Circular No. 180/1998/TT-BTC provides detailed guidance on accounting for value-added tax (VAT)

CIRCULAR

OF THE MINISTRY OF FINANCE NUMBER 180/1998/TT-BTC DATE DECEMBER 26, 1998 GUIDING THE SUPPLEMENTARY ACCOUNTING OF VALUE ADDED TAX

Pursuant to the Law on Value Added Tax, Decree No. 28/1998/NĐ-CP dated May 11, 1998, and Decree No. 102/1998/NĐ-CP dated December 21, 1998 of the Government.
Pursuant to Circular No. 89/1998/TT-BTC dated June 27, 1998, and Circular No. 175/1998/TT-BTC dated December 24, 1998 of the Ministry of Finance guiding the supplementary amendments to some points in Circular No. 89/1998/TT-BTC dated June 27, 1998 of the Ministry of Finance;
Pursuant to Circular No. 100/1998/TT-BTC dated July 15, 1998 of the Ministry of Finance guiding accounting for VAT, corporate income tax;
To ensure the accounting of VAT is consistent with the calculation, declaration, and payment of VAT, the Ministry of Finance guides the supplementary amendment to the accounting of VAT as follows:

I - GUIDANCE ON THE SUPPLEMENTARY ACCOUNTING OF VAT.

1 - For business establishments calculating VAT payable under the deduction method, when giving away or presenting products or goods covered by the reward and welfare fund, accounting reflects the revenue from the given or presented products or goods at the selling price without VAT, recorded as:

Debit Account 431 - Reward and Welfare Fund

Credit Account 3331 - VAT Payable

Credit Account 511 - Sales Revenue (Selling Price Without VAT).

2 - For business establishments calculating VAT payable under the deduction method, when selling goods for promotional, marketing, or advertising purposes without VAT output tax, only the VAT input tax corresponding to the value of these goods can be deducted from the total reasonable costs calculated for corporate income tax. The VAT input tax not deductible for promotional or advertising goods exceeding the percentage ratio relative to the total reasonable costs calculated for corporate income tax, recorded as:

Debit Account 641 - Selling Expenses (Details of Promotional and Advertising Costs)

Credit Account 133 - VAT Deductible.

3 - For units receiving consignment sales at the price set by the principal entity and only earning commission, the commission paid to the consignee is accounted for as a cost of the principal entity, and the consignee does not need to calculate and pay VAT on the commission earned from consignment sales.

+ When selling consignment goods at the price stipulated by the principal entity, the accounting unit receiving consignment sales records the total amount received based on sales invoices, recorded as:

Debit Accounts 111, 112, 131, ...

Credit Account 331 - Amounts Payable to Sellers (Total Payment Amount).

+ At the end of the period, accounting calculates and determines the commission revenue earned from consignment sales, recorded as:

Debit Account 331 - Amounts Payable to Sellers

Credit Account 511 - Sales Revenue.

+ When paying the consignment sale proceeds to the principal entity, recorded as:

Debit Account 331 - Amounts Payable to Sellers

Credit Accounts 111, 112, ...

+ The amount of commission payable to the consignee, recorded by the principal entity's accounting as:

Debit Account 641 - Selling Expenses

Credit Account 131, 111, ...

4 - For units receiving consignment sales of goods subject to special consumption tax from production entities at prices set by the production entity, the consignee only earns commission and does not need to pay VAT on the commission earned. Accounting for revenue and payment of consignment sales for units receiving consignment sales of goods subject to special consumption tax from production entities is handled as for units receiving consignment sales at prices set by the principal entity and only earning commission, as already guided in Point 3.

5 - Production entities producing iron and steel that calculate VAT payable under the deduction method when purchasing scrap iron and steel as raw materials for production can deduct 5% of the value of purchased scrap iron and steel. Based on purchase receipts, invoices, and lists of scrap iron and steel purchases, accounting calculates the deductible VAT input tax and the purchase price without VAT:

After calculating the deductible VAT input tax and the purchase price without VAT, accounting records the value of purchased scrap iron and steel at the purchase price without VAT, recorded as:

Debit Account 152 - Raw Materials, Materials (Purchase Price Without VAT)

Debit Account 133 - Deductible VAT

Credit Account 111, 112, 331, ... (Total Payment Amount).

+ For enterprises with subordinate units responsible for purchasing scrap iron and steel to supply production units within the enterprise according to the enterprise's designated prices, the purchasing unit can deduct 5% of the value of purchased scrap iron and steel. In subordinate units responsible for purchasing scrap iron and steel, accounting calculates the deductible VAT input tax based on purchase receipts and invoices, and records it as specified in Point 5.

When subordinate units sell scrap iron and steel to production entities, the seller must issue a VAT invoice and record sales revenue from scrap iron and steel at the selling price without VAT, recorded as:

Debit Account 111, 112, 136 (Total Payment Amount)

Credit Account 3331 - VAT Payable

Credit Account 512 - Internal Sales Revenue (Selling Price Without VAT).

6 - Trading organizations and enterprises purchasing goods subject to special consumption tax from production entities for resale can deduct 3% of the VAT input tax based on the purchase price. Based on purchase invoices, accounting calculates the deductible VAT input tax at 3% of the payment price, and calculates the purchase price without VAT:

After calculating the deductible VAT input tax and the purchase price without VAT, accounting records the value of purchased goods at the purchase price without VAT, recorded as:

Debit Account 156, 157, 632 (Purchase Price Without VAT)

Debit Account 133 - Deductible VAT

Credit Account 111, 112, 331, ... (Total Payment Amount).

7 - In cases where production entities processing agricultural, forestry, and aquatic products not yet processed by producers for further processing do not have invoices but can still deduct input VAT at a rate of 3% or 5% based on the value of purchased goods. Based on purchase lists, accounting calculates the deductible VAT input tax and the purchase price without VAT:

After calculating the deductible VAT input tax and the purchase price without VAT, accounting records the value of purchased agricultural, forestry, and aquatic products at the purchase price without VAT, recorded as:

Debit Account 152, 621 (Purchase Price Without VAT)

Debit Account 133 - Deductible VAT

Credit Account 111, 112, 331 (Total Payment Amount).

8 - In cases where purchased goods must be returned and are subject to VAT under the tax deduction method, based on the delivery documents for returning goods to the seller and related documents, record:

Debit Account 111, 112, 331 (Total payment amount)

Credit Account 133 - Deductible VAT

Credit Accounts 152, 153, 156, 211 (Purchase price excluding VAT).

9 - When purchasing fixed assets with a combined VAT invoice used for both taxable and non-taxable business activities, accounting shall reflect the value of the fixed assets at the purchase price excluding VAT, while the input VAT shall be recorded on the debit side of Account 133. At the end of the accounting period, the deductible and non-deductible input VAT will be calculated and determined based on the ratio of taxable turnover to total turnover according to the tax deduction method. The non-deductible input VAT shall be recorded in the relevant costs associated with the use of fixed assets, recorded as follows:

+ In cases where the non-deductible input VAT is large, record:

Debit Account 142 - Prepaid expenses

Credit Account 133 - VAT Deductible.

When allocating the non-deductible input VAT to costs, record:

Debit: Accounts 627, 641, 642, etc.

Credit Account 142 - Prepaid expenses.

+ In cases where the non-deductible input VAT is small, record:

Debit: Accounts 627, 641, 642, etc.

Credit Account 133 - VAT Deductible.

10 - When selling goods (subject to VAT under the tax deduction method) in exchange for other materials or goods for use in producing and trading taxable goods and services under the tax deduction method, accounting shall reflect sales revenue from exchanging goods for other materials or goods at the selling price excluding VAT, recorded as:

Debit Account 131 - Receivables from customers (Total payment amount)

Credit Account 3331 - VAT Payable

Credit Account 511 - Sales revenue (Selling price excluding VAT).

Upon receiving exchanged materials or goods with a VAT invoice, accounting shall reflect the value of received exchanged materials or goods at the purchase price excluding VAT, recorded as:

Debit Accounts 152, 153, 156, 211, etc. (Purchase price excluding VAT)

Debit Account 133 - Deductible VAT

Credit Account 131 - Receivables from customers.

Upon receiving exchanged materials or goods without a VAT invoice, accounting shall reflect the value of received exchanged materials or goods at the payment amount, recorded as:

Debit Accounts 152, 153, 156, 211, etc. (Total payment amount)

Credit Account 131 - Receivables from customers (Total payment amount).

+ When selling goods (subject to VAT under the direct tax method on added value) in exchange for other materials or goods for use in producing and trading taxable goods and services under the direct tax method, accounting shall reflect sales revenue from exchanging goods at the payment amount, recorded as:

Debit Account 131 - Receivables from customers

Credit Account 511 - Sales revenue (Total payment amount).

Upon receiving exchanged materials or goods, accounting shall reflect the value of received exchanged materials or goods at the payment amount, non-deductible input VAT, recorded as:

Debit Accounts 152, 153, 156, 211, etc. (Total payment amount)

Credit Account 131 - Receivables from customers.

II - IMPLEMENTATION.

This Circular takes effect from January 1, 1999, and Point 10 of Section I of this Circular replaces the barter accounting provisions set out in Point 2 (b1) of Section III in Circular No. 100/1998/TT-BTC dated July 15, 1998, issued by the Ministry of Finance.

During implementation, if there are any difficulties, units are requested to report to the Ministry of Finance for consideration and resolution.