What is a cooperative fund? Revenues of the Cooperative Fund in Vietnam

What is a cooperative fund? Revenues of the Cooperative Fund in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. What is a cooperative fund?

According to Clause 1, Article 3 of Decree 45/2021/ND-CP, a cooperative fund is an out-of-budget state financial fund that operates adopting the business model of a single-member limited liability company 100% of charter capital of which is held by the State or a financial organization that operates adopting the cooperative business model, capital preservation and growth principles, for not-for-profit purposes, and has autonomy in raising and using capital for granting loans to cooperatives, cooperative unions, and members of artels and cooperatives in accordance with regulations herein and relevant laws.

2. Revenues of the Cooperative Fund in Vietnam

The fund’s revenues are amounts receivable in the period, including:

- Operating revenues:

+ Loan interests;

+ Fees collected under trusteeship agreements;

+ Revenues from investment and consulting services concerning the fund’s operations; revenues from assistance and training services rendered to the fund’s borrowers in accordance with regulations of law;

+ Other operating revenues as prescribed by law.

- Revenues from financial activities: 

+ Deposit interests;

+ Earnings from exchange rate differences (if any);

+ Revenues from other financial activities.

- Other revenues:

+ Earnings from liquidation, transfer or selling of assets;

+ Revenue from leasing of assets;

+ Difference between the compensation for asset loss received from the issuer and actual compensation for asset loss;

+ Recovered amounts of debts which have been charged off;

+ Revenue from reversal of provisions;

+ Other lawful revenues as prescribed by law.

(Article 6 of Circular 52/2022/TT-BTC)

3. Revenue recognition principle of the Cooperative Fund in Vietnam

Specifically, in Article 5 of Circular 52/2022/TT-BTC, the revenue recognition principle of the Cooperative Fund are as follows:

- All revenues of the cooperative fund must be recognized and recorded for the purposes of preparation and presentation of financial statements in accordance with Vietnam’s accounting standards and relevant law provisions, and must be supported by lawful invoices or receipts.

- With regard to loan interests, the cooperative fund shall evaluate the debt recoverability and classify debts in accordance with Article 28 of the Decree 45/2021/ND-CP as the basis for recording of interests receivable as follows:

+ The fund shall record the interests receivable in the period as its revenues in respect of debts classified as standard debts for which the loan loss provision is not required according to SBV’s regulations applicable to microfinance institutions;

+ The interests receivable of debts remaining classified in the standard debt group as a result of implementation of the State policies and the interests receivable in the period of remaining debts shall not be recorded as the fund’s revenues but shall be monitored in off-balance sheet to expedite the debt collection.

Such debts shall be recorded as the fund’s revenues, when collected.

- Deposit interest revenue is the amount of deposit interests receivable during the period.

- Amounts receivable which have been recorded as income but then are considered unrecoverable or not collected on due dates shall be recorded as the fund’s expenses and monitored in off-balance sheet to expedite the debt collection. Such amounts shall be recorded as the fund’s revenues, when collected.

- Revenue from other activities shall be recorded in accordance with regulations of laws on taxation and relevant laws.

- Determination of the fund’s revenues for the tax calculation purpose shall comply with regulations of law on taxation.

Thanh Rin

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE