Legal Counselling

Vietnam: Valuation enterprise shall set up the professional risk reserve fund with the minimum amount of money appropriated every year as 1% of revenues

16:01, 02/04/2014

This is an important content specified in Circular No. 38/2014/TT-BTC elaborating several articles of Decree No. 89/2013/ND-CP dated August 06, 2013 of Vietnam’s Government providing guidance on implementation of the Price Law on appraisal of prices.

The establishment of professional risk reserve fund of the valuation enterprise is specified in Circular No. 38/2014/TT-BTC of the Ministry of Finance of Vietnam as follows:

- If the valuation enterprise does not purchase professional liability insurance, it must set up the professional risk reserve fund with the minimum amount of money appropriated every year as 1% of revenues from provision of valuation service (VAT-exclusive revenues). Accounting for the professional risk reserve fund shall be the same as that for provision for payables and amounts of money appropriated for reserve fund shall be recorded as business expenses as regulated by laws.

- When the fund's ending balance is equal to 10% of revenues from the provision of valuation service in the financial year, the appropriation for the professional risk reserve fund in that year is not required.

+ At the end of the financial year, if the fund's balance remains unchanged or positive, the valuation enterprise shall reverse that fund’s balance and set aside the professional risk reserve fund in the following financial year.

+ If the valuation enterprise stops providing valuation service, it must reverse provisions for risks and carry out procedures for payment of corporate income tax as regulated.

View other provisions at Circular No. 38/2014/TT-BTC of the Ministry of Finance of Vietnam, effective from May 15, 2014.

Thu Ba

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