Instructions on collection and payment of profits and dividends distributed to the State capital in enterprises in Vietnam

Instructions for collecting and paying profits and dividends to be distributed to the State capital in enterprises (Illustration image)

Receipts into the state budget the remaining profits of enterprises in which 100% of capital is held by the State

The remaining profit payable to the state budget of enterprises in which 100% of charter capital is held by the State is the profit determined according to the provisions of the Vietnamese law on accounting after deducting the following amounts:

- Make up for the loss of the previous year in accordance with the law on corporate income tax;

- Deducting from the Science and Technology Development Fund according to regulations (if not yet deducted from expenses when determining accounting profit);

- Corporate income tax payable in accordance with the law on corporate income tax;

- Distributions and deductions for setting up the fund according to regulations.

The determination of profits of enterprises in which 100% of charter capital is held by the State when investing capital in other enterprises shall be carried out as follows:

- Remaining profits of subsidiaries in which 100% charter capital is held by the parent company are determined based on production and business results, financial statements in accordance with the law on state capital investment into the business.

The parent company decides to collect the remaining profits of the subsidiaries and accounts for the financial revenue of the parent company for payment to the state budget.

- Dividends and profits distributed from joint stock companies, limited liability companies with two or more members with a capital contribution of enterprises in which 100% of charter capital is held by the State are determined on the basis of results of production and business, financial statements according to the provisions of the law on state capital investment in enterprises and the decision on dividend and profit distribution of the General Meeting of Shareholders or the Members' Council of a joint-stock company, limited liability company with two or more members.

Enterprises in which 100% of charter capital is held by the State shall be responsible for collecting dividends and distributing profits and accounting for financial revenues for payment to the state budget.

- Remaining profits of subsidiaries in which 100% of charter capital is held by the parent company, dividends and profits distributed from joint stock companies and limited liability companies with two or more members having contributed capital. of enterprises in which 100% of charter capital is held by the State according to the above provisions shall be aggregated to determine the remaining profit to be remitted to the state budget.

Collection and distribution of state budget for dividends and distributed profits

In addition to determining the remaining profit to be paid to the state budget and profits of enterprises held by the Vietnamese State, Circular 85/2021/TT-BTC of Vietnam also clearly stipulates revenue to the state budget for dividends and profits are divided by the state capital invested in joint stock companies, limited liability companies with two or more members.

According to the Circular, dividends and distributed profits payable to the state budget are determined on the basis of production and business results, financial statements in accordance with the law on investment of state capital in enterprises, and the proportion of contributed capital of enterprises. The State is decided by the General Meeting of Shareholders and the Members' Council, including:

- Amount of dividends and profits temporarily divided in the fiscal year (if any);

- Dividends and profits of previous years are distributed in the fiscal year.

State budget allocation in Vietnam

For enterprises in which 100% charter capital is held by the State, joint stock companies, limited liability companies with two or more members with capital contributed by the State, the Ministries, ministerial-level agencies, agencies under the Government acting as the owner's representative shall pay 100% of the remaining profits to the central budget, and dividends and distributed profits must be remitted to the state budget.

For enterprises in which 100% of charter capital is held by the State, joint-stock companies, limited liability companies with two or more members with capital contributed by the State, the payment by the People's Committees of provinces and cities as the owner's representative shall be submitted 100% to the local budget for the remaining profits and dividends and profits distributed must be remitted to the state budget.

Circular 85/2021/TT-BTC of Vietnam takes effect from January 1, 2022, applies to the final settlement of the remaining profits payable to the state budget in 2021 and replaces Circular 61/2016/ TT-BTC.

Bao Ngoc

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