Circular No. 182/1998/TT-BTC guides value-added tax and corporate income tax for enterprises, organizations, and individuals with foreign investment capital in Vietnam under the Law on Foreign Investment in Vietnam and those not under the Law on Foreign Investment in Vietnam.

CIRCULAR

OF THE MINISTRY OF FINANCE NUMBER 182/1998/TT-BTC ON DECEMBER 26, 1998
GUIDELINES FOR ACCOUNTING VALUE ADDED TAX,
ENTERPRISE INCOME TAX FOR ENTERPRISES,
ORGANIZATIONS, AND INDIVIDUALS WITH FOREIGN INVESTMENT CAPITAL IN
VIETNAM IMPLEMENTING INVESTMENTS UNDER THE LAW ON FOREIGN INVESTMENT
IN VIETNAM AND NOT UNDER THE LAW ON FOREIGN INVESTMENT
IN VIETNAM

- Pursuant to the Law on Value Added Tax No. 02/1997/QH9 dated May 10, 1997; the Law on Enterprise Income Tax No. 03/1997/QH9 dated May 10, 1997;

- Pursuant to Decree No. 28/1998/NĐ-CP dated May 11, 1998 of the Government detailing the implementation of the Law on Value Added Tax; Decree No. 30/1998/NĐ-CP dated May 13, 1998 of the Government detailing the implementation of the Law on Enterprise Income Tax;

- Pursuant to Circular No. 89/1998/TT-BTC dated June 27, 1998 of the Ministry of Finance guiding the implementation of Decree No. 28/1998/NĐ-CP dated May 11, 1998 of the Government detailing the implementation of the Law on Value Added Tax;

- Pursuant to Circular No. 99/1998/TT-BTC dated July 14, 1998 of the Ministry of Finance guiding the implementation of Decree No. 30/1998/NĐ-CP dated May 13, 1998 of the Government detailing the implementation of the Law on Enterprise Income Tax;

- Pursuant to Circular No. 100/1998/TT-BTC dated July 15, 1998 of the Ministry of Finance guiding accounting for Value Added Tax and Enterprise Income Tax; Circular No. 180/1998/TT-BTC dated December 26, 1998 of the Ministry of Finance guiding supplementary accounting for Value Added Tax;

- Pursuant to Circular No. 169/1998/TT-BTC dated December 22, 1998 of the Ministry of Finance guiding tax regimes applicable to foreign organizations and individuals engaged in business activities in Vietnam not falling under the forms of investment under the Law on Foreign Investment in Vietnam.

The Ministry of Finance guides accounting for Value Added Tax (VAT) and Enterprise Income Tax (EIT) for enterprises, organizations, and individuals with foreign investment capital in Vietnam as follows:

I- SCOPE OF APPLICATION

This Circular applies to enterprises and organizations with foreign investment capital in Vietnam implementing investments under the Law on Foreign Investment in Vietnam; branches, foreign law firms in Vietnam operating according to the practice regulations of foreign law firms in Vietnam; foreign organizations and individuals engaged in business activities in Vietnam not falling under the forms of investment under the Law on Foreign Investment in Vietnam.

II- ACCOUNTING FOR VALUE ADDED TAX (VAT)

1- Enterprises and organizations with foreign investment capital applying the Vietnamese enterprise accounting system must implement accounting for VAT according to the provisions of Circular No. 100/1998/TT-BTC dated July 15, 1998 of the Ministry of Finance guiding accounting for VAT and EIT and Circular No. 180/1998/TT-BTC dated December 26, 1998 of the Ministry of Finance guiding supplementary accounting for VAT.

2- Enterprises and organizations with foreign investment capital applying other common accounting systems must also implement accounting for VAT according to the provisions of Circular No. 100/1998/TT-BTC dated July 15, 1998 and Circular No. 180/1998/TT-BTC dated December 26, 1998 of the Ministry of Finance and the following guidance points and supplements:

2.1- Regarding sales invoices:

Must use VAT invoices issued by tax authorities, or use self-printed VAT invoice models that have been registered and approved by the General Department of Taxation. When issuing invoices, they must comply with the issuance, management, and usage regulations for sales invoices stipulated in Decision No. 885/QĐ-BTC dated July 16, 1998 of the Minister of Finance.

2.2- Regarding accounting accounts and accounting methods:

a- Add the account "Deductible VAT" to reflect the amount of deductible input VAT. The account number should be consistent with the numbering of the accounting system currently in use at the entity.

The purpose of using the account, the structure and content reflected on the Debit and Credit sides of the "VAT deductible tax" account, the accounting methods for economic transactions arising shall be carried out according to the provisions for Account 133 "VAT deductible tax" stipulated in Circular No. 100/1998/TT-BTC.

b- Rename the "Revenue tax" account to the "VAT payable" account in the current accounting system being applied at the entity to reflect VAT output, VAT payable, VAT payable on imported goods, VAT paid and still payable.

The structure and content reflected on the Debit and Credit sides of the "VAT payable" account, the accounting methods for economic transactions arising shall be carried out according to the provisions for Account 3331 "VAT payable" stipulated in Circular No. 100/1998/TT-BTC.

2.3- Regarding accounting books:

It is necessary to open detailed accounting books as required to clearly reflect the indicators of deductible VAT input, VAT output, VAT payable, VAT payable on imported goods, VAT refunded, VAT reduced.

2.4- Regarding financial reports:

On the Balance Sheet, Income Statement, and the explanation section of the financial report, additional contents related to the implementation of the Law on Value Added Tax (VAT input deductible, deducted, still deductible, VAT output, VAT payable, paid, still payable, VAT refunded, refunded, VAT reduced for the quarter, fiscal year) must be presented.

3- Foreign organizations and individuals engaged in business activities in Vietnam not falling under the forms of foreign investment as provided for in the Law on Investment in Vietnam:

3.1- Foreign contractors and subcontractors conducting business activities through a permanent establishment in Vietnam applying the enterprise accounting system of Vietnam must carry out VAT accounting in accordance with Circular No. 100/1998/TT-BTC dated July 15, 1998 and Circular No. 180/1998/TT-BTC dated December 26, 1998 of the Ministry of Finance and in accordance with the following special guidance points:

a) In the case where the main contractor signs a contract to undertake the entire project and subcontracts part of it to foreign parties and Vietnamese partners:

. At the main foreign contractor:

- When issuing invoices (including VAT) that include the value of work performed by subcontractors or Vietnamese business partners, record:

Debit Account 131 - Receivables from customers

Credit Account 511 - Sales Revenue

Credit Account 333 - Taxes and other amounts due to the State (33311)

- When receiving results from subcontractors or business partners, record:

Debit Account 632 - Cost of goods sold

Debit Account 133 - VAT deductible tax (1331)

Credit Account 331 - Payable to suppliers

- When determining the amount of VAT payable for the period:

Deducting deductible VAT input from VAT output, record:

Debit Account 333 - Taxes and other amounts due to the State (33311)

Credit Account 133 - VAT deductible tax (1331)

Determine the amount of VAT payable and actually paid, record:

Debit Account 333 - Taxes and other amounts due to the State (33311)

Credit Accounts 111, 112

. At the foreign subcontractor:

- When purchasing input materials, fixed assets (invoices including VAT), business expenses, record:

Debit various Accounts 152, 211, 642...

Debit Account 133 - VAT deductible tax (1331, 1332)

Credit various Accounts 111, 112, 331

- When transferring the results of the subcontractor's work to the main contractor, the subcontractor issues an invoice (including VAT) and reflects sales revenue, record:

Debit Account 131 - Receivables from customers

Credit Account 511 - Sales Revenue

Credit Account 333 - Taxes and other amounts due to the State (33311)

- When determining the amount of VAT payable for the period:

Deducting deductible VAT input from VAT output, record:

Debit Account 333 - Taxes and other amounts due to the State (33311)

Credit Account 133 - VAT deductible tax (1331)

- Determine the amount of VAT payable and actually paid, record:

Debit Account 333 - Taxes and other amounts due to the State (33311)

Credit Accounts 111, 112

b) In the case where the contractor cooperates with a Vietnamese party based on a signed contract and divides the business results based on revenue sharing:

- When receiving revenue from the division of business results by the Vietnamese party, the contractor issues an invoice (including VAT) and reflects sales revenue, record:

Debit Account 131 - Receivables from customers

Credit Account 511 - Sales Revenue

Credit Account 333 - Taxes and other amounts due to the State (33311)

- When purchasing input materials, fixed assets (invoices including VAT), business expenses, record:

Debit various Accounts 152, 211, 642...

Debit Account 133 - VAT deductible tax (1331, 1332)

Credit various Accounts 111, 112, 331

- When determining the amount of VAT payable for the period:

. Deducting deductible VAT input from VAT output, record:

Debit Account 333 - Taxes and other amounts due to the State (33311)

Credit Account 133 - VAT deductible tax (1331)

. Determining the amount of VAT payable and actually paid, record:

Debit Account 333 - Taxes and other amounts due to the State (33311)

Credit Accounts 111, 112

3.2- Foreign contractors and subcontractors applying other common accounting systems must organize accounting work to ensure full and truthful reflection of sales revenue, material values, goods, fixed assets, purchased services as the basis for determining VAT payable under the presumptive tax method.

III- ACCOUNTING FOR ENTERPRISE INCOME TAX (EIT)

1- Enterprises and organizations with foreign capital applying the enterprise accounting system of Vietnam must carry out EIT accounting in accordance with Circular No. 100/1998/TT-BTC dated July 15, 1998 of the Ministry of Finance guiding VAT and EIT accounting.

2- Enterprises and organizations with foreign capital in Vietnam permitted by the Ministry of Finance to apply other common accounting systems must also carry out EIT accounting in accordance with Circular No. 100/1998/TT-BTC dated July 15, 1998 of the Ministry of Finance guiding VAT and EIT accounting and the following provisions:

- EIT is determined based on pre-tax profit and the applicable tax rate. EIT is a State tax liability (if the business activity in the fiscal year is profitable) recorded on the debit side of the account reflecting undistributed profits of the fiscal year.

- In cases where enterprises and organizations with foreign capital are allowed by competent authorities to reduce EIT, accounting entries should be reversed from those made when determining the amount of EIT payable (increasing the enterprise's income and reducing the State tax liability).

3- Foreign organizations and individuals engaged in business activities in Vietnam not falling under the forms of foreign investment as provided for in the Law on Investment in Vietnam:

3.1- Foreign contractors and subcontractors conducting business activities in Vietnam subject to EIT under the declaration method must carry out accounting work according to the enterprise accounting system of Vietnam and EIT accounting in accordance with Circular No. 100/1998/TT-BTC dated July 15, 1998 of the Ministry of Finance.

3.2 - Foreign contractors and subcontractors applying different general accounting systems to pay corporate income tax under the fixed tax method must organize accounting work to reflect sales revenue according to the revenue determination method specified in Point 2, Part C of Circular No. 169/1998/TT-BTC dated December 22, 1998, issued by the Ministry of Finance guiding the tax regime applicable to foreign organizations and individuals conducting business activities in Vietnam that do not fall under the forms of investment regulated by the Law on Foreign Investment in Vietnam, serving as the basis for determining the corporate income tax payable.

IV - EFFECTIVE PROVISIONS

This Circular takes effect from January 1, 1999; other contents regarding value-added tax and corporate income tax accounting not guided in this Circular shall be implemented according to the current accounting system.

During implementation, if there are difficulties or obstacles, it is recommended to report them to the Ministry of Finance for consideration and resolution.