FINANCIAL MANAGEMENT AND PERFORMANCE ASSESSMENT OF LOTTERY ENTERPRISES, STOCK EXCHANGES AND VIETNAM SECURITIES DEPOSITORY

This Decree deals with the financial management and performance assessment of lottery enterprises, stock exchanges and Vietnam Securities Depository.

1. Lottery enterprises, including single-member limited liability companies that are duly incorporated by People's Committees of provinces or central-affiliated cities and Vietnam Lottery One-member Limited Liability Company (hereinafter referred to as “Vietlott”).

2. Stock Exchanges and Vietnam Securities Depository.

3. Representative agencies of state capital owner in lottery enterprises, Stock Exchanges and Vietnam Securities Depository.

4. Other organizations and individuals involved in the financial management and performance assessment of lottery enterprises, Stock Exchanges and Vietnam Securities Depository.

A lottery enterprise is only allowed to make investments in industries/sectors directly relating its lottery business.

1. Revenues earned by a lottery enterprise include: Revenues from licensed lottery operations, revenues from other business operations, financial incomes as regulated by law and other incomes.

2. With regard to accumulated prizes of computerized lottery products, if over the claim period but the winner fails to claim his/her prize, the lottery enterprise that is licensed to engage in online lottery business may record such unclaimed prize as its other incomes.

When making declaration of the corporate income tax, the lottery enterprise may record the following expenses as its deductible expenses:

1. Prize expenses:

a) Prize expenses incurred in course of launching traditional lottery products, lotto games and instant games shall be the amounts actually paid to winners who have winning tickets in accordance with regulations of law. With respect to traditional lottery products launched under the cooperation mechanism for lottery issuance, prize expenses include: Prize amounts actually paid out to winners by a lottery enterprise itself as provided for in the Regulation on operation of the Regional Lottery Council; An amount of prize payouts which must be paid by the lottery enterprise according to a payment percentage set forth to winners who present winning tickets for which the payment is jointly made by the lottery enterprise and the Regional Lottery Council in accordance with the said Regulation on operation of the Regional Lottery Council.

b) Prize expenses incurred in course of launching computerized lottery products shall be the amounts actually paid to winners and the accumulated value of prize money rolled over to the next drawing, if no one wins in the draw, as provided for in the Game Rule in accordance with regulations of the Law on Lottery Business.

2. Agent commissions:

a) Agent commission is the amount paid to a lottery agent by the lottery enterprise in return for selling lottery tickets.

b) Ministry of Finance shall stipulate specific rate of commission paid to lottery agents set forth in this clause in each period.

c) The commission rate must be specified in the lottery sales agent agreement signed by and between the lottery enterprise and a lottery agent.

d) The lottery enterprise shall pay commission to a lottery agent after the number of lottery tickets sold out by such agent in the period has been verified and such agent has fulfilled all economic obligations specified in the signed lottery sales agent agreement.

dd) Before paying commission to a lottery agent, the lottery enterprise shall deduct the tax amount to be paid by such agent in accordance with regulations of the Law on Taxation.

3. Fees of authorization for payment to prize winners

a) Ministry of Finance shall stipulate specific fees paid to lottery agents authorized to make payments to prize winners as set forth in this clause in each period.

b) Authorization fee shall be paid according to the lottery sales agent agreement signed by and between the lottery enterprise and a lottery agent which includes a clause on authorization for payment to prize winners and other documents proving that such lottery agent has made payments to prize winners.

c) The lottery agent authorized to make payments to prize winners is not allowed to collect any fees from such prize winners.

4. Drawing cost and supervisory fee:

a) Drawing cost includes the cost of leasing hall for organize drawing activities and costs of other equipment/services purchased or leased to conduct a draw. In case of cooperation in lottery issuance, all participating lottery enterprises shall together conduct a draw, the cost of such lottery draw incurred by each lottery enterprise shall be determined according to the ratio of quantity of lottery tickets received for sale by such lottery enterprise to the total quantity of tickets of an issuance." Determination of drawing cost incurred by each lottery enterprise is specified in the Regulation on operation of the Regional Lottery Council.

b) Payment of remunerations to members of the lottery supervision council shall depend on the approval by the representative agency of state capital owner according to the request by the lottery enterprise.  Determination of such remunerations shall apply the principle of economy and efficiency in conformity with duties of each member so as to emphasize his/her responsibility to fulfill supervisory duties.

5. Contributions towards preventing illegal numbers game and issuance of fake lottery tickets:

a) Contribution principle:

- Contributions shall be directly made to police authorities and relevant agencies in local area or in the administrative location where business activities are carried out so as to conduct investigation and handling of cases of illegal numbers game and issuance of fake lottery tickets.

- Each lottery enterprise shall make contributions according to its financial capacity.

- Contributions are proved by legal invoices/vouchers issued in accordance with regulations of law.

- Contributions shall be made according to copies of judgments issued by people’s courts, decisions on filling a lawsuit or decisions on imposition of administrative penalties and receipts of fine payment.

- Police authorities and relevant agencies shall openly and transparently allocate the received contributions to units and individuals having good performance according to the complexity of each case, number of participants in investigation and investigation period.

b) Ministry of Finance shall stipulate specific limits of contributions towards preventing illegal numbers game and issuance of fake lottery tickets in each period in accordance with regulations herein.

c) Based on the reality and contribution limits prescribed in this clause, the lottery enterprise shall request the representative agency of state capital owner to consider giving approval for specific contents and contributions.

6. Contributions to prize reserve fund:

a) Principles for setting aside the prize reserve fund:

- A lottery enterprise is allowed to set aside the prize reserve fund only when launching licensed lottery products according to the fixed pay-out method in compliance with regulations of the Law on Lottery Business.

- When setting up the prize reserve, the lottery enterprise must not incur loss and have the actual payout smaller than the planned payout as regulated by the Law on Lottery Business. Actual payout in the period is determined by adopting the following formula:

Total taxable revenue of Vietlott in the period shall exclude receipts from sale of lottery tickets in previous periods when drawing is not yet conducted.

- At the time of setting aside the prize reserve, total balance of the prize reserve fund of a lottery enterprise in the Northern or Central region shall not exceed 10% of total taxable revenue from all licensed lottery types, and that of a lottery enterprise in Southern region or Vietlott shall not exceed 3% of the same.

b) The prize reserve for each lottery type is determined by adopting the following formula:

c) The lottery enterprise is allowed to provisionally set aside the prize reserve on a quarterly basis and record such reserve in accounts at the end of the fiscal year if it satisfies the requirements in Point a of this Clause

d) The lottery enterprise may use the prize reserve fund to pay out prizes if the actual payout is greater than the planned payout in the period. In case the balance of the prize reserve fund is not enough to pay prize amounts to all winners, the deficit shall be recorded as operating expenses. Ending balance of the prize reserve fund shall be carried forward to the previous year. If the balance of the prize reserve fund set up in the period by a lottery enterprise exceeds the limit prescribed in Point a of this Clause, the difference must be reserved to “other incomes” account.

7. Lottery ticket expenses:

a) Cost of printing lottery tickets as the actual amounts paid to the printing facility, costs of transport, loading/unloading and storage, and surcharges (if any) or payments for printing lottery tickets of each issuance in accordance with regulations of the Regional Lottery Council on the basis of the economic contract signed by and between the lottery enterprise and printing facility.

b) Cost of printing betting slips, buying printing paper, printing inks and other expenses incurred in course of launching computerized lottery products according to economic contracts signed between the lottery enterprise and relevant service providers. 

c) If a lottery enterprise prints lottery tickets itself, cost of printing lottery tickets shall be reasonable expenses actually incurred and recorded as its general administration expenses.

8. Costs of providing information about lottery tickets, draws and drawing results:

a) Costs of providing information about lottery tickets, draws and drawing results are amounts paid for relevant units providing information about drawing results on radio stations, television channels and other means of mass media, cost of printing pamphlets providing payout rules and drawing results for players and lottery agents.

b) These costs are paid according to economic contracts, valid invoices and vouchers as regulated by the Law on Taxation.

9. Contributions towards maintaining operation of the Regional Lottery Council:

a) Ministry of Finance shall stipulate specific limits of contributions towards maintaining operation of the Regional Lottery Council as mentioned in this Clause in each period.

b) Any expenses paid must have valid vouchers. In case the Regional Lottery Council itself takes charge of spend management, spending limits must be approved by the Council. Chairperson of the Regional Lottery Council shall be legally responsible for the legality and validity of spending items. Ending a fiscal year, these operating expenses must be recorded into accounts so as to disclose before the Regional Lottery Council. Ending balance shall be carried forward to the following year to use for proper purposes.

1. Actual revenue from launching computerized lottery products of Vietlott in each province or central-affiliated city is determined according to the following regulations.

a) For computerized lottery tickets provided through lottery terminals:  Revenue from launching computerized lottery products includes receipts from sale of computerized lottery tickets through registered lottery terminals in a province or central-affiliated city under provisions of lottery sales agent agreements signed with Vietlott or revenue from points of sales established by Vietlott.

b) For computerized lottery products provided via the telephone or internet: Revenue shall be determined according to the location of drawing that a player registers when opening account to play games in accordance with regulations of the Law on Computerized Lottery Business.

2. Vietlott shall assume responsibility to comply with the following regulations.

a) An authorized unit at its head office shall make statements of value-added tax, special excise duty and corporate income tax. Based on amounts of taxes payable by type, Vietlott shall determine and make payment of taxes to each provincial-government state budget in proportion to the actual revenue from sales of lottery tickets in such province or city.

b) An authorized unit at its head office shall deduct amounts of personal income tax payable, make personal income tax statements and make payments of personal income tax to provincial-government state budgets in accordance with regulations of law. To be specific: Amounts of personal income tax on commissions earned by a lottery agent shall be paid to the state budget of province or central-affiliated city where that lottery agent has taxable income. Amounts of personal income tax on prize money of a winner shall be paid to the state budget of province or central-affiliated city where that winning player registers to play games via the telephone or internet, or where the lottery terminal which has provided the winning lottery ticket is located.

c) With regard to the net profit after taxes payable to local-government state budgets in accordance with regulations in Clause 1 Article 7 herein, Vietlott shall make statement of net profit after taxes at its head office and divide and make payments to provincial-government state budgets in proportion to the actual revenue earned from sales of lottery tickets in respective province or central-affiliated city.   

1. A lottery enterprise shall distribute its profit and set aside funds in accordance with regulations of the Government’s Decree No. 91/2015/ND-CP dated October 13, 2015 on state investments in enterprises, use and management of state capital and assets in enterprises, and its amending and superseding documents (if any). If the charter capital of a lottery enterprise is sufficient as regulated by law, that lottery enterprise is not allowed to set up investment and development funds.

2. Funds established from the net profit after taxes of a lottery enterprise shall be used in accordance with regulations of the Government’s Decree No. 91/2015/ND-CP dated October 13, 2015 on state investments in enterprises, use and management of state capital and assets in enterprises, and its amending and superseding documents (if any). The lottery enterprise is not allowed to use its net profit after taxes to pay bonuses or commissions to lottery agents inconsistently with the law.

1. In addition to financial statements and statistical reports prepared and sent to regulatory authorities, and the financial disclosure carried out in accordance with applicable laws, on a quarterly basis and at the end of a fiscal year, a lottery enterprise is required to prepare and submit the following reports to regulatory authorities:

a) Income statement (Using the form No. 01/BCXS stated in the Appendix enclosed herewith).

b) Report on sale of lottery tickets (Using the form No. 02/BCXS stated in the Appendix enclosed herewith).

c) Report on debts and payment guarantee of lottery agents (Using the form No. 03/BCXS stated in the Appendix enclosed herewith).

d) Report on payment of commissions and authorization fees to lottery agents (Using the form No. 04/BCXS stated in the Appendix enclosed herewith).

dd) Report on management and use of state capital and assets (Using the form No. 05/BCXS stated in the Appendix enclosed herewith).

e) Report on actual revenue from sale of computerized lottery products in each province or city, and payments made to provincial-government state budget of Vietlott (Using the form No. 06/BCXS stated in the Appendix enclosed herewith).

2. Reports prescribed in Clause 1 of this Article shall be sent to the representative agency of the state capital owner and Ministry of Finance at the same time when financial statements and statistical reports are submitted in accordance with applicable regulations of law.

3. Lottery enterprises must prepare and submit irregular reports at the request of the representative agency of the state capital owner and Ministry of Finance.

4. Member Board or President of a lottery enterprise shall be responsible for the accuracy and faithfulness of its reports.

Stock Exchanges and Vietnam Securities Depository are allowed to make investments or capital contributions for the purposes of developing their infrastructure and information technology systems upon the approval by competent authorities.

1. Revenue of a stock exchange:

a) Revenues from professional operations include revenue from listing of securities, revenue from trading in securities and derivatives, revenue from trading members, revenue from tender for bonds, revenue from auction of shares, revenue from transfer of securities ownership without using the trading system of Stock Exchange and revenue from other professional operations of the stock exchange.

b) Revenues from provision of information services, infrastructure services and other services.

c) In addition to financial income and other incomes as prescribed by the law on management and use of capital and assets of state-owned enterprises, the stock exchange is allowed to record interests on deposits relating auctions of shares as financial income.

2. Revenue of Vietnam Securities Depository:

a) Revenues from professional operations include revenue from management of depository members, revenue from registration of securities, revenue from securities depository, revenue from transfer of securities, revenue from error handling after trading, revenue from transfer of transfer of securities ownership without using the trading system of Stock Exchange, revenue from provision of bond settlement agent services, revenue from clearing and settlement of derivative transactions and revenue from other professional operations.

b) Revenues from provision of information services and other services.

c) In addition to financial income and other incomes as prescribed by the law on management and use of capital and assets of state-owned enterprises, Vietnam Securities Depository is allowed to record interests on deposits relating settlement of dividends, bond principals and interests, and exercise of call option of securities as financial income.

When making statement of corporate income tax, Stock Exchanges and Vietnam Securities Depository may record the following expenses as its deductible expenses:

1. Contributions to the fund for compensation for members of a stock exchange and contributions to the fund for prevention of operational risks and the fund for prevention of derivative settlement risks of the Vietnam Securities Depository.

a) A stock exchange shall quarterly make contributions to the fund for compensation for members, and the Vietnam Securities Depository shall also quarterly make contributions to the fund for prevention of operational risks. Total amount of contributions made to the fund of a stock exchange during a year shall not exceed 2% of its revenue from securities trading, and that of Vietnam Securities Depository shall also not exceed 2% of its revenue from securities depository. If the balance of a fund is equal to 5% of the owner’s equity shown in quarterly or annual financial statements, no contribution shall be made to that fund.

b) Vietnam Securities Depository shall quarterly make contributions to the fund for prevention of derivative settlement risks and total amount of contributions made to that fund in a year shall not exceed 5% of its annual revenue from clearing and settlement of derivatives.

c) Ending a fiscal year, if the closing balance of a certain fund is positive, it shall be carried over the following year. If the balance of a certain fund is not enough to cover expenses, remaining expense shall be recorded as operational expenses.

d) Fund for compensation for members of a stock exchange, fund for prevention of operational risks and fund for prevention of derivative settlement risks shall be used in accordance with regulations of the Law on Securities.

2. Receipts from transfer of securities ownership without using the trading system of Stock Exchange transferred by Vietnam Securities Depository to the Stock Exchanges are also recorded as expenses of Vietnam Securities Depository.

1. Performance assessment and ranking of stock exchanges and Vietnam Securities Depository shall be carried out in accordance with regulations of the Law on Performance Assessment and ranking of state-owned enterprises.  

2. When conducting performance assessment, apart from factors prescribed in Clause 2 Article 28 of the Government's Decree No. 87/2015/ND-CP dated October 06, 2015 on supervision of state capital investment in enterprises, financial supervision, performance assessment and disclosure of financial information of state-owned enterprises and state-invested enterprises, and its amending and superseding documents (if any), the Stock Exchanges and Vietnam Securities Depository are allowed to eliminate the following objective impact factors:

a) Policies promulgated by the Government influence on listing and trading in securities as well as registration, depository and clearing of securities on the securities market.

b) Revenues from professional operations of a stock exchange may be influenced by the following variations: Securities trading volume and price; value of winning bonds, capital mobilization by issuing bonds; price of Government bonds, treasury bills; value of transfer of securities ownership without using the trading system of Stock Exchange; trading volume of future contracts.

c) Revenues from professional operations of a stock exchange may be influenced by the following variations: Volume of annual realized deposited securities; face value and coupon of bonds and treasury bills; the number of times for exercising rights and corresponding number of stakeholder; number and value of security transfer; value of transfer of securities ownership without using the trading system of Stock Exchange.

1. Comply with regulations on financial management and performance assessment set forth herein and relevant regulations on management and use of state capital and assets, and performance assessment of state-owned enterprises.

2. Bear the supervision and inspection by competent state authorities of financial management by lottery enterprises, Stock Exchanges and Vietnam Securities Depository in accordance with laws. 

3. Vietnam Securities Depository shall separately record its capital and assets and those of the settlement assistance fund established under provisions in Article 58 of the Law on Securities No. 70/2006/QH11 and the clearing fund established under provisions in Article 24 of the Government’s Decree No. 42/2015/ND-CP dated May 05, 2015 on derivatives and derivatives market and legislative documents on amendments, supplements or replacement thereof, if any.

1. Exercise rights and fulfill obligations of state capital owner in lottery enterprises incorporated by People’s Committees of provinces or central-affiliated cities in accordance with regulations of law.

2. Consider giving approval for remunerations paid to members of the lottery supervision council and contributions towards preventing illegal numbers game and issuance of fake lottery tickets in accordance with regulations herein.

3. Instruct local authorities to conduct comprehensive inspection of lottery enterprises for compliance with regulations on financial management herein.  

1. Perform functions of a representative agency of state capital owner in the Stock Exchanges, Vietnam Securities Depository and Vietlott in accordance with regulations of law.

2. Provide guidance on determination of commissions paid to lottery agents, fees of authorization for payments to prize winners, remunerations paid to members of the lottery supervision council and costs for prevention of illegal numbers game and issuance of fake lottery ticket as well as contributions towards maintaining operation of the Regional Lottery Council in accordance with Clauses 2, 3, 4, 5, 9 Article 5 herein.

3. Evaluate the compliance with regulations and policies by lottery enterprises, stock exchanges and Vietnam Securities Depository so as to revise regulations on financial management and performance assessment herein.

1. This Decree shall come into force as from January 01, 2018.

2. In addition to regulations herein, lottery enterprises, stock exchanges and Vietnam Securities Depository must also comply with regulations on financial management applied to state-owned enterprises.

Minister of Finance, Chairpersons of people’s committees of provinces or central-affiliated cities, the member boards and General Directors or Directors of lottery enterprises, the management boards and General Directors or Directors of Stock Exchanges and Vietnam Securities Depository, and relevant organizations and individuals shall implement this Decree./.