Thông tư liên tịch 12/2016/TTLT-BKHCN-BTC

JOINT CIRCULAR

ON GUIDELINES FOR THE ALLOCATION AND MANAGEMENT OF THE SCIENCE AND TECHNOLOGY DEVELOPMENT FUND IN ENTERPRISES

Pursuant to the Law on corporate income tax n^o 14/2008/QH12 dated June 03, 2008 and the Law No. 32/2013/QH13 dated June 19, 2013 on amendments to the Law on corporate income tax;

Pursuant to the Law on Science and Technology No. 29/2013/QH13 dated June 18, 2013;

Pursuant to the Government’s Decree No. 95/2014/ND-CP dated October 17, 2014 on investment and financial governance for science and technology activities;

Pursuant to the Government’s Decree No. 218/2013/ND-CP dated December 26, 2013 on details and guidelines for the implementation of certain articles of the Law on corporate income tax;

Pursuant to the Government’s Decree No. 20/2013/ND-CP dated February 26, 2013 on the functions, missions, authority and organizational structure of the Ministry of Science and Technology;

Pursuant to the Government’s Decree No. 215/2013/ND-CP dated December 23, 2013 on the functions, missions, authority and organizational structure of the Ministry of Finance;

Minister of Science and Technology and Minister of Finance promulgate the joint Circular on guidelines for the allocation and management of the science and technology development fund in enterprises.

Chapter I

GENERAL

Article 1. Scope and regulated entities

1. Scope: This Circular provides guidelines for the allocation and management of the science and technology development fund in enterprises (referred to as the Fund).

2. Regulated entities: Enterprises that are incorporated as per the law (referred to as the enterprises), government agencies and other relevant entities.

Article 2. Terminology

In this Circular, the following words and phrases are construed as follows:

1. “Corporate regulation on science and technology” is formulated by enterprises and primarily comprised of the definition of missions, implementation, assessment and acceptance of science and technology missions that enterprises carry out. Guidelines for the corporate regulation on science and technology are available in Form No. 01 enclosed to this Circular.

2. "Local and foreign organizations and enterprises cooperating in research” are incorporated as per the law and have the functions, missions and capacity of research and production in accordance with the sectors in which research cooperation is required.

3. "Local and foreign individuals cooperating in research” possess qualifications for science research, expertise in technology or financial resources.

Article 3. Organization of the Fund

1. The fund can be organized in one of these manners:

a) Be established as an organization without judicial personality and directly under an enterprise.

b) Be not established as an organization and operated by the enterprises’ officials who conduct multiple concurrent tasks.

2. The organization of the Fund is left to the discretion of competent individuals of the enterprises.

3. When an enterprise establishes the Fund in one of the manners defined in Section 1 of this Article, the enterprise shall deliver its written decision on establishment of the Fund to the Department of Science and Technology in the province or centrally-affiliated city, where the enterprise is mainly based, in 30 days upon the issuance of such decision.

The enterprise shall also submit its regulation on science and technology and its regulation on allocation and use of the fund to the tax authority administering the area where the enterprise is mainly based upon the enterprise's submission of the report on the initial allocation of the fund.

Article 4. Financing of the Fund

The fund shall be financed by the following sources:

1. Incomes on which the corporate income tax is levied in the tax period, as follows:

a) State-owned enterprises shall extract 3% to 10% of the incomes on which the corporate income tax is levied to establish the Fund. The extraction rate shall be subject to the state enterprise's capacity and desire to allocate finances to scientific and technological activities;

b) Enterprises not defined in Point a, Section 1 of this Article shall at their disposal decide the extraction rate, which shall not exceed 10% of the taxed corporate incomes;

c) The incomes on which the corporate income tax is levied shall be determined in accordance with the Law on corporate income tax and guiding documents.

2. The corporation or parent enterprise transfers part(s) of its science and technology development fund to the relevant funds of its subsidiaries or affiliates or vice versa.

Chairperson of the Board of Directors, Chairperson of the Members’ Council, General Director or Director (i.e. the legal representative of the enterprises) shall decide the rate of transfer of the science and technology development fund of the corporation or parent enterprise to those of its subsidiaries or affiliates and vice versa on the basis of the fund extraction ratio, the demands for investment in scientific and technological activities of subsidiaries and affiliates, and the entire system’s needs and plans on science and technology development.

The transfer of the Fund, as stated in this Section, shall only be applicable for subsidiaries or affiliates that are fully owned by the parent enterprise.

The transfer of the Fund, as stated in this Section, shall not be applicable in these events:

- Foreign-invested enterprises transfer their fund to that of the overseas parent enterprise;

- The parent enterprise in Vietnam transfers the Fund to those of overseas subsidiaries.

Article 5. Responsibilities and rights of organizations and individuals managing the Fund

1. Use efficiently the Fund that the enterprise establishes and that subsidiaries and affiliates contribute to as per regulations.

2. Formulate and present to competent individuals of the enterprise, for approval, the plans on annual spending and contributions of the Fund, on the enterprise’s scientific and technological activities (including scientific and technological activities of subsidiaries and affiliates if the Fund belongs to the corporation or parent enterprise) and on expenditure for the management of the Fund.

3. Manage and use the Fund for scientific and technological activities of the enterprise (including scientific and technological activities of subsidiaries and affiliates if the Fund belongs to the corporation or parent enterprise) in accordance with the approved plan on scientific and technological activities.

4. Inspect and assess the implementation of scientific and technological activities that have been financed by the Fund.

5. Formulate and present to competent individuals of the enterprise, for approval, the transfer of one Fund to another as stated in Section 2, Article 4 of the Circular.

6. Formulate and present to the enterprise’s personnel in highest authority, for approval, the commission or acceptance of the science and technology development fund(s) in trust to or from other enterprises with the aim of performing science and technology missions in line with the enterprise's activities in science and technology.

7. Formulate and present to competent individuals of the enterprise the details of activities in support of the enterprise’s science and technology development.

8. Cooperate with state management authorities in inspecting the establishment, organization, management and use of the Fund as per the law.

9. Report the extraction, transfer and use the Fund to the tax authority and Department of Science and Technology administering the zone where the enterprise's head office bases.

Article 6. Council of science and technology of enterprises

1. Chairperson of the Board of Directors or Chairperson of the Members’ Council or General Director or Director (i.e. the legal representative of an enterprise) shall decide the establishment of a Council of science and technology of the enterprise, which selects and appraises the contents and expenditure of science and technology missions, on the basis of the nature and scale of the enterprise’s missions in science and technology as defined in the enterprise’s regulation on science and technology.

2. Members of a Council of science and technology shall be experienced in corporate management and finance and be expert at sciences and technologies at which the missions aim.

A council of science and technology of the enterprise, which appraises or finalize science and technology missions, must be comprised of at least 50% of its members who are not working for the agency presiding at the missions. Moreover, at least 02 of its members must be prestigious specialists whose qualifications and expertise fit the field(s) of science and technology under their consultancy. Other members shall be managerial personnel of the enterprise.

If members of a council of science and technology of the enterprise are unqualified, the enterprise can recruit specialists to carry out assessment(s).

The quantity of members in a council of science and technology shall be subject to the scale and complexity of science and technology missions; however, there must be at least 05 members.

3. Each council of science and technology of an enterprise may provide counsels for one or some missions in science and technology (if such missions occur in the same sector).

4. The works of a council of science and technology of an enterprise shall be, in principle, open, transparent, independent and unbiased. A council and its members shall give its propositions and opinions, respectively, in writing. Members of a Council shall be held liable for their counsels.

5. The regulation on science and technology of the enterprise shall define the procedure of appraisal and verification of contents and expenditure of science and technology missions and finalization of the missions.

6. A council of science and technology of an enterprise shall evaluate and finalize the result of science and technology missions of the enterprise in accordance with the enterprise’s regulation on science and technology.

Chapter II

ALLOCATION OF THE FUND

Article 7. Implementation of science and technology missions

The fund shall finance the following missions in science and technology:

1. Science and technology missions at national level, ministerial level and provincial level.

The fund shall allocate reciprocal finances in sync with the progress of science and technology missions at national level, ministerial level and provincial level in line with the signed contracts for science research and technology development and the approved explanations of the missions.

2. Science and technology missions of the enterprises.

a) Science and technology missions of the enterprises as per their regulation on science and technology.

Science and technology missions with latent risks against the national interests, national defense, national security, environment, human life and health, prior to the phases of production and application, shall be implemented according to the Circular No. 02/2015/TT-BKHCN dated March 06, 2015 by the Minister of Science and Technology on the evaluation and verification of the result of science and technology missions that do not funded by the state budget;

b) Expenditure of science and technology missions, whose contents have been verified by the Council(s) of science and technology of the enterprises, shall be subject to the regulation on allocation and use of the Fund;

c) Competent individuals of the enterprise shall formulate and decide the level of allocations for its science and technology missions and be held liable to the law for their decisions;

d) The assignment of allocations to finished products or to segments of science and technology missions shall be defined in the enterprise's regulation on science and technology and be permissibly governed by the Joint Circular No. 27/2015/TTLT/BKHCN-BTC dated December 30, 2015 by the Ministry of Science and Technology and the Ministry of Finance on the assignment of finances to state-funded missions in science and technology.

Article 8. Support to the development of science and technology of enterprises

1. Physical and technical infrastructure for science and technology activities of the enterprises: Set up research and development organizations and centers for analysis, testing, experiment, inspection and calibration of products; information infrastructure and database of the enterprises, summarization of science and technology activities; spending on the maintenance and repair of physical and technical facilities and equipment for science and technology activities; spending on the development of science and technology; quality control systems of the enterprises.

Investments into the research and development organizations and centers for analysis, testing, experiment, inspection and calibration of products, information infrastructure and database of the enterprises, summarization of science and technology activities shall be subject to the procedures and formalities of investment projects and be validated by competent individuals of the enterprises as per regulations.

2. Purchase of rights of use and ownership: Technology secrets; technical knowledge of technologies transferred as technological plans, technology processes, technical designs, technical solutions, formulas, technical parameters, drawings, technical diagrams, computer software, data, production streamline solutions, technology renovations, invention patents, useful solutions, plant varieties, industrial designs, ideas, documents, research findings, domestic and foreign products that support the enterprises' science and technology activities;

Technologies defined in the list of technology transfer restriction shall only be actualized upon competent government authorities' licensing of technology transfer(s).

Purchase(s) of the rights of use and ownership shall be based on either of the following:

a) Explanations of science and technology missions whose contents and expenditure have been appraised and verified by a Council of science and technology according to the enterprise’s regulation on science and technology;

b) Sales contracts or contracts for transfer of the right(s) of use and/or ownership between the enterprise and entities holding the right(s) of use and/or ownership.

3. Purchase(s) of machinery and equipment with transferred technologies shall be subject to the Law on technology transfer (except technologies defined in the list of technology transfer restriction, which are only actualized upon competent government authorities’ licensing of technology transfer) in order to replace some or all technologies in use with more advanced ones with the aim of enhancing the performance and quality of products or develop new products in the enterprises.

Purchase(s) of machinery and equipment with transferred technologies shall be subject to the procedure and formalities of investment projects and the approval of competent individuals of the enterprises as per regulations.

4. Remunerations for specialists hired or engagement in contracts with science and technology organizations that carry out science and technology activities of the enterprises.

5. Spending on innovative activities.

a) Innovations endorsed by agencies and organizations as per the Government’s Decree No. 13/2012/ND-CP dated March 02, 2012 on the regulation on innovation and in conformity to relevant laws.

b) When an enterprise employs the Fund, competent individuals of the enterprise shall base on its regulation on science and technology, labor contract(s) and collective bargaining agreement to decide allocations for innovative activities endorsed as per regulations.

c) Allocations for innovative activities shall be subject to Article 16 of the Government’s Decree No. 13/2012/ND-CP dated March 02, 2012 on the regulation on innovation.

6. Allocations for assessment, experiment, standardization and quality control, advertisement and commercialization of new products and technologies, registration of intellectual property.

7. Allocations for the implementation of projects or development of new products despite the failed sale of such products or the stagnation of such projects due to objective causes as determined by the Council of science and technology of the enterprises.

Article 9. Training of personnel in science and technology for the enterprises

1. The training of science and technology personnel for the enterprises shall be conducted in the following manner:

a) Training and certification by universities;

b) Training in research groups;

c) Training of specialists in sciences and technologies that are prioritized, crucial or new;

d) Postgraduate research;

dd) Advanced training of expertise, knowledge and managerial skills in science and technology.

2. Training shall be conducted in short and long term domestically and abroad. Moreover, internship in prestigious local and foreign organizations in science and technology shall be provided. Also granted is the engagement in science and technology missions.

3. The enterprises shall be responsible for formulating plans for training of personnel in science and technology, for estimating allocations for annual training activities and for obtaining approval of competent individuals of the enterprises.

4. Details of allocations for the training of personnel in science and technology shall be defined in the regulation on allocation and use of the Fund.

5. The quota of allocations for the training of personnel in science and technology shall be governed by current regulations of the Government on the quota of training expenditure. Competent individuals of the enterprises shall formulate and define the quota of their allocations on which a quota has not been set by competent government authorities.

Article 10. Cooperation in science and technology

1. Local and foreign organizations, individuals and enterprises shall cooperate in the following activities of science and technology: Surveys, search of partners, study of demands of domestic and overseas technologies; joint research missions over sciences and technologies that the government encourages and prioritizes.

2. Manners of cooperation in science and technology

a) The enterprises shall cooperate with local and foreign entities in science and technology in the following manners:

- Placement of orders with research organizations for science research and technology development on a contract basis;

- Transfer of technologies on a contract basis;

- Training and enhancement of qualifications in science and technology on a contract basis;

- Recruit of technology innovation consultants on a contract basis;

- Cooperation in science and technology studies with the aim of solving particular issues of science and technology or pursuing sciences and technologies in a cluster of industries and chains of production that augment the competitiveness of the enterprises;

b) The enterprises shall be responsible for explaining science and technology missions in relation to the forms of cooperation defined in Point a, Section 2 of this Article. Such science and technology missions shall undergo the process of selection, appraisal of content and expenditure and finalizing assessment as per the enterprises' regulation on science and technology.

3. The government encourages and prioritizes the following activities of cooperation in science and technology:

Activities of research and application of science and technology according to the lists of sciences and technologies that the government encourages and prioritizes; for example, the list of hi-tech technologies prioritized for investment and development and the list of hi-tech products prioritized for development as per the Prime Minister's Decision No. 66/2014/QD-TTg dated November 25, 2014.

The enterprises shall conduct surveys, search for partners and study demands for overseas technologies given priority according to the Prime Minister's Decision No. 1069/QD-TTg dated July 04, 2014 on the approval of state-funded programs for search and transfer of overseas technologies towards 2020 as per regulations;

The enterprises shall carry out research missions, in cooperation with foreign entities, by priority and with financial support from the Government as per the Prime Minister's Decision No. 538/QD-TTg dated April 16, 2014 on the approval of bilateral and multilateral research programs in science and technology.

Article 11. Management of the Fund

1. Spending on the management of the Fund includes:

a) Salary, contributions to social insurance, unemployment insurance and health insurance, and other regulated contributions;

b) Allowances for personnel holding concurrent posts;

c) Rent of offices (if any);

d) Purchase and repair of office equipment and assets for the operation of the Fund;

dd) Payments for public services that assist the operation of the Fund;

e) Allocations for the activities of the Council(s) of science and technology of the enterprise;

g) Payments for assessment specialists on hire for the Council(s) of science and technology of the enterprise;

h) Business expenses for the implementation of missions of the Fund;

i) Other payments in relation to the operation of the Fund.

2. Competent individuals of the enterprises shall decide the quota and ratio of allocations for the management of the Fund.

Chapter III

FUND MANAGEMENT

Article 12. Financial management for the Fund

1. Competent individuals of the enterprises shall stipulate the management and use of assets, finance and allocation quota of the Fund, approve the ratio of allocations for the management of the Fund, validate the financial plan(s) and report(s) on establishment, transfer and use of the Fund on annual basis.

2. The Fund shall be reserved only for the enterprises' investments in science and technology according to Article 7, Article 8, Article 9, Article 10 and Article 11 of the Circular. The enterprises cannot invest the Fund into other activities not in relation to their development of science and technology or redundantly into items of science and technology missions that have been otherwise financed.

3. If a corporation or parent enterprise using the Fund of its subsidiaries or affiliates or vice versa, the corporation or parent enterprise may decide to transfer the Fund to finance science and technology activities of the entire system. Such decision(s) must specify the year that the Fund transferred was established.

4. Allocations from the Fund must be fully evidenced in writing as per regulations.

5. Guaranteed allocations from the Fund for science and technology development of the enterprises shall not be recorded as tax-deductible expenses in a tax period.

6. If the enterprises need to overspend the Fund, above its current balance, on science and technology activities anytime in a year, the differential sum(s) between the actual spending and the Fund’s allocations shall be picked out or extracted from finances of the Fund for subsequent years to cover the insufficient amount or be recorded as tax deductible expenses in the relevant tax period.

Article 13. Management of assets that the Fund creates

1. The enterprises must document the fixed assets as stated in Section 1, Section 2 and Section 3, Article 8 of the Circular to have them supervised and managed as per regulations of the Ministry of Finance. Depreciation of fixed assets shall not be required. The enterprises shall monitor and manage other assets and have them used for proper purposes.

2. The enterprises’ repair and renovation of fixed assets in which the Fund has been invested shall be financed by their fund for science and technology development.

3. If fixed assets, in which the Fund has been invested, have yet to depreciate fully but are assigned to the enterprises’ business operations, the remaining value of the fixed assets shall be recorded as other incomes and be depreciated as tax-deductible expense.

4. If fixed assets, whose creation is a result of the enterprises' science and technology development missions as stated in Section 2, Article 7 of the Circular, are assigned to the enterprises' business operations, the remaining value of the fixed assets shall be recorded as other incomes and be depreciated as tax-deductible expense.

5. When the fixed assets defined in Section 1, Section 2 and Section 3 of Article 8 are transferred as stated in Section 2, Article 4 of the Circular, the enterprises shall determine the remaining value of such assets to adjust the sources of the science and technology fund.

6. The liquidation of assets that avail the science and technology activities of the enterprises shall be subject to current regulations.

Article 14. Settlement of the Fund being unused, underused or misused

1. The allocated amounts of the Fund shall include all the sums finalized in accounting records, the sums advanced, recorded in writing but unsuited for finalization for the implementation of activities of the Fund as defined in Article 7, Article 8, Article 9, Article 10 and Article 11 of this Circular, and the sums transferred from the Fund as stated in Section 2, Article 4 of the Circular.

2. Contributions to and allocations from the Fund shall be subject to the first in first out principle.

3. If total allocations and contributions of the national science and technology development fund or the science and technology development funds of the governing ministries and provinces and cities where an enterprise registers to pay taxes do not reach 70% of the fund contributed and additionally financed by transfers (if any) in 05 years since the original contribution to such fund, the contributing enterprise shall incur a corporate income tax, which is levied on the remaining amount in the Fund, and an interest on such corporate income tax.

The rate of the corporate income tax redeemed shall be the tax rate imposed on the enterprise during the establishment of the Fund.

The rate of interest on the redeemed tax, which is levied on the unused amount of the Fund, shall be the rate of interest on the 1-year treasury bond (or the 1-year treasury bill) in effect upon the redemption. Moreover, the interest shall be imposed in two years. 

4. If the enterprise misuses the Fund during the establishment of the latter, the enterprise shall incur a corporate income tax levied on the part of incomes it has contributed to the Fund and has misused. Also incurred is an interest on such corporate income tax.

The rate of the corporate income tax redeemed shall be the tax rate imposed on the enterprise during the establishment of the Fund.

The rate of interest on the redeemed tax that is levied on the misused amounts of the Fund shall be the rate of fine on tax deferral as per the Law on tax administration and guiding documents. The interest shall be imposed upon the occurrence of the violation until the payment of the financial obligation to the state budget.

5. The enterprise shall not record the interest on the corporate income tax payable as a tax deductible for its taxable incomes.

6. If an enterprise benefiting from tax incentives (i.e. preferential tax rate, tax deduction, tax exemption) does not use any or less than 70% of the Fund or misuse it, the enterprise shall incur a tax on the incomes on which tax incentives have been granted upon its contribution to the Fund. Also incurred is an interest as per regulations.

7. The amount in the Fund, none or less than 70% of which the enterprise has used in 05 years upon the establishment of the fund, or the misused amount shall be settled in line with the business type of the enterprise in the following manner:

a) For state-owned enterprises

- A state-owned enterprise’s use of the Fund is subject to Point a, Section 1, Article 4 of this Article. If the none or less than 70% of the Fund contributed and additional financed by any transfers is used, the enterprise shall dispense the unused or underused part(s) of the Fund to the national science and technology development fund or the science and technology development funds of the governing ministries and provinces and cities where the enterprise registers to pay taxes.

The amount dispensed to the national science and technology development fund or the science and technology development funds of the governing ministries and provinces shall be at least 20% of the Fund, none or less than 70% of which has been used, of the Fund contributed and additionally financed by any transfers.

- If total allocations and contributions of the national science and technology development fund or the science and technology development fund(s) of the governing ministry or province where the enterprises register to pay taxes do not reach 70% of the fund contributed and additionally financed by transfers (if any), the enterprises shall incur a corporate income tax, which is levied on the remaining amount in the Fund, and an interest on such corporate income tax.

- The remaining amount in the Fund, after the regulated obligations are paid, shall be at the enterprise's disposal as per regulations.

* Example 1:

Corporation X (i.e. a state-owned enterprise) states the following data in its report on the establishment and use of the science and technology development fund in 2021:

In 2016, Corporation X contributed 10%, i.e. VND 20 billion, to its science and development fund that was newly established. In 2021, Corporation X spent only VND 10 billion from the science and technology development fund (i.e. 50% of the Fund as contributed). The remaining amount in the Fund, as the enterprise has used less than 70%, is VND 10 billion (i.e. 20 billion minus 10 billion). A part of such amount must be dispensed to the national science and technology development fund or the science and technology development funds of the governing ministries and provinces and cities where the enterprise registers to pay taxes.

+ If Corporation X dispenses 40% of the underused Fund, i.e. VND 4 billion (40% x 10 billion), to the national science and development fund. Therefore, the total sum that Corporation X has used and dispensed to the national science and technology development fund is: 14 billion (i.e. 10 billion + 4 billion), which makes up 70% of the Fund contributed; therefore, the enterprise does not incur a corporate income tax and continues to use its Fund as per regulations since its Fund retains VND 6 billion (20 billion - 14 billion).

+ If Corporation X dispenses 20% of the underused Fund, i.e. VND 2 billion (20% x 10 billion), to the national science and development fund. Therefore, the total sum that Corporation X has used and dispensed to the national science and technology development fund is: VND 12 billion (10 billion + 2 billion), which makes up 60% of the Fund contributed (less than 70% of this Fund); thus, Corporation X must pay a corporate income tax on the remaining amount of VND 8 billion in the Fund (20 billion - 12 billion) and an interest on such corporate income tax as follows:

The corporate income tax, which is payable since the sum used and dispensed to the national science and technology fund does not make up 70% of the Fund (the rate of corporate income tax during the establishment of the Fund in 2016 was 20%) shall be:

VND 8 billion x 20% = VND 1.6 billion.

The interest on the corporate income tax (if the rate of interest on the 1-year treasury bond is 12%) shall be:

VND 1.6 billion x 12% x 2 years = VND 384 million.

- If the state-owned enterprise misuses the Fund, it shall incur a corporate income tax levied on the part of incomes it has contributed to the Fund and has misused. Also incurred is an interest on such corporate income tax.

b) For other enterprises

- Other (non state-owned) enterprises can contribute to the science and technology development funds of the provinces and cities where they register to pay taxes.

- If an enterprise does not or does contribute to the provincial science and technology development funds but none or less than 70% of the funds are used (including any contributions to such funds) or the funds are misused, the enterprise shall incur a corporate income tax on the amount of incomes, which the enterprise has contributed to the funds but has not used, has underused (less than 70%) or misused, and an interest on such corporate income tax.

* Example 2 (if the enterprise uses the Fund to an inadequate degree):

Enterprise A states the following data in the report on the establishment and use of the science and technology development fund in 2012:

In 2016, Enterprise A contributed 10%, i.e. VND 2 billion, to its science and development fund that was newly founded. In 2021, Enterprise A spent only VND 1.2 billion from the science and technology development fund (i.e. 60% of the Fund as contributed). The remaining amount in the Fund, as the enterprise has used less than 70%, is VND 0.8 billion (2 billion - 1.2 billion).

+ If Enterprise A dispenses VND 200 million (0.2 billion) to the provincial science and technology development fund(s). Therefore, the total sum that Enterprise A has used and dispensed to the provincial science and technology development fund(s) is: 1.4 billion (i.e. 1.2 billion + 0.2 billion), which makes up 70% of the Fund contributed; therefore, the enterprise does not incur a corporate income tax on the remaining amount contributed to its Fund, which is VND 0.6 billion (2 billion - 1.4 billion).

+ If Enterprise A dispenses none to the provincial science and technology development fund(s), it shall incur a corporate income tax on the amount of VND 0.8 billion and an interest on the corporate income tax as follows:

The corporate income tax, which is payable since less than 70% of the Fund has been used (the rate of corporate income tax during the establishment of the Fund in 2016 was 20%) shall be:

VND 0.8 billion x 20% = VND 160 million.

The interest on the corporate income tax (if the rate of interest on the 1-year treasury bond is 12%) shall be:

VND 160 million x 12% x 2 years = VND 38.4 million.

* Example 3 (if the enterprises misuse the Fund):

In 2016, Enterprise B contributes VND 800 million to its science and technology development fund that was newly founded. At the end of 2016, the enterprise spent VND 300 million from the Fund. Every year, the enterprise reported its contribution and use of the Fund. A tax authority, on May 05, 2017, exposed that the enterprise spent VND 50 million from the Fund for an invalid purpose and had such incident recorded in writing. On May 10, 2017, the enterprise paid the fine to the state budget. The rate of fine for tax deferral as per the Law on tax administration is 0.03% per day.

In such circumstance, the sum of tax and interest payable is:

The corporate income tax, which is levied due to the misuse of the fund (the rate of corporate income tax during the establishment of the Fund in 2016 was 20%) shall be:

VND 50 billion x 20% = VND 10 million.

The number of days that the deferral fine is imposed from December 31, 2016 to May 09, 2017 is 131 days.

The interest payable (according to the deferral fine):

VND 10 million x 0.03% per day x 131 days = VND 393,000.

* Example 4 (if the enterprise benefits from incentive(s) on the corporate income tax during the establishment of the Fund):

Enterprise C states the following data in the report on the establishment and use of the science and technology development fund in 2012:

In 2016, Enterprise C contributed 10%, i.e. VND 2 billion, to its science and development fund that was newly founded. In 2021, Enterprise C spent only VND 1.2 billion from the science and technology development fund (i.e. 60% of the Fund as contributed). The remaining amount in the Fund, as the enterprise has used less than 70%, is VND 0.8 billion (2 billion - 1.2 billion).

It is assumed that the enterprise was granted with the preferential corporate income tax rate of 10% and the reduction of its corporate income tax by 50% upon its contribution to the Fund in 2016. Because the enterprise has used less than 70% and has dispensed none to the provincial science and technology development fund(s), it incurs a corporate income tax on its underused contribution and an interest on the corporate income tax as follows:

The corporate income tax that the enterprise incurs for its use of less than 70% of the Fund shall be:

VND 0.8 billion x 10% x 50% years = VND 40 million

The interest on the corporate income tax (if the rate of interest on the 1-year treasury bond is 12%) shall be:

VND 40 million x 12% x 2 years = VND 9.6 million.

* Example 5:

Enterprise D contributed VND 2 billion, in 2016, and VND 2.5 billion, in 2017, to its science and technology development fund. If Enterprise D spends VND 1.8 billion, i.e. 90% of the 2016's contribution to the Fund, by 2012, the remaining worth of the Fund as per the year of 2016 is VND 0.2 billion (as the enterprise has used 90% of the contribution to its science and technology activities). The enterprise shall continue allocating the fund to its science and technology activities in subsequent years according to the first in first out principle without incurring either a tax or an interest.

If the enterprise does not allocate the fund to science research in 2022, the unused amount of VND 2.5 billion, as contributed in 2017, shall result in the imposition of a corporate income tax and a deferral interest. However, the unused amount of VND 0.2 billion, as contributed in 2016, shall not incur any tax or deferral interest.

8. Corporations, parent enterprises and subsidiaries, which have transferred the Funds in their system, shall be responsible for managing and allocating the remaining Funds (of the transferring enterprises), after partially transferred, and the added Funds (of the transferee enterprises) as per this Circular.

If a transferee enterprise uses none or less than 70% of its Fund (including transfers) or misuses such fund, the transferee enterprise shall incur a corporate income tax plus interest as regulated to the state budget. If the transferee enterprise benefits from corporation income tax incentive(s) upon its contribution to its Fund, the corporate income tax redeemed shall be:

- The corporate income tax levied on the original value of the Fund shall be determined according to tax incentives granted to the transferred enterprise upon its contribution to such Fund.

- The corporate income tax levied on fund transfers from other enterprises shall be determined according to the rate of corporate income tax imposed on the transferred enterprise upon the receipt of such transfers.

The unused or misused transfers shall be defined according to the proportion of such transfers to the value of the Fund that includes transfers.

* Example 6:

In 2016, Corporation E contributed totally VND 4 billion to its science and technology fund and received a transfer of VND 1 billion from its subsidiaries. The total contribution to the Fund in 2016 was VND 5 billion. In 2021, the corporation spent only VND 3 billion from the science and technology fund (i.e. 60% of the Fund as contributed). The underused amount in the Fund, as the enterprise has used less than 70%, is VND 2 billion (5 billion - 3 billion).

It is presumed that Corporation E was granted the preferential rate of corporate income tax of 10% in 2016.

The corporate income tax on the fund, less than 70% of which was used, shall be determined as follows:

+ The corporate income tax on the unused original amount in the Fund of the transferee enterprise shall be:

VND 2 billion x 4/5 x 10% = VND 160 million

+ The corporate income tax on the unused transfer to the Fund of the transferee enterprise shall be:

VND 2 billion x 1/5 x 20% = VND 80 million

Total corporate income tax that the enterprise incurs for its use of less than 70% of the Fund shall be:

VND 160 billion + VND 80 billion = VND 240 million

The interest on such corporate income tax (if the rate of interest on the 1-year treasury bond is 12%) shall be:

VND 240 million x 12% x 2 years = VND 57.6 million.

Article 15. Request of financial supports from science and technology development funds of the country, ministries and local authorities

1. When in need of finances for their science and technology missions, the enterprises that have contributed to the science and technology development funds of the country, ministries or local bodies, as stated in Point a and Point b, Section 7, Article 14 of the Circular are entitled to request financial supports from such science and technology development funds.

2. The science and technology development funds of the country, ministries and local bodies, which have received external contributions, shall provide financial supports equivalent to such contributions and prioritize extra aids within the capacity of such funds according to the cost estimates of the said science and technology missions. The financial supports and extra aids from the science and technology development funds of the country, ministries and local bodies shall be managed and supervised in accordance with the operational regulations of such funds.

3. The enterprises shall proceed via the following procedure and formalities to request financial supports from the science and technology development funds of the country, ministries and local bodies:

a) Procedure:

- An enterprise having contributed to the science and technology development funds of the country, ministries and local bodies as stated in Point a and Point b, Section 7, Article 14 of the Circular shall prepare and submit its application to such funds;

- The said funds shall receive the application directly at their premises or by post. The reception employees of the funds shall stamp a mark of receipt on an application manually submitted, write the time of receipt, record the quantity of documents included in the application and input data into the administrative journal of the funds. Otherwise, an application delivered by post shall be stamped with a receipt mark and inputted into the administrative journal of the funds.

b) Submission:

The application shall be either submitted manually at the premises of the science and technology development funds of the country, ministries or local bodies or delivered by post;

c) Content and quantity of the application:

- Content of the application: The written request for financial support(s) from the science and technology development funds of the country, ministries and local bodies in line with contributions to such Fund; the explanation(s) and estimate of expenditure for science and technology missions;

- Quantity of the application: 01 set.

d) Processing time: At most 45 working days upon the receipt of the full application for financial supports (not including the time for the enterprises to correct errors and supplement documents)

Article 16. Management of the Fund upon ownership change, consolidation, merger and corporate division

1. When an active enterprise undergoes changes in ownership, consolidation or merger, the enterprise newly founded through the change of ownership or consolidation or the acquiring enterprise shall succeed to and assume responsibilities for the management and allocation of the Fund that exists prior to such change, consolidation or merger.

2. If an active enterprise's Fund is not depleted upon the division of such enterprise, the enterprises newly established through such division shall succeed to and assume responsibilities for the management and allocation of the Fund that exists prior to the division. The enterprises are given discretion in the apportionment of their Funds; however, they shall inform tax authorities before the process of apportionment.

Article 17. Reporting of contributions, transfers and allocations of the Fund

The enterprises shall make annual reports on contributions, transfers and allocations of their Fund according to Form No. 2 enclosed to this Circular.

If the Fund of a corporation or parent enterprise incorporates transfers from the funds of its subsidiaries and affiliates or vice versa, the enterprise receiving transfers and allocating the Fund shall report the transfers and allocations of the Fund that incorporates transfers. Such reports must indicate the years when contributions and transfers to the Fund occur.

Reports on contributions, transfers and allocations of the Fund shall be submitted to the authorities defined in Section 1, Article 1 of the Government's Decree No. 95/2014/ND-CP dated October 17, 2014 on investment and financial regulations for science and technology activities. The reports shall be submitting upon the filing of the finalization return on the enterprise's annual corporate income tax.

Chapter IV

IMPLEMENTATION

Article 18. Effect and implementation

1. This Circular comes into force on September 01, 2016 and applies to the contribution, management and allocation of the enterprises' science and technology funds from their corporate income tax period in 2016.

2. Upon the effect of this Circular, the following documents shall lose effect:

a) Decision No. 36/2007/QD-BTC dated May 16, 2007 by the Ministry of Finance on the promulgation of the Regulation on the organization and operation of science and technology development funds of organizations, individuals and enterprises;

b) Circular No. 15/2011/TT-BTC dated February 09, 2011 by the Ministry of Finance on guidelines for the establishment, organization, operation, management and allocation of science and technology development funds of the enterprises;

c) Circular No. 105/2012/TT-BTC dated June 25, 2012 on amendments to the Circular No. 15/2011/TT-BTC dated February 09, 2011 by the Ministry of Finance on guidelines for the establishment, organization, operation, management and allocation of science and technology development funds of the enterprises;

d) Article 10 of the Circular No. 78/2014/TT-BTC dated June 18, 2014 by the Ministry of Finance on guidelines for the Government’s Decree No. 218/2013/ND-CP dated December 26, 2013 on details and guidelines for the implementation of the Law on corporate income tax.

dd) Form No. 03-6/TNDN enclosed to the Circular No. 156/2013/TT-BTC dated November 06, 2013 by the Ministry of Finance on guidelines for the implementation of certain articles of the Law on tax administration; the Law on amendments to certain articles of the Law on tax administration and the Government’s Decree No. 83/2013/ND-CP dated July 22, 2013.

3. The enterprises that have established and contributed to the Funds according to previous legislative documents shall manage and allocate such Funds as per this Circular upon its effect.

4. If legislative documents named in this Circular are amended or replaced, new documents shall prevail.

5. Difficulties that ensue shall be reported to the Ministry of Science and Technology and the Ministry of Finance for timely guidance./.

APPENDIX

FORMS
(Enclosed to the Joint Circular No. 12/2016/TTLT-BKHCN-BTC dated June 28, 2016 by the Ministry of Science and Technology and the Ministry of Finance)

1. Form No. 01: The enterprise's regulation on science and technology/

2. Form No. 02: The report on the enterprise’s contributions, transfers and allocations of the science and technology development fund.

Form No. 01
12/2016/TTLT-BKHCN-BTC

THE REGULATION ON SCIENCE AND TECHNOLOGY OF THE ENTERPRISE

- Pursuant to the Circular …

- Pursuant to the Regulation on the organization and operation of the Science and Technology Development Fund of the enterprise as enclosed to the Decision No. …;

- Pursuant to ...

 (The person in highest authority in the enterprise) promulgates the following Regulation on activities of science and technology:

Article 1. Allocation of the science and technology development fund of the enterprise

The allocations from the science and technology development fund of the enterprise (referred to as the Fund) shall be of use for the following activities of science and technology:

1. Implement the science and technology missions.

2. Support the development of science and technology in the enterprise.

Article 2. Procedure for implementation of science and technology missions

1. Procedure for implementation of science and technology missions:

The council of science and technology of the enterprise (referred to as the science and technology council) shall select, appraise and finalize the missions in science and technology as follows:

a. Proposal:

- Individuals (i.e. principal investigators) and units (i.e. lead agencies) make the proposal sheets and presentations of the science and technology missions in accordance with the demands for science research and technology application for the enterprise's business operations.

b. Selection:

- The fund lists the science and technology missions registered, recommends members of the Council of science and technology and presents such information to the Chairperson of the Fund for a decision to establish the Council.

- The fund prepares the meeting of the council of science and technology: relevant documents, time, location, invitations to members of the Council.

- The council of science and technology holds the meeting, evaluates recommendations and endorses or rejects the missions.

- The agenda of the Council for selection of works includes:

▪ Secretary of the Council reads out the written decision on the establish of the Council for selection of works, introduces its members and participants.

▪ Chairperson of the Council presides at the meeting.

▪ Principal investigator and lead agency briefly present the science and technology mission.

▪ Members of the Council discuss and evaluate the works via selection sheets that are then given to the secretary.

▪ Principal investigator and lead agency respond to any comments of the Council.

▪ Basing on the opinions of members of the Council, the Chairperson of the Council concludes the endorsement or rejection of the missions.

▪ Secretary of the Council summarizes the opinions of its members and the conclusion of the Chairperson of the Council and makes a written record of the Council’s meeting.

- Principal investigator and lead agency resend their presentations of the missions, as revised according to the Council’s advices, to the Fund.

c. Verification:

- The fund designates functional unit(s) to verify the expenditure of the science and technology missions, which the council of science and technology has recommended, then to competent persons of the enterprise for approval.

- Competent persons of the enterprise consider and approve the implementation of the science and technology missions.

- A decision on approval of a science and technology mission indicates:

▪ The information on the science and technology mission approved for implementation: Names of the mission, principal investigator and lead agency.

▪ Total expenditure of the mission, which specifies allocations from the science and technology development fund and the progress of disbursement.

▪ Duration of the mission and time of finalization.

▪ Products of the mission upon acceptance: technology process, machinery, equipment and research report.

- The fund informs the principal investigator and lead agency of the selection of the mission.

d. Implementation

- Individuals and units designated to the science and technology missions carry out the approved plan. Make recommendations and suggestions to the Fund if problems ensue.

- The fund supervises the implementation of the science and technology missions.

dd. Finalization:

- Principal investigator and lead agency prepare and send the acceptance report and cost finalization documents of the science and technology missions to the Fund.

- The fund summarizes science and technology missions for finalization, recommends members of the council of science and technology for finalization of works and presents such information to the Chairperson of the Fund for a decision to establish the council.

- The fund prepares the meeting of the council of science and technology for finalization of works: relevant documents, time, location, invitations to members of the Council.

- The council of science and technology appraises the result of the missions and makes acceptance reports to the Fund.

- The agenda of the Council of science and technology for finalization of works:

▪ Secretary of the Council reads out the decision on the establishment of such Council and introduces the members of the Council and participants.

▪ Chairperson of the Council presides at the meeting.

▪ Principal investigator and lead agency present the brief version of the report on finalization of the science and technology missions.

▪ Members of the Council discuss and appraise the works via appraisal sheets that are then given to the secretary.

▪ Principal investigator and lead agency respond to any comments of the Council.

▪ Basing on the comments of the members of the Council, the Chairperson of the Council concludes the science and technology missions or remarks on further revisions.

▪ Secretary of the Council summarizes the opinions of its members and the conclusion of the Chairperson of the Council and writes a record of the Council’s meeting.

▪ Principal investigator and lead agency send the cost finalization documents and acceptance report, as revised according to the Council’s advices, to the Fund.

- The fund reviews the full cost finalization documents and acceptance report of the science and technology missions and send them to relevant functional divisions then to the Chairperson of the Fund for approval.

2. Council of science and technology:

- A council of science and technology for verification and finalization of works shall consist of at least 5 individuals. One or two of its members shall be assessors who are experienced in corporate management and finance and possess expertise in sciences and technologies that the science and technology missions aim at. The establishment of a science and technology council is at the discretion of the Chairperson of the Fund.

- The enterprise may hire external specialists to participate in assessments.

- Each council of science and technology may provide counsels for one (01) or some science and technology missions (if such missions occur in the same field).

- A council of science and technology for selection and finalization of works must be comprised of at least 50% of its members who are not working for the lead agency presiding at the works. Moreover, at least 2 of its members must be prestigious specialists whose qualifications and expertise fit the field(s) of science and technology under their consultancy. Other members shall be managerial personnel.

- A council of science and technology for selection and finalization of works consists of: 01 chairperson, (possibly 01 vice chairperson), 01 or 02 assessors, 01 secretary and other members. The secretary of the Council shall be a member of the Fund, who is in charge of preparing the meetings of the Council, taking meeting records, reading out opinions given by absent members in writing and performing other tasks.

- Principles of appraisal of science and technology missions:

▪ Each member of the Council comments on and grades a science and technology mission via an appraisal sheet.

▪ The average grade of the science and technology mission shall be the sum of members’ grades divided by the number of members attending the Council's meeting.

▪ If the grade in an appraisal sheet differs from the average grade of the Council by 30%, such appraisal sheet shall be null and discarded.

▪ Ranking of science and technology missions:

+ Fail: average grade < 50

+ Pass: average grade at 50 to 69

+ Good: average grade at 70 to 89

+ Excellent: average grade at 90 to 100

- The members (particularly assessors) of a Council, from the section to the finalization of a science and technology mission, shall be unchanged. Otherwise, at most one third of the original members may be changed.

Article 3. Assignment of science and technology missions

- The allocations for science and technology missions shall be assigned in either of these methods:

+ Missions whose allocations are assigned to finished products;

+ Missions whose allocations are assigned to each segment.

- The allocations shall be assigned to finished products for the missions that met all of these requirements:

+ Principal investigator and lead agency justify and propose the assignment of allocations to finished products;

+ Products of science and technology of the missions have been specified; primary quality criteria of such products, unit of measurement, quality level or scientific requirements to attain; quantity or scale of potential products; locations of application;

- Missions not eligible for assignment of allocations to finished products shall receive allocations assigned by segment. Items whose allocations are and are not assigned shall be defined according to the justifications of the principal investigator and lead agency.

+ Items whose allocations are assigned

a) Manual labor, including: Labor of holders of research titles; hiring of local and foreign specialists who cooperate in the process of research and the implementation of missions.

b) Science seminars, domestic business trips for research.

c) Investigations and data-collecting surveys.

d) Purchase of ingredients, fuels, materials and parts for research activities, on which the enterprise has set an economic and technical quota.

dd) Purchase of instruments, disposable objects, energies, documents, records, data, newspapers, books, magazines for reference; service outsourcing; stationery, contact information, printing and photocopying of documents for research activities.

e) Other works related directly to the implementation of the missions.

+ Items whose allocations are not assigned

a) Purchase of ingredients, fuels, materials (e.g. chemicals) and parts for research activities, on which the enterprise or competent government authorities have not set a technical and economic quota.

b) Repair and purchase of fixed assets, including the procurement of assets that are essential and of direct use to research activities; repair of equipment and facilities that directly serve the research activities.

c) Overseas trips.

Article 4. Effect and implementation

- This guideline takes effect from the date that it is signed.

- Ensuing difficulties shall be reported to the Fund for revision and to the person in highest authority of the enterprise for promulgation./.

Form No. 02
12/2016/TTLT-BKHCN-BTC

REPORT ON CONTRIBUTION, TRANSFER AND ALLOCATION OF THE SCIENCE AND TECHNOLOGY DEVELOPMENT FUND
(Enclosed to the Corporate Income Tax Finalization Return No. 03/TNDN)
Tax period: from … to ….

Taxpayer’s name: ……………………………………………………………………………….

Taxpayer identification code:

I. Contribution to the science and technology development fund in the tax period:

1. Level of contribution: …………………………….

2. Amount contributed: VND ………………………..

II. Supervision of transfers and allocations of the science and technology development fund in previous and current tax periods:

Documents enclosed:

- List of contracts for science research and technology development;

- List of contracts for scientific and technological information services;

- List of science and technology activities of the Fund in the tax period.