Vietnam: How is the difference in the performance of the local Development Investment Fund distributed?

According to Article 34 of the Decree No. 147/2020/NĐ-CP of the Vietnam Government, financial, accounting and auditing regimes of the local investment and development fund are as follows:

- The fiscal year of the local investment and development fund begins on January 1 and ends on December 31.

- The annual financial statements of the local investment and development fund must be independently audited in accordance with the current law.

- The mechanism of salary, remuneration, bonus and allowance of managers and employees of the local investment and development fund shall comply with regulations applicable to one-member limited liability companies 100% State capital and guidance of the Ministry of Labor, War Invalids and Social Affairs of Vietnam. The ranking of the local investment and development fund shall comply with the guidance of the Ministry of Labor, War Invalids and Social Affairs of Vietnam.

- The operating result of the local investment and development fund is the difference between the total revenue, other income and the total reasonable and valid expenses. After paying taxes and other payments to the state budget in accordance with the tax law, this difference is distributed as follows:

+ Offsetting the negative revenue and expenditure difference to the time of settlement.

+ Deduct 30% into the development investment fund.

+ Deduct 10% into the financial reserve fund; When the fund balance is equal to 25% of the charter capital of the local investment and development fund, no further deductions will be made.

+ Deduct no more than 03 months of employee's actual salary into the bonus and welfare fund; deduct no more than 1.5 months of the manager's salary into the manager's bonus fund.

+ The remaining difference shall be continued to be added to the development investment fund to supplement the charter capital for the local development investment fund.

- Annually, the provincial People's Committee approves the report on the settlement of the difference between revenues and expenditures of the local development investment fund. The report on the settlement of the difference between revenues and expenditures of a local development investment fund must be accompanied by a description of the evaluation of the results and efficiency of the Fund's performance of tasks as prescribed in Article 65 of the Law on State Budget of Vietnam and its amending, supplementing or replacing documents (if any).

More details at the Decree No. 147/2020/NĐ-CP of the Vietnam Government, effective from February 05, 2021.

Ty Na

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