Legal Counselling

Vietnam: Funding amount of the Fund for environmental risks and damage compensation

10:53, 26/06/2016

This is a notable content stipulated in Circular No. 86/2016/TT-BTC of the Ministry of Finance of Vietnam guiding a number of contents relating to the provision fund for environmental risks and damage compensation regulated in the Decree No. 19/2015/ND-CP of Vietnam’s Government.

According to Circular No. 86/2016/TT-BTC of the Ministry of Finance of Vietnam, the amount of funding of the Fund for environmental risks and damage compensation is specified as follows:

- Amount of funding: The enterprise shall appropriate 0.5% of its net revenue provided that the appropriation shall not exceed 5% of annual pre-tax profit. In which, annual net revenue from good sale and service provision shall not include revenues from the sale of goods made between a parent company and its subsidiaries.

- When the fund's balance equals 10% of the enterprise’s charter capital, the appropriation for setting aside the Fund shall be ceased. In case the enterprise’s charter capital is increased as adjusted, the enterprise shall continue the appropriation for setting aside the Fund until the fund’s balance equals to 10% of the new rate of charter capital (after it is increased).

- If the fund’s balance is lower than 10% of the enterprise’s charter capital before the reduction of charter capital, the enterprise shall base on the new rate of its charter capital to determine the fund’s balance and make appropriation to ensure that the fund’s balance equals to 10% of the new rate of charter capital (after it is reduced).

View purposes of the Fund at Circular No. 86/2016/TT-BTC of the Ministry of Finance of Vietnam, effective from August 05, 2016.

- Thanh Lam -

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