Financial source of disaster prevention fund in Vietnam

Financial source of disaster prevention fund in Vietnam (Internet image)

1. What is the Disaster Prevention Fund?

- The Disaster Management Fund is a state extra-budgetary financial foundation having its legal personality, its own seal and allowed to have its accounts opened at the State Treasury and commercial banks legally operating in Vietnam.

- The Central Disaster Management Fund is established by the Government under the provisions of this Decree and run by the Ministry of Agriculture and Rural Development. Its international name is Vietnam Disaster Management Fund, abbreviated to VNDMF.

- Provincial disaster management funds (hereinafter referred to as provincial DMF) are established under the approval decisions of Presidents of the People's Committees of centrally-affiliated cities and provinces, and run by the People's Committees of centrally-affiliated cities and provinces. The Fund of each province or centrally-affiliated city is named after the name of that province or centrally-affiliated city.

- Each DMF operates like a single-member limited liability company of which the charter capital is wholly held by the State.

(Clause 10, Article 10 of the Law on Natural Disaster Prevention and Control 2013, Point a, Clause 7, Article 1 of the Law on amendments to the law on natural disaster management and law on dikes 2020, Article 3 of Decree 78/2021/ND-CP)

2. Financial sources of the disaster prevention fund in Vietnam

2.1. Financial source of the central disaster prevention fund in Vietnam

Financial sources of the central disaster prevention fund include:

- Grants, aids, voluntary and trusted contributions of domestic and foreign organizations and individuals. Voluntary contributions, grants, aids and financial support given to the Fund shall be included in CIT-deductible expenses.

- Amounts granted by provincial Funds according to the Prime Minister’s decision.

- Interest earned from deposit accounts.

- Other legitimate finances (if any).

- Balance in the last year that may be carried forward to the subsequent year.

(Article 6 of Decree 78/2021/ND-CP)

2.2. Financial sources of the provincial disaster prevention fund in Vietnam

Financial sources of the provincial disaster prevention fund include:

- The rate of compulsory contribution from domestic and foreign economic organizations within a locality per year is 0.02% of total value of existing assets according to the financial statement that the paying organization makes on December 31 each year to the tax authority, is VND 500,000 at minimum and VND 100 million at maximum, and shall be accounted as that organization’s operating expenses.

- Voluntary contributions, grants, aids and financial support given to the Fund by organizations and enterprises shall be included in CIT-deductible expenses.

- Vietnamese citizens who are at least 18 years old or at retirement age under normal working conditions prescribed in law on labor shall make annual contributions as follows:

+ Officials, public officers, public employees, persons paid wages, salaries, allowances and employees working at agencies, organizations and non-business units of the Party, State, socio-political organizations and associations that are funded by the State budget to cover their operating expenses at the central level, in provinces and centrally-run cities, in urban/rural districts, towns, provincially-affiliated cities, cities under the central authority (district level), in communes, wards and townships (commune level), in special administrative-economic units and armed forces shall pay a half of the statutory base salary divided by the number of working days in a month.

+ Employees working under labor contracts in enterprises shall pay a half of the region-specific statutory minimum pay rate divided by the number of working days in a month as agreed upon in the labor contract. Employees who enter into multiple contracts with different enterprises shall only have to make a one-off contribution according to the labor contract of which the term is longest.

+ Other employees other than those specified at Point a and b of this Clause shall have to contribute 10,000 VND/person/year.

- Grants, aids, voluntary contributions granted by domestic and foreign organizations and individuals.

- Allocations granted by the VNDMF and by another provincial Fund.

- Interest earned from deposit accounts.

- Other legitimate finances (if any).

- The Fund’s year-end balance which is carried forward to the subsequent year.

(Article 12 of Decree 78/2021/ND-CP)

Diem My

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