vietnam from November 01, 2024

Scope of operation and criteria for classification of cooperatives in Vietnam from November 01, 2024 (Image from the internet)

On September 12, 2024, the Government of Vietnam issued Decree 113/2024/ND-CP providing detailed instructions on certain articles of the Law on Cooperatives 2023.

Scope of operation and criteria for classification of cooperatives in Vietnam from November 01, 2024

Decree 113/2024/ND-CP provides detailed instructions on certain articles of the Law on Cooperatives 2023 regarding:

- Classification of cooperative sizes.

- Criteria for selection, subjects, contents, levels of support, funding sources, and implementation of State policies supporting the development of collective groups, cooperatives, and cooperative alliances.

- Conditions for cooperatives and cooperative alliances to establish enterprises, contribute capital, and purchase shares to participate in enterprises.

- Conditions for cooperatives and cooperative alliances to conduct internal lending activities, and the lending levels, limits, interest rates, and risk handling from internal lending activities.

- Internal transactions and income from internal transactions.

- Handling of assets when cooperatives or cooperative alliances are dissolved or bankrupt.

Article 4 of Decree 113/2024/ND-CP stipulates theScope of operation and criteria for classification of cooperatives as follows:

(1) Fields of operation of cooperatives:

The fields of operation of cooperatives are determined according to the main business activities registered with the business registration authority. The fields of operation of cooperatives are classified into 04 groups based on economic sectors defined by law on statistics as follows:

- Agricultural sector includes the following sectors: primary agriculture, forestry, and fisheries; salt extraction sector;

- Industrial - construction sector includes the following primary sectors: mining (excluding salt extraction); manufacturing and processing industry; production and distribution of electricity, gas, hot water, steam, and air conditioning; water supply; waste management and treatment activities; construction;

- Finance, banking, and insurance sector includes the following primary sector: financial, banking, and insurance activities;

- Trade - service and other sectors include the following primary sectors: wholesale and retail, repair of automobiles, motorcycles, motorbikes, and other motor vehicles; transportation and warehousing; accommodation and food services; information and communications; real estate business; professional, scientific, and technological activities; administrative and support services; education and training; health and social support activities; arts, entertainment, and recreation; other service activities.

(2) Criteria for classifying the size of cooperatives:

- The number of official members of the cooperative is determined as of December 14th of the preceding year, updated on the National Information System on Cooperatives according to the law on the content, updating, exploitation, and management of the National Information System on Cooperatives.

- The total capital of the cooperative is determined in the annual financial report submitted by the cooperative to the tax authority as regulated by tax law. In cases where the cooperative has operated for less than 01 year and has not yet submitted an annual financial report to the tax authority, the total capital is determined based on the charter capital recorded in the Certificate of Cooperative Registration.

- The annual revenue of the cooperative is the total revenue from the sale of goods, provision of services, and other income as determined in the annual financial report submitted by the cooperative to the tax authority as regulated by tax law. In cases where the cooperative has operated for less than 01 year or more than 01 year but without revenue, the cooperative relies on the total capital criteria specified in point b of this clause to determine its size.

More details can be found in Decree 113/2024/ND-CP which comes into force in Vietnam from November 1, 2024.

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