MICROFINANCE INSTITUTIONS MUST DISTRIBUTE 10% PROFIT INTO THE PROVISION FUND
On February 12, 2018, the Ministry of Finance issued the Circular No. 18/2018/TT-BTC on guiding a number of articles regarding the financial regime applicable to microfinance institutions.
This Circular prescribes, after being used for offsetting the previous year’s loss and paying enterprise income tax, profits of microfinance institutions shall be distributed as follow: Offsetting previous years’ loss for which the prescribed time limit for being deducted to post-enterprise income tax profits has expired.
The remaining profit shall be distributed as follows: 5% shall be the charter capital addition reserve fund, a microfinance institution’s charter capital addition reserve fund must not exceed its charter capital; 10% shall be appropriated into the financial provision fund.
Also in accordance with this Circular, at the end of an accounting period, microfinance institutions shall make and submit financial statements in accordance with law. Chairpersons of Members’ Councils or directors general (directors) of microfinance institutions shall take responsibility for the accuracy and truthfulness of these reports.
This Circular takes effect on March 29, 2018.
