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MINISTRY OF FINANCE
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SOCIALIST REPUBLIC OF VIET NAM
Independence - Freedom – Happiness
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No. 182/1998/TT-BTC
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Hanoi, December 26, 1998
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CIRCULAR
PROVIDING INSTRUCTIONS FOR THE ACCOUNTING OF THE
VALUE ADDED TAX (VAT) AND THE CORPORATE INCOME TAX APPLIED TO FOREIGN-INVESTED
BUSINESSES, ORGANISATIONS AND INDIVIDUALS WHICH INVEST IN VIETNAM ACCORDING OR
NOT ACCORDING TO THE LAW ON FOREIGN INVESTMENT IN VIETNAM
- In
accordance with Value Added Tax (VAT) Law 02/1997/QH9 dated May 10, 1997; and
Corporate Income Tax Law 03/1997/QH9 of May 10, 1997;
- In accordance with Governmental Decree No.28/1998/ND-CP dated May 11, 1998,
stipulating in detail the implementation of the Value Added Tax Law ; and Governmental
Decree No.30/1998/ND-CP dated May 13, 1998, regulating details of the
implementation of the Corporate Income Tax Law;
- In accordance with Circular No.89/1998/TT-BTC dated June 27, 1998 of the
Ministry of Finance providing guidelines for the implementation of Govemmental
Decree No.28/1998/ND-CP of May 11, 1998 which stipulates in detail the
implementation of the Value Added Tax Law;
- In accordance with Circular No.99/1998/TT-BTC of July 14, 1998 of the
Ministry of Finance instructing in detail the implementation of the Corporate
Income Tax Law;
- In accordance with Circular No.100/1998/TT-BTC dated July 15, 1998 of the
Ministry of Finance with instructions for the accounting of the Value Added Tax
and the Corporate Income Tax; and Circular No.180/1998/TT-BTC of December 26,
1998 from the Ministry of Finance which provides guidelines for additional
accounting of the Value Added Tax;
- In accordance with Circular No.169/1998/TT-BTC of December 22, 1998 of the
Ministry of Finance on the tax regime applicable to foreign organisations and
individuals which run business in Vietnam and are not subject to forms of
investment under the Law on Foreign Investment in Vietnam;
The Ministry of Finance instructs the accounting of the Value Added Tax (VAT)
and the Corporate Income Tax (CIT) applied to foreign-invested businesses,
organisations and individuals in Vietnam as follows:
I. SCOPE OF APPLICATION
This Circular is effective for foreign-invested
businesses and organisations which invest in Vietnam under the Law on Foreign
Investment in Vietnam. These include branches, foreign lawyer organisations in
Vietnam which operate in accordance with the regulations on law consulting for
foreign lawyer organisations in Vietnam; and foreign organisations and
individuals conducting business in Vietnam beyond the scope of investment modes
under the Law on Foreign Investment in Vietnam.
II. ACCOUNTING OF THE VALUE ADDED TAX (VAT)
1. Foreign-invested businesses and organisations
which apply Vietnamese business accounting regimes must account for the Value
Added Tax (VAT) in accordance with Circular No.100/1998/TT- BTC dated July 15,
1998 of the Ministry of Finance on the accounting of VAT and CIT and Circular
No.180/1998/TC-BTC dated December 26, 1998 by the Ministry of Finance on
additional accounting of VAT.
2. Foreign-invested businesses and organisations
which apply other regular accounting regimes are also requested to conduct the
accounting of VAT as decreed in Circular No.100/1998/TT-BTC of July 15, 1998
and Circular No.180/1998/TT-BTC of December 26, 1998 by the Ministry of Finance
as well as the following instructions:
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It is a must to use either VAT-included receipts
issued by the customs office or VAT-included receipts which are issued by the
business itself, but already registered and approved by the General Department
of Customs. When issuing receipts, businesses of this kind must observe the
regulation on issuance, management and utilisation of receipts clarified in
Decision No.885/QD-BTC dated July 16, 1998 by the Finance Minister.
2.2- Accounts and accounting methods:
a- Add the Deductible Value Added Tax Account
which indicates the amount of deductible input VAT. The account number must
match that of the account system currently applied by the business.
The purpose of using the account; structure and
content of Debit and Credit of the Deductible Value Added Tax Account; and
methods of accounting for newly-emerging economic professional operations shall
be implemented as applied to Deductible Value Added Tax Account 133 which is
identified in Circular No.100/1998/TT-BTC.
b- Rename the Turnover Tax Account to the
Must-be-paid Value Added Tax Account in the account system currently observed
by the business which shows output VAT, must-be-paid VAT, must- be-paid VAT on
imports, paid VAT and will-be-paid VAT.
Structure and content of Debit and Credit of the
Must-be-paid Value Added Tax Account as well as methods of accounting for
newly-emerging economic professional operations are implemented as applied to Must-be-paid
Value Added Tax Account 3331 recognised in Circular No.1011/1998/TT-BTC.
2.3- Accounting books:
Detailed accounting books which clearly indicate
norms for deductible input VAT, output VAT, must-be-paid VAT, must-be- paid VAT
on imports, refundable VAT, and reducible VAT shall be kept.
2.4- Financial reports:
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3- Foreign organisations and individuals which
conduct business in Vietnam and are not subject to forms of investment under
the Law on Foreign Investment in Vietnam:
3.1- Foreign main and supplementary contractors
who run business through their permanent bases in Vietnam and apply Vietnamese
business accounting regimes must conduct the accounting of VAT as stipulated in
Circular No.100/1998/TT-BTC dated July 15, 1998 and Circular No.180/1998/TT-BTC
of December 26, 1998 of the Ministry of Finance as well as the following
instructions:
a) In cases where the contractor signs the
contract to undertake the entire package bid and share supplementary bids to
foreign and Vietnamese parts:
* Foreign main contractors:
- When issuing VAT-included receipts which
include the value of work handled by the sub-contractor or the Vietnamese
business co-operator, make entries as follows:
Debit: Account 131 - Must be collected from the
customer
Credit: Account 511 - Sales turnover
Credit: Account 333 - Tax and accounts payable
to the State Budget (33311)
- When receiving results of sub-contractors or
business co-operators, make entries as follows:
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Debit: Account 133 - Deductible VAT (1331)
Credit: Account 331 - Must be paid to the seller
- When specifying the amount of VAT payable for
the term:
For input and output VAT deductions, make
entries as follows:
Debit: Account 333 - Tax and accounts payable to
the State Budget (33311)
Credit: Account 133 - Deductible VAT (1331)
For identifying VAT that must be paid and has
already been paid, make entries as follows:
Debit: Account 333 - Tax and accounts payable to
the State Budget (33311)
Credit: Accounts 111 and 112
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- For purchase of input materials; fixed assets
(VAT-included receipts), and operational outlay costs, make entries as follows:
Debit: Accounts 152, 211, 642 etc.
Debit: Account 133 - Deductible VAT (1331, 1332)
Credit: Accounts 111, 112 and 331
- When transferring work results of the
sub-contractor to the main contractor, the sub-contractor issues VAT-included
receipts and indicates sales turnover, make entries as follows:
Debit: Account 131 - Must be collected from the
customer
Credit: Account 511 - Sales turnover
Credit: Account 333 - Tax and accounts payable
to the State Budget (33311)
- When specifying VAT payable for the term:
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Debit: Account 333 - Tax and accounts payable to
the State Budget (33311)
Credit: Accounts 111 and 112
b) In cases where the contractor co-operates in
business with the Vietnamese side on the basis of signing the contract and
sharing the turnover:
- When receiving the turnover shared by the
Vietnamese part according to factual business results, the contractor issues
VAT-included receipts and indicates sales turnover, make entries as follows:
Debit: Account 131 - Must be collected from the
customer
Credit: Account 511 - Sales turnover
Credit: Account 333 - Tax and accounts payable
to the State Budget (33311)
- For purchase of input materials; fixed assets
(VAT-included receipts) ; and operational outlay costs, make entries as
follows:
Debit: Accounts 152, 211, 642 etc.
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Credit: Accounts 111, 112 and 331
- When clarifying VAT payable for the term:
+ For deductions of input and output VAT, make
entries as follows:
Debit: Account 333 - Tax and accounts payable to
the State Budget (33311)
Credit: Account 133 - Deductible VAT (1331)
+ For defining VAT that must be paid and has
already been paid, make entries as follows;
Debit: Account 333 - Tax and accounts payable to
the State Budget (33311)
Credit: Accounts 111 and 112
3.2- Foreign contractors and sub-contractors
which apply other regular accounting regimes and pay VAT under the form of
directly calculating added value are requested to monitor the accounts to
ensure honest and sufficient reports on sales turnover, the value of materials,
goods and fixed assets, and input purchase services which serve as a basis for
defining payable VAT under the tax fixing method.
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1- Foreign-invested businesses and organisations
which apply Vietnamese corporate accounting regime must fulfil the accounting
of the Corporate Income Tax as regulated in Circular No.100/1998/TT-BTC dated
July 15, 1998 of the Ministry of Finance on the accounting of VAT and CIT.
2- Foreign-invested businesses and organisations
in Vietnam which are allowed by the Ministry of Finance to apply other regular
accounting regimes are also required to conduct the accounting of CIT in
accordance with the regulations of Circular No.100/1998/TT-BTC of July 15, 1998
of the Ministry of Finance on the accounting of VAT and CIT and with the
following regulations:
- CIT is defined on the basis of pre-CIT profit
and tax rates as per the existing regulations. CIT is a required contribution
to the State (if the business is profitable in the fiscal year) which is noted
in the account�s Debit and
indicates original profit in the fiscal year.
- In cases where foreign-invested businesses and
organisations are allowed by the competent body to reduce CIT, the accountant
is requested to make entries which are contrary to that after defining payable
CIT (i.e. take notes of the increase in the corporate income and the decrease
in the contribution to the State).
3- Foreign-invested organisations and
individuals which run business in Vietnam and are not subject to forms of
investment under the Law on Foreign Investment in Vietnam:
3.1- Foreign contractors and sub-contractors,
which conduct business in Vietnam and are subject to paying CIT on the account
of the declaration form, must conduct the accounting in observation of
Vietnamese corporate and CIT accounting regimes as decreed in Circular
No.100/1998-TT-BTC dated July 15, 1998 of the Ministry of Finance.
3.2- Foreign-invested contractors and
sub-contractors, which apply other regular accounting regimes and pay CIT under
the fixing tax method, must monitor the accounts so as to indicate sales
turnover by defining turnover in accordance with the regulations in Article 2
of Part C of Circular No.169/1998/TT-BTC dated December 22, 1998 of the
Ministry of Finance on the tax regime applied to foreign-invested organisations
and individuals that run business in Vietnam and are not subject to forms of
investment as ruled in the Law on Foreign Investment in Vietnam. This serves as
a basis for identifying payable CIT.
IV. Implementation provision
This circular is effective from January 1, 1999.
Other issues related to the accounting of VAT and CIT and not mentioned in this
Circular must observe the existing accounting regimes.
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P/P FINANCE MINISTER
DEPUTY MINISTER
Pham Van Trong