In order to remove obstacles for non-State enterprises in accounting the exchange rate differences and to create an equitable business environment among enterprises, in conformity with the provisions of the Enterprises Law, the Law on Foreign Investment and the Law amending and supplementing the Foreign Investment Law in Vietnam, the Ministry of Finance hereby amends and supplements a number of points of Circular No. 44-TC/TCDN of July 8, 1997 on handling the exchange rate differences as follows:

I. To amend the name of Circular No. 44-TC/TCDN of July 8, 1997 as follows:

"Circular guiding the handling of exchange rate differences in enterprises".

II. Section I of Circular No. 44-TC/TCDN of July 8, 1997 shall be amended and supplemented as follows:

"I. GENERAL PROVISIONS

1. Objects of application:

This Circular applies to:

a/ State enterprises;

b/ Enterprises operating under Enterprises Law No. 13/1999/QH10, adopted on June 12, 1999 by the National Assembly of the Socialist Republic of Vietnam;

c/ Joint-venture enterprises, enterprises with 100% foreign capital, foreign parties to business cooperation contracts under the Law on Foreign Investment and the Law amending and supplementing the Foreign Investment Law in Vietnam (hereafter referred to as business cooperation foreign parties), which conduct the accounting in Vietnam dong and compulsorily applied exchange rate differences to be handled for the determination of expenditures and taxable incomes.

For joint-venture enterprises established under the treaties signed between the Government of the Socialist Republic of Vietnam and foreign governments, if such treaties contain provisions on handling of exchange rate differences, which are contrary to the guidance in this Circular, the provisions of such treaties shall apply.

2. In this Circular the following terms shall be construed as follows:

2.1. Foreign currency is any currency other than Vietnam dong.

2.2. Foreign currency operations mean the activities of collection and payment in foreign currencies, that are expressed in current accounts and used for price calculation.

2.3. Foreign exchange rates are rates applicable to the exchange between two different currencies (hereafter called exchange rates for short).

2.4. Foreign exchange rate difference (hereafter called exchange rate difference for short) is the difference between the exchange rate recorded in the accounting books and the rate of conversion at the time of adjustment of foreign currency of the same kind.

3. The subjects prescribed at Point 1 engaged in foreign currency operations shall conduct the accounting of exchange rate differences in accordance with the current accounting regime.

The exchange rates for converting foreign currencies into Vietnam dong shall comply with the Finance Ministry�s Circular No. 77/1998/TT-BTC of June 6, 1998 guiding the exchange rates for converting foreign currencies into Vietnam dong used for conducting the accounting in enterprises.

4. All foreign currencies for which the Vietnam State Bank does not announce the exchange rates for their conversion into Vietnam dong shall be uniformly converted through US dollar".

III. Implementation provisions:

1. This Circular takes effect 15 days after its signing and applies to financial final settlement and tax final settlement as from the 2000 fiscal year (and also for enterprises with their fiscal year ended in 2000). Other stipulations in the Finance Ministry�s Circular No. 44-TC/TCDN of July 8, 1997 which are not contrary to those in this Circular are still effective.

2. All previous stipulations on financial handling of foreign currency exchange rate differences applicable to enterprises or business cooperation foreign parties, which are contrary to this Circular, are now annulled.

3. Any problems arising in the course of implementation should be reported to the Finance Ministry for study, amendment or supplement.

For the Finance Minister
Vice Minister
TRAN VAN TA