THEGOVERNMENT | | THE SOCIALIST REPUBLIC OF VIETNAM
Independence - Freedom - Happiness |
No. 122/2017/ND-CP | | Hanoi, November 13, 2017 |
DECREE
Prescribing some specific contents on the financial management mechanism and operational effectiveness assessment applicable to lottery businesses, the stock exchanges and the Vietnam Securities Depository
Pursuant to the June 19, 2015 Law on Organization of the Government;
Pursuant to the November 26, 2014 Law on Enterprises;
Pursuant to the November 26, 2014 Law on Management and Use of State Capital Invested in Production and Business at Enterprises;
Pursuant to the June 29, 2006 Law on Securities and the November 24, 2010 Law Amending and Supplementing a Number of Articles of the Law on Securities;
At the proposal of the Minister of Finance;
The Government issues this Decree prescribing some specific contents on the financial management mechanism and operational effectiveness assessment applicable to lottery businesses, the stock exchanges and the Vietnam Securities Depository.
Chapter I
GENERAL PROVISIONS
Article 1.Scope of regulation
This Decree prescribes some specific contents on the financial management mechanism and operational effectiveness assessment applicable to lottery businesses, the stock exchanges and the Vietnam Securities Depository.
Article 2.Subjects of application
1. Lottery businesses, including lottery single-member limited liability companies established by provincial-level People’s Committees and the Vietnam Computerized Lottery Single-Member Limited Company (below referred to as Vietlott).
2. The stock exchanges and the Vietnam Securities Depository.
3. Agencies representing the owner at lottery businesses, stock exchanges and the Vietnam Securities Depository.
4. Other organizations and individuals involved in the financial management and operational effectiveness assessment of lottery businesses, stock exchanges and the Vietnam Securities Depository.
Chapter II
SOME SPECIFIC FINANCIAL PROVISIONS APPLICABLE TO LOTTERY BUSINESSES
Article 3.Investment by lottery businesses
Lottery businesses may only invest in sectors and trades directly related to lottery business.
Article 4.Revenues of lottery businesses
1. Revenues of a lottery business include revenues from trading in permitted lottery products, revenues from other business activities, revenues from financial operations as prescribed by law, and other revenues.
2. Particularly for computerized lotto products, if winners fail to claim jackpots within the prescribed time limit, businesses licensed to deal in computerized lottery may account such jackpots as other revenues.
Article 5.Expenses
When calculating enterprise income tax, lottery businesses may subtract the following specific expenses:
1. Expense for prize payment
a/ For traditional lottery, manual lotto and instant lottery products, the prize payment expense is the amount of money actually paid to winners for winning lottery tickets in accordance with law. Particularly for traditional lottery products issued under the joint-issuance mechanism, the prize payment expense of a lottery business shall include the prize payment expense actually paid for winning lottery tickets with prizes to be paid by the lottery business under the Operation Regulation of the concerned Regional Lottery Council; and the actually paid prize payment expense which is allocated to the lottery business according to the allocation ratio for winning lottery tickets with prizes to be jointly paid by the lottery business and the Regional Lottery Council in accordance with the latter’s Operation Regulation.
b/ For computerized lotto products, the prize payment expense is the amount of money actually paid to winners for winning lottery tickets and the value of jackpots rolled over to the next draw as specified in the lottery participation rules in accordance with the law on lottery business.
2. Expense for payment of agent commissions to lottery agents
a/ Agent commission means an amount of money a lottery business pays to a lottery agent for sale of lottery tickets.
b/ The Ministry of Finance shall specify the rates of lottery agent commission prescribed in this Clause in each period.
c/ Agent commission rates must be specified in lottery agent contracts between lottery businesses and lottery agents.
d/ Lottery businesses shall pay agent commissions to lottery agents only after the number of lottery tickets sold out by such agents in the period is certified and the agents fulfills their economic obligations stated in the agent contracts with the lottery businesses.
dd/ Before paying commissions to lottery agents, lottery businesses shall withhold their payable tax amounts in accordance with the tax laws.
3. Expense for authorizing agents to pay prizes to winners
a/ The Ministry of Finance shall specify the levels of expense for authorizing lottery agents to pay prizes prescribed in this Clause in each period.
b/ Payment shall be made based on agent contracts between lottery businesses and lottery agents, provided such contracts contain terms on authorization of prize payment, and other documents proving lottery agents’ payment of prizes to winners.
c/ Lottery agents authorized to pay prizes may not collect any charges from prize winners.
4. Expenses for organization of lottery drawings and oversight by the Lottery Oversight Council
a/ Expenses for organization of lottery drawings include venue rental and other expenses for procurement or hire of equipment or services to serve lottery drawings. For cases of issuance of traditional lottery tickets under the joint-issuance mechanism, lottery businesses entering into the joint-issuance agreement shall together organize lottery drawings and the expense for organization of lottery drawings in a period shall be allocated to each of these lottery businesses based on the proportion of lottery tickets received for sale by such business to the total number of issued tickets in the region in such period. The determination of specific expenses must comply with the Operation Regulation of the Regional Lottery Council.
b/ Expenses for payment of remuneration to members of the Lottery Oversight Council shall be approved by owner-representing agencies at the request of lottery businesses. Remuneration rates shall be determined on the principle of ensuring thrift and efficiency, conforming to the time and contents of jobs performed, and enhancing responsibilities of the Lottery Oversight Council’s members in oversight work.
5. Expense in support of the prevention of illegal lottery result-based gambling and issuance of fake lottery tickets
a/ Payment principles:
- Providing support directly to public security agencies and related agencies in the localities or areas where lottery businesses carry out business activities to serve investigation, detection and handling of cases related to illegal lottery result-based gambling and issuance of fake lottery tickets.
- Suiting financial capacity of lottery businesses.
- Having sufficient lawful and valid invoices and documents in accordance with law.
- Payment shall be made based on copies of court judgments, decisions on initiation of cases or decisions on sanctioning of administrative violations and fine payment receipts.
- Public security agencies and related agencies shall distribute support money to units and individuals having recorded achievements in such work in a public and transparent manner, depending on the complexity of cases, number of persons and units engaged in investigation, and duration of investigation.
b/ The Ministry of Finance shall specify the rates of support for prevention of illegal lottery result-based gambling and issuance of fake lottery tickets prescribed in this Clause in each period.
c/ Based on actual conditions and rates of support prescribed in this Clause, lottery businesses shall propose owner-representing agencies to approve specific expense items and levels so as to ensure that support will be provided to proper subjects within the prescribed limits.
6. Expenses for setting aside the prize payment risk reserve fund
a/ Principles of setting aside:
- Lottery businesses may set aside a prize payment risk reserve fund only for licensed lottery products for which the fixed prize payment method is applied in accordance with the law on lottery business.
- At the time of setting aside the reserve fund, lottery businesses suffer no losses and apply a prize payout ratio lower than that planned under the law on lottery business. The actual prize payout ratio shall be determined as follows:
Actual prize payout ratio | = | Total prize payment expense amount actually paid in the period | x | 100% |
Total taxable revenue arising in the period |
For Vietlott, the total taxable revenue arising in a period is exclusive of revenue from sale of lottery tickets in previous selling periods for which lottery drawings have not yet been organized.
- At the time of setting aside the reserve fund, the total balance of the prize payment reserve fund of a lottery business must not exceed 10% of its total taxable revenue from all lottery products for which the business is permitted to set aside the reserve fund, for businesses operating in the Northern or Central region; or 3%, for business operating in the Southern region and Vietlott.
b/ The setting aside rate applicable to a lottery product shall be determined as follows:
Prize payment risk reserve | = | Total taxable revenue from the lottery product in the period | x | Planned prize payout ratio in the period as prescribed for the lottery product | - | Total value of prizes actually paid to winners for the lottery product in the period |
c/ Lottery businesses may temporarily set aside the reserve fund on a quarterly basis and shall conduct finalization at the end of every fiscal year if satisfying the conditions for setting aside the reserve fund prescribed at Point a of this Clause.
d/ Lottery businesses may use the prize payment risk reserve fund to pay prizes in case the actual prize payout ratio in a period is higher than the planned one. In case the fund’s balance of a lottery business is not enough to cover the excessive amount of actually paid prizes, such amount shall be accounted as business expenses. In case the prize payment risk reserve fund is not used up, the remainder may be carried forward to the subsequent year. In case the amount set aside by a lottery business as the prize payment risk reserve fund in a period is higher the level prescribed at Point a of this Clause, the excessive amount shall be reserved and accounted as other revenues.
7. Expenses for lottery tickets
a/ Expenses for printing lottery tickets shall be determined based on the money amounts actually paid to printing establishments, expenses for transportation, loading and unloading and storage, and lawful surcharges (if any) or contributions to cover lottery ticket printing expenses in accordance with regulations of the Regional Lottery Council based on the economic contract between lottery businesses and printing establishments.
b/ Expenses for printing playslips, buying printing papers and ink and other expenses related to computerized lotto tickets must comply with actual paid prices under economic contracts signed between lottery businesses and suppliers.
c/ In case lottery businesses print lottery tickets by themselves, ticket printing expenses are reasonable and valid expenses accounted as businesses’ general expenses.
8. Expenses for making public information on lottery tickets, lottery drawings and draw results
a/ Expenses for making public information on lottery tickets, lottery drawings and draw results are expenses for publicizing information on drawing results via radio, television and other mass media and expenses for printing leaflets on prize payment rules and drawing results to serve customers and agents.
b/ These expenses shall be paid based on economic contracts and valid invoices and vouchers in accordance with the tax laws.
9. Expenses for making contributions to Regional Lottery Councils
a/ The Ministry of Finance shall specify the rates of contributions to Regional Lottery Councils prescribed in this Clause in each period.
b/ All spending items must have reasonable and valid invoices. For spending items managed by Regional Lottery Councils, spending levels must be approved by such councils. Chairpersons of Regional Lottery Councils shall take responsibility for the lawfulness and validity of spending items. At the end of a fiscal year, these expenses must be finalized and made public in the Regional Lottery Councils. The remainder may be carried forward for further use for proper purposes as prescribed.
Article 6.Principles of performance of obligations toward the state budget by Vietlott
1. Actual revenues from dealing in computerized lotto products of Vietlott in a province or centrally run city shall be determined as follows:
a/ Revenues earned from dealing in computerize lotto products via terminal devices registered for sale of lotto tickets in such province or centrally run city under lottery agent contracts signed with Vietlott or ticket sale counters or points established by Vietlott, for case of distributing computerized lotto tickets via terminal devices;
b/ Revenues determined based on the localities registered by customers when opening prize accounts in accordance with the regulations on computerized lotto business.
2. Vietlott shall:
a/ Declare and finalize value-added tax, excise tax and enterprise income tax amounts at its head office. On the basis of the payable amount for each tax, allocate the tax amount payable to the budget of a locality according to the proportion of the revenue earn in such locality to its total revenues.
b/ Withhold, declare and finalize payable personal income tax amounts at its head office. Allocate payable personal income tax amounts to local budgets in accordance with law, specifically: the personal income tax on commissions paid to a computerized lotto agent shall be allocated to the province or centrally run city where taxable incomes of such agent are generated; personal income tax of a prize winner shall be allocated to the province or centrally run city registered by the prize winner, for case of distributing tickets via mobile phones or the Internet, or the province or centrally run city where the winning ticket is issued, for cases of distributing tickets via terminal devices.
c/ Declare profits left after paying enterprise income tax to local budgets under Clause 1, Article 7 of this Decree at its head office and allocate such amounts to local budgets according to the proportion of the revenue actually earned in a province or centrally run city to its total revenue.
Article 7.Profit distribution
1. The distribution of profits and setting aside of funds by lottery businesses must comply with the Government’s Decree No. 91/2015/ND-CP of October 13, 2015, on investment of state capital in enterprises and management and use of capital and assets at enterprises and its amending, supplementing and replacing documents (if any). Lottery businesses which have received sufficient charter capital may not set aside investment and development funds.
2. The use of funds set aside from after-tax profits must comply with the Government’s Decree No. 91/2015/ND-CP of October 13, 2015, on investment of state capital in enterprises and management and use of capital and assets at enterprises and its amending, supplementing and replacing documents (if any). Lottery businesses are prohibited from using after-tax profits to pay bonuses or agent commissions higher than the prescribed maximum rates.
Article 8.Financial statements, statistical reports and other reports
1. Apart from making and submitting to state management agencies financial statements and statistical reports and carrying out financial disclosure in accordance with current laws, at the end of every quarter and year, lottery businesses shall make the following reports:
a/ Report on business operation (Form No. 01/BCXS in the Appendix to this Decree).
b/ Report on ticket sale (Form No. 02/BCXS in the Appendix to this Decree).
c/ Report on due obligations and guarantee for payment obligation of lottery agents (Form No. 03/BCXS in the Appendix to this Decree).
d/ Report on payment of agent commissions and expenses for authorizing agents to pay prizes (Form No. 04/BCXS in the Appendix to this Decree).
dd/ Report on management and use of state capital and assets (Form No. 05/BCXS in the Appendix to this Decree).
e/ Report on actual revenues arising in each province or city where computerized lotto tickets are issued and allocation and remittance of revenues to budgets of such localities by Vietlott (Form No. 06/BCXS in the Appendix to this Decree).
2. The reports specified in Clause 1 of this Article shall be submitted to owner-representing agencies and the Ministry of Finance together with financial statements and statistical reports in accordance with the current regulations.
3. Lottery businesses shall make and send irregular reports to owner-representing agencies and the Ministry of Finance if so requested.
4. The Members’ Councils or presidents of lottery businesses shall be held responsible for the accuracy and truthfulness of these reports.
Chapter III
SOME SPECIFIC FINANCIAL REGULATIONS APPLICABLE TO STOCK EXCHANGES AND THE VIETNAM SECURITIES DEPOSITORY
Article 9.Investment
The stock exchanges and the Vietnam Securities Depository may only invest and contribute capital to develop the infrastructure and information technology of the securities market after obtaining approval of competent authorities.
Article 10.Revenues
1. For the stock exchanges
a/ Revenues from professional operations include revenue from securities listing; revenue from securities trading or derivatives trading; revenue from trading members; revenue from bond bidding; revenue from share auction; revenue from the transfer of securities ownership not via the trading system of the stock exchanges; and revenues from other professional operations.
b/ Revenues from provision of services include revenue from information provision services; revenue from infrastructure provision services; and revenues from provision of other services.
c/ Apart from revenues from financial operations and other incomes in accordance with the law on management and use of capital and assets of state-owned enterprises, the stock exchanges may account interests on deposits related to share auctions as revenues from financial operations.
2. For the Vietnam Securities Depository
a/ Revenues from professional operations include revenue from management of depository members; revenue from securities registration; revenue from securities depository operation; revenue from securities account transfer; revenue from exercise of rights; revenue from fixing of post-trading errors; revenue from the transfer of securities ownership not via trading systems of the stock exchanges; revenue from bond principal and interest payment agency; revenue from derivatives trading clearing and payment; and revenues from other professional operations.
b/ Revenues from service provision include revenue from information provision services and revenues from provision of other services.
c/ Apart from revenues from financial operations and other revenues in accordance with the law on management and use of capital and assets of state-owned enterprises, the Vietnam Securities Depository may account as its revenues from financial operations the amount of interests on deposit of amounts arising from authorized payment of dividends and bond principal and interest and the performance of the right to purchase securities.
Article 11.Expenses
When calculating enterprise income tax, the stock exchanges and the Vietnam Securities Depository may subtract the following specific expenses:
1. Expenses for setting aside the Fund for Payment of Damages to Members, for the stock exchanges, and expenses for setting aside the Fund for Prevention of Professional Risks and the Fund for Prevention of Risks in Derivatives Payment, for the Vietnam Securities Depository.
a/ The setting aside of the Fund for Payment of Damages to Members of the stock exchanges and Fund for Prevention of Professional Risks of the Vietnam Securities Depository shall be carried out on a quarter basis. The annual setting aside level must not exceed 2% of the revenue from securities trading, for the stock exchanges, or the revenue from securities depository activities, for the Vietnam Securities Depository. When the balance of such fund equals 5% of the equity stated in the quarterly or annual financial statement, the setting aside of such fund shall be stopped;
b/ The setting aside of the Fund for Prevention of Professional Risks in Derivatives Payment by the Vietnam Securities Depository shall be carried out on a quarterly basis and the annual setting aside level must not exceed 15% of the annual revenue from the derivatives clearing and payment operation;
c/ In case such funds are not used up in a fiscal year, the remainder may be carried forward to the subsequent year for further use. In case the funds’ balance is insufficient to cover expenses, the excessively paid amount may be accounted as expenses for professional operation;
d/ The use of the Fund for Payment of Damages to Members, Fund for Prevention of Professional Risks and Fund for Prevention of Professional Risks of the Vietnam Securities Depository must comply with the law on securities.
2. The transfer of expenses related to transfer of securities ownership not via trading systems of the stock exchanges from the Vietnam Securities Depository to the stock exchanges must comply with the law on securities.
Article 12.Operational effectiveness assessment and classification of enterprises
1. The stock exchanges and the Vietnam Securities Depository shall conduct operational effectiveness assessment and classification of enterprises in accordance with the law operational effectiveness assessment and classification of state-owned enterprises.
2. When calculating criteria for assessing operational effectiveness of enterprises, in addition to the factors prescribed in Clause 2, Article 28 of Decree No. 87/2015/ND-CP of October 6, 2015, on supervision of investment of state capital in enterprises, financial supervision, operational effectiveness assessment and disclosure of financial information of state-owned and state-invested enterprises, and its amending, supplementing and replacing documents (if any), the stock exchanges and the Vietnam Securities Depository may exclude the following objective factors:
a/ State management policy which affects securities listing, trading, registration, depository and clearing in the securities market.
b/ For the stock exchanges, revenues from professional operations may change due to the fluctuation of such factors as the securities trading volume and prices; bid-winning value of bonds; plans and scale of capital raising via bond issuance; the traded value of government bonds and bills; the value of ownership transfer of securities not via trading systems of the stock exchanges; and trading volume of futures.
c/ For the Vietnam Securities Depository, revenues from professional operations may change due to the fluctuation of such factors as the volume of securities deposited in the year; the paid government bond and bill principal and interest amounts; the number of times of exercising rights and the number of shareholders involved in each time of exercising rights; the number of times and value of securities account transfer; and the value of ownership transfer of securities not via trading systems of the stock exchanges.
Chapter IV
RESPONSIBILITIES OF RELATED AGENCIES
Article 13.Responsibilities of lottery businesses, the stock exchanges and the Vietnam Securities Depository
1. To comply with the financial management mechanisms and regulations on operational effectiveness assessment prescribed in this Decree and other provisions on management and use of capital and assets, and assessment of operational effectiveness of state-owned enterprises.
2. To be subject to competent state agencies’ inspection, examination and supervision of their financial operations in accordance with law.
3. The Vietnam Securities Depository shall account its capital and asset separately from the payment assistance fund established under Article 58 of Law on Securities No. 70/2006/QH11 and clearing fund established under Article 24 of the Government’s Decree No. 42/2015/ND-CP of May 5, 2015, on derivatives and derivatives market, and their amending, supplementing and replacing documents (if any).
Article 14.Responsibilities of provincial-level People’s Committees
1. To exercise the rights and perform the obligations of the owner toward lottery businesses established by provincial-level People’s Committees in accordance with law.
2. To approve the levels of remuneration paid to the Lottery Oversight Councils’ members and support for prevention of illegal lottery result-based gambling and issuance of fake lottery tickets under this Decree.
3. To direct local competent agencies to comprehensively examine, inspect and supervise lottery businesses’ observation of the financial management mechanism in accordance with this Decree.
Article 15.Responsibilities of the Ministry of Finance
1. To perform the function of the owner-representing agency for stock exchanges, the Vietnam Securities Depository and Vietlott in accordance with law.
2. To guide the rates of agent commissions for lottery agents; the rates of charges for authored payment of prizes to prize winners; the levels of remunerations for the Computerized Lotto Oversight Councils’ members; the levels of support for prevention of illegal lottery result-based gambling and issuance of fake lottery tickets; and the levels of contributions to regional lottery councils as prescribed in Clauses 2, 3, 4, 5 and 9, Article 5 of this Decree.
3. To assess the observation of mechanisms and policies so as to improve the financial management mechanisms and regulations on operational effectiveness assessment applicable to lottery businesses, stock exchanges and the Vietnam Securities Depository.
Chapter V
IMPLEMENTATION PROVISIONS
Article 16.Effect
1. This Decree takes effect on January 1, 2018.
2. In addition to specific provisions prescribed in this Decree, lottery businesses, stock exchanges and the Vietnam Securities Depository must comply with financial management provisions applied to state-owned enterprises.
Article 17.Implementation responsibilities
The Minister of Finance, chairpersons of provincial-level People’s Committees; Members’ Councils, directors general or directors of lottery businesses; Boards of Directors and directors general of stock exchanges and the Vietnam Securities Depository, and related organizations and individuals shall implement this Decree.-
On behalf of the Government
Prime Minister
NGUYEN XUAN PHUC
Vietnamese
Decree 122/2017/NĐ-CP DOC (Word)
Decree 122/2017/NĐ-CP PDF (Original)
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