Circular No. 234/2009/TT-BTC dated December 9, 2009 of the Ministry of Finance guiding the mechanism to form, manage and use the Fund for petrol and oil price valorization under the Government’s Decree No. 84/2009/ND-CP of October 15, 2009, on petrol and oil trading

THE MINISTRY OF FINANCE

Circular No. 234/2009/TT-BTC of December 9, 2009, guiding the mechanism to form, manage and use the Fund for petrol and oil price valorization under the Government’s Decree No. 84/2009/ND-CP of October 15, 2009, on petrol and oil trading

Pursuant to June 17, 2003 Accounting Law No. 03/2003/QH11 of the National Assembly of the Socialist Republic of Vietnam;

Pursuant to May 10, 2002 Price Ordinance No. 40/2002/PL-UBTVQH10 of the National Assembly Standing Committee;

Pursuant to the Government’s Decree No. 118/2008/ND-CP of November 27, 2008, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

Pursuant to the Government’s Decree No. 170/2003/ND-CP of December 25, 2003, detailing the Price Ordinance, and Decree No. 75/2008/ND-CP of June 9, 2008, amending and supplementing a number of articles of the Government’s Decree No. 170/2003/ND-CP;

Pursuant to the Government’s Decree No. 129/2004/ND-CP of December 31, 2004, detailing and guiding a number of articles of the Accounting Law regarding business activities;

Pursuant to the Government’s Decree No. 84/2009/ND-CP of October 15, 2009, on petrol and oil trading (below referred to as Decree No. 84/2009/ND-CP);

Considering opinions of the Ministry of Industry and Trade in Official Letter No. 11339/BCT-TTTN of November 10, 2009, on the circular guiding Decree No. 84/2009/ND-CP;

The Ministry of Finance guides the mechanism to form, manage and use the Fund for petrol and oil price valorization under Decree No. 84/2009/ND-CP as follows:

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This Circular guides the mechanism to form, manage and use the Fund for petrol and oil price valorization (below referred to as the price valorization fund).

Article 2. Subjects of application

This Circular applies to principal traders of petrol and oil under the Commercial Law; Decree No. 84/2009/ND-CP and other relevant legal documents.

This Circular does not apply to traders licensed to import, produce and prepare petrol and oil for their own special use without selling them on the market under law; traders licensed to import petrol and oil under the Investment Law to be used as samples for advertisement or for display in fairs and exhibitions, or as refundable or non-refundable aid; and petrol and oil producers selling petrol and oil to petrol and oil importers.

Article 3. Interpretation of terms

In this Circular, the terms below are construed as follows:

1. Petrol and oil under this Circular include petrol, diesel oil, kerosene and mazut oil.

2. World petrol and oil prices means the trading prices of end-product petrol and oil on the international market announced by Platt’s Singapore.

3. Prime price means the price used to set the petrol or oil retail price, which has the following constituents and is determined as (=) {CIF price plus (+) import duty plus (+) excise tax} multiplied by (x) foreign exchange rate plus (+) business expense norm plus (+) price valorization fund plus (+) pre-tax profit norm plus (+) value-added tax plus (+) petrol and oil charges plus (+) other payable taxes, charges and payments under current law. The prime price is calculated on the average number of days of reserve under Article 22 Decree No. 84/2009/ND-CP.

4. CIF price means the world petrol or oil price plus (+) insurance plus (+) freight for transportation to Vietnamese port;

5. Foreign exchange rate used to calculate the prime price is the average selling rate of US dollar (USD)-Vietnam dong (VND) applied by commercial banks to principal traders in conformity with the number of days of reserve under Article 22 of Decree No. 84/2009/ND-CP.

6. Business expense norm means the expense for domestic circulation of petrol and oil (wholesale and retail expenses) of principal traders (including expenses for general agents and agents) for calculation of the maximum prime price, in which:

- The average expense for retail of petrol, diesel oil and kerosene in the regions nationwide is maximum VND 600/liter;

- The average expense for wholesale of mazut oil in the regions nationwide is maximum VND 400/kg.

The Ministry of Finance shall announce the adjustment of the above maximum business expense norms suitable to the actual business situation of principal traders in each period.

7. Pre-tax profit norm means principal traders’ profit from petrol and oil trading at home for calculation of the prime price, which has the maximum level of VND 300/liter or kg. Its adjustment shall be announced by the Ministry of Finance to suit the actual business situation of principal traders in each period.

Actually earned profits depend on business results of traders.

Chapter II

SPECIFIC PROVISIONS

Article 4. Mechanism to form the price valorization fund

1. Principal traders may implement on their own decision petrol and oil trading modes in compliance with international practice and law and shall take responsibility for their production and business efficiency. They shall set aside funds for price valorization and use these funds only for price valorization under regulations of competent agencies.

2. The price valorization fund is formed from a specific and fixed amount in the prime price under Clause 9, Article 3, Chapter I of Decree No. 84/2009/ND-CP, which is VND 300/liter (kg) of the actually sold petrol and oil volume and is determined as an expense item in the prime price of principal traders. When necessary, the Ministry of Finance may adjust the amount and time for forming the price valorization fund to suit market price fluctuations and notify these adjustments to principal traders for compliance.

3. Under the direction of leaders of the Ministry of Finance and the Ministry of Industry and Trade, the joint-ministerial (Finance-Industry and Trade) team for petrol and oil price control shall notify the time to cease the formation of or restore the level of fund set aside for price valorization for principal traders’ compliance in the following cases:

a/ To set a level of fund set aside for price valorization lower than the level specified in Clause 2 of this Article or cease its formation when changes in price constituents cause the prime price to increase over twelve per cent (> 12%) from current selling prices or when an increase in petrol and oil prices adversely affects socio-economic development and people’s lives;

b/ When changes in price constituents cause the prime price to decrease compared to the price before the cessation of the formation of the fund for price valorization or cause a decrease in the fund set aside for price valorization under Point a above, the joint-ministerial team for petrol and oil price control shall notify the time to restore the fund set aside for price valorization under Clause 2 of this Article.

4. The total fund set aside for price valorization shall be determined by the fund set aside for price valorization specified in Clauses 2 and 3, Article 4 of this Circular multiplied by (x) the volume of petrol and oil actually sold on the domestic market during the period of setting aside funds for price valorization.

Article 5. Mechanism to use the price valorization fund

Principal traders may use the price valorization fund to valorize petrol and oil prices as follows:

1. When changes in price constituents cause the prime price to increase between over seven per cent (> 7%) and twelve per cent (£ 12%) from current retail prices, principal traders may increase sale prices up to seven per cent (£ 7%) plus  (+) sixty per cent (60%) of the prime price’s actual increase in excess of seven per cent
(> 7%) within the increase limit between over seven per cent (> 7%) and twelve per cent
(£ 12%). The remaining forty percent (40%) will be offset by the price valorization fund;

2. To use the price valorization fund in the case specified in Clause 1 of this Article in accordance with the requirement on the minimum interval between two (2) consecutive price adjustments.

3. When changes in price constituents cause the prime price to increase over twelve per cent (> 12%) from current sale prices, principal traders may adjust sale prices under Clause 1 of this Article. For the remaining difference, the Ministry of Finance shall assume the prime responsibility for, and coordinate with the Ministry of Industry and Trade in, announcing the application of price valorization measures through tax policy administration, formation and use of price valorization funds and other economic-administrative measures under current law.

4. When an increase in petrol and oil prices adversely affects socio-economic development and people’s lives, the Ministry of Finance shall assume the prime responsibility for, and coordinate with the Ministry of Industry and Trade in, announcing the application of price valorization measures through tax policy administration, formation and use of price valorization funds and other economic-administrative measures under current law.

Article 6. Cost accounting and settlement of the price valorization fund

1. Principal traders shall fully and accurately account the fund set aside for price valorization into the cost of goods sold.

2. The price valorization fund shall be used under Article 5 of this Circular. When using the price valorization fund, principal traders shall account it as decrease in the cost of goods sold.

3. Closing a fiscal year, principal traders may carry forward the balance of the price valorization fund to the following year.

4. On the 30th day of the first month of the following quarter, principal traders shall submit to the Ministry of Finance and the Ministry of Industry and Trade reports on the formation, use and balance of the price valorization fund of the previous quarter. In special cases, principal traders shall submit reports at the request of the Ministry of Finance.

Article 7. Accounting methods and presentation of financial statements of the price valorization fund

1. To add account 357 - Price valorization fund

1.1. Account content: Account 357 is used to reflect the current amount, increase and decrease of the price valorization fund of principal traders. This account must be accounted on a number of principles under Article 6 of this Circular.

1.2. Structure and content of account 357 - Price valorization fund:

Debit: Decrease of the price valorization fund as a result of its use under current regulations of the State.

Credit: Increase of the price valorization fund as a result of setting aside funds under current regulations of the State.

Credit balance: Current amount of the price valorization fund at the time of reporting.

2. Accounting methods to set aside and use funds for price valorization:

2.1. When setting aside funds for petrol and oil price valorization under current law, accountants shall record:

Debit account 632 - Cost of goods sold

Credit account 357 - Price valorization fund

2.2. When using the price valorization fund under law, accountants shall record:

Debit account 357 - Price valorization fund

Credit account 632 - Cost of goods sold

3. Presentation of financial statements:

To add the item “Price valorization fund” - Code 340 - on the balance sheet. This item reflects the price valorization fund at the time of reporting. The figure to be recorded in this item is the credit balance of account 357 “Price valorization fund” on the accounting book of account 357.

Chapter III

ORGANIZATION OF IMPLEMENTATION

Article 8. Responsibilities of concerned agencies

1. The Corporate Finance Department shall assume the prime responsibility for, and coordinate with the Price Administration Department (the Ministry of Finance) in, supervising revenues, expenditures and balances of the price valorization fund of principal traders.

2. Under the direction of leaders of the Ministry of Finance and the Ministry of Industry and Trade, the Price Administration Department (the Ministry of Finance) shall notify principal traders of the time to set aside or suspend funds for price valorization and the fund level under Clauses 2 and 3, Article 4 of this Circular for compliance.

3. When the joint-ministerial team for petrol and oil price control detects that a principal trader unreasonably adjusts the petrol and oil sale price under Clause 9, Article 3, Chapter I, and Article 27, Chapter III, of Decree No. 84/2009/ND-CP, and this Circular, it shall issue a notice to cancel the sale price of this trader and request it to impose reasonable prices under the above provisions.

4. The Finance Inspectorate (the Ministry of Finance) shall collect arrears and administratively sanction violations of regulations on pricing and statistical accounting under current regulations as follows:

a/ Remitting into the state budget the amount of difference arisen from principal traders’ imposition of unreasonable prices against the reasonable price under Clause 3 of this Article on the volume of petrol and oil actually sold during the time of violation.

b/ Administratively sanctioning violations of regulations on pricing and forcing principal traders to comply with regulations when they fail:

- To comply with provisions on the interval between two price adjustments under Article 27, Chapter III of Decree No. 84/2009/ND-CP;

- To comply with provisions on the level of fund set aside for price valorization, the time to suspend or restore the level of fund set aside for price valorization.

- To use the price valorization fund according to regulations of competent authorities.

c/ Failing to comply with provisions on accounting methods to set aside and use funds for price valorization and presentation of financial statements under Articles 6 and 7, Chapter II of this Circular.

5. Key traders shall valorize petrol and oil prices and concurrently set aside, use and account funds for price valorization and guide the accounting methods to set aside and use funds for price valorization and present financial statements on the price valorization fund under this Circular.

Article 9. Effect

1. This Circular takes effect on December 15, 2009, which is the effective date of Decree No. 84/2009/ND-CP, and replaces the Finance Ministry’s Circular No. 56/2009/TT-BTC of March 23, 2009, guiding the mechanism to form, use and settle the fund for petrol and oil price valorization, and Circular No. 159/2009/TT-BTC of August 6, 2009, amending and supplementing Circular No. 56/2009/TT-BTC of March 23, 2009, guiding the mechanism to form, use and settle the fund for petrol and oil price valorization.

2. The Directors of the Price Administration Department, the Corporate Finance Department and the Accounting and Audit Regime Department, the Chief Inspector of the Ministry of Finance, principal traders and heads of concerned units shall implement this Circular.

In the course of implementation, any arising problems should be promptly reported to the Ministry of Finance for study and appropriate amendment and supplementation.-

For the Minister of Finance
Deputy Minister
TRAN VAN HIEU