Circular No. 191/1998/TT-BTC guides the accounting for value-added tax (VAT) in basic construction activities and agricultural and forestry product production and processing.

 CIRCULAR

GUIDELINES ON VALUE ADDED TAX ACCOUNTING FOR BASIC CONSTRUCTION ACTIVITIES, PRODUCTION AND PROCESSING OF AGRICULTURAL AND FOREST PRODUCTS CIRCULAR NO. 191/1998/TT-BTC ISSUED ON DECEMBER 31, 1998 BY THE MINISTRY OF FINANCE

Pursuant to the Law on Value Added Tax (VAT) adopted by the National Assembly of the Socialist Republic of Vietnam at its 11th session of the Ninth Legislature on May 10, 1997, and Decree No. 28/1998/NĐ-CP dated May 11, 1998 and Decree No. 102/1998/NĐ-CP dated December 21, 1998 of the Government detailing the implementation of the VAT Law;
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 implementation of Decree No. 28/1998/NĐ-CP detailing the implementation of the VAT Law and Decree No. 102/1998/NĐ-CP amending and supplementing certain provisions of Decree No. 28/1998/NĐ-CP;
Pursuant to Circular No. 187/1998/TT-BTC dated December 29, 1998 of the Ministry of Finance guiding the additional VAT for basic construction activities, production, and processing of agricultural and forest products;
Pursuant to Circular No. 100/1998/TT-BTC dated July 15, 1998 and Circular No. 180/1998/TT-BTC dated December 26, 1998 guiding the supplementary accounting of VAT;
To ensure appropriate VAT accounting in accordance with the calculation, declaration, and payment of VAT, the Ministry of Finance hereby guides the accounting of VAT for basic construction activities (BCA), production, and processing of agricultural and forest products as follows:

I- GENERAL PROVISIONS

1. These guidelines apply to self-conducted basic construction activities (BCA), production, and processing of agricultural and forest products in units engaged in agricultural and forestry production as specified in Circular No. 187/1998/TT-BTC dated December 29, 1998 of the Ministry of Finance.

2. Accounting of sales revenue:

- Sales revenue from self-conducted BCA activities with separate accounting of business results subject to VAT is the value of completed construction projects without VAT.

- Sales revenue from unprocessed agricultural and forest products directly sold to the market exempt from VAT is the selling price of the products.

- Sales revenue from processed agricultural and forest products consumed domestically subject to VAT is the selling price without VAT.

- Sales revenue from materials purchased by enterprises supplied to farm households, employees, or sold externally to organizations, households, and individuals under commercial trading subject to VAT is the selling price without VAT.

- Sales revenue from agricultural and forest products exported with a zero (0%) VAT rate is the export selling price.

3. Accounting of the value of materials, equipment, and services purchased:

- The value of materials, equipment, and services purchased for the execution of BCA volume by the self-conducted BCA unit with separate accounting of production and business results is the purchase price without VAT.

- The value of materials, equipment, and services purchased for the execution of BCA volume by the self-conducted BCA unit without separate accounting of production and business results is the purchase price including VAT (total payment).

- The value of materials, fixed assets, and services purchased for direct sale of unprocessed agricultural and forest products to the market exempt from VAT is the purchase price including VAT (total payment).

- The value of materials, fixed assets, and services purchased for the production and processing of agricultural and forest products consumed domestically subject to VAT is the purchase price without VAT. For raw materials that are agricultural and forest products used in production and processing according to Point 2b, Section II of Circular No. 187-1998/TT-BTC, the purchase price without VAT is determined as follows:

- The value of materials purchased by enterprises supplied to farm households, employees, or sold externally to organizations, households, and individuals under commercial trading is the purchase price without VAT.

- The value of materials, raw materials, fixed assets, and services purchased for the production and processing of agricultural and forest products for export is the purchase price without VAT (if purchased with a VAT invoice). For raw materials that are agricultural and forest products used in production and processing according to Point 2b, Section II of Circular No. 187-1998/TT-BTC dated December 29, 1998, the 3-5% deduction on the value of raw materials put into processing is not allowed.

II. VAT ACCOUNTING

1. Self-conducted basic construction activities in agriculture and forestry production:

a. Self-conducted basic construction activities in agriculture and forestry production with separate accounting of production and business results.

Accounting at the self-conducted BCA unit with separate accounting of business results:

- When receiving allocated capital from the production and business unit:

+ When receiving capital in cash, record:

Debit: Accounts 111, 112,

Credit: Account 336 - Internal Payable

+ When receiving capital in materials, fixed assets (FA), record:

Debit: Accounts 152, 153, 211,...

Debit: Account 133 - VAT Deductible (if applicable)

Credit: Account 336 - Internal Payable

- When purchasing materials, equipment, and services for BCA activities subject to VAT under the deduction method, record:

Debit: Accounts 152, 153, 621,...

Debit: Account 133 - VAT Deductible (input VAT)

Credit: Accounts 111, 112, 331 (Total payment)

- When BCA work is completed and handed over to the production and business unit and the BCA unit must issue a VAT invoice, record:

Debit: Account 336 - Internal Payable

Credit: Account 512 - Internal Sales Revenue

Credit: Account 333 - Taxes and Other Amounts Due to the State

(3331 - Output VAT)

- At the end of the period, calculate and determine the deductible input VAT for the period, record:

Debit Account 333 - Taxes and Other Amounts Payable to the State

(3331 - VAT Due)

Credit: Account 133 - VAT Deductible.

- When paying VAT to the State Budget, record:

Debit: Account 3331 - VAT Due

Credit: Accounts 111, 112

Accounting at the production and business unit:

- When transferring capital to the BCA unit:

+ When transferring capital in cash, record:

Debit: Account 136 - Internal Receivable

Credit: Accounts 111, 112

+ When transferring capital in materials, FA, record:

Debit: Account 136 - Internal Receivable (Total payment)

Credit: Accounts 152, 211,...(price without VAT)

Credit: Account 133 - VAT Deductible (input VAT of the transferred materials, FA)

When receiving completed fixed assets from the construction contractor, record:

Debit Account 211 - Fixed Assets (value of the project including output VAT)

Credit Account 136 - Internal Receivables (1361) (Total payment amount)

If the fixed assets are invested with state budget funds or self-supplemented funds, simultaneously record:

Debit Account 441 - Construction Investment Funds

Credit Account 411 - Operating Capital

b/ Self-construction activities in agricultural and forestry production without separate accounting for production and business results:

For self-construction activities conducted by the unit without separate accounting for production and business results as stipulated in Circular No. 187-1998/TT-BTC dated December 29, 1998, they are not subject to VAT.

When purchasing materials, equipment, and services for self-construction activities that are not subject to VAT, record:

Debit Accounts 152, 153, 241

Credit Accounts 111, 112, 331, etc. (Total payment amount and transportation costs, loading and unloading costs, etc.)

When issuing materials for use in self-construction activities that are not subject to VAT, record:

Debit Account 241 - Uncompleted Construction Investments

Credit Accounts 152, 153, etc.

When the construction project is completed and put into use, record:

Debit Accounts 211, 213, etc.

Credit Account 241 - Uncompleted Construction Investments

If the completed construction project is invested with state budget funds or self-supplemented funds, record:

Debit Account 441 - Construction Investment Funds

Credit Account 411 - Operating Capital

2. Production activities of agricultural and forestry products through processing for domestic consumption subject to VAT under the deduction method:

When purchasing materials, raw materials, services, fixed assets with VAT invoices or special vouchers, or deductible at a certain percentage (%) based on the purchase price according to tax laws for producing and processing agricultural and forestry products subject to VAT for domestic consumption, record:

Debit Accounts 152, 153, 211, 621, 627, 642 (price excluding VAT)

Debit Account 133 - Deductible VAT

Credit Accounts 111, 112, 331, etc. (Total payment amount)

When putting agricultural and forestry products submitted by farm households and products produced by the unit into processing for domestic consumption subject to VAT, record:

Debit Account 621 - Direct Material Costs

(Price excluding VAT)

Debit Account 133 - Deductible VAT

(VAT deductible at the specified percentage (%))

Credit Account 512 - Internal Sales Revenue (production cost of the product or submission price, local tax price)

When generating revenue from processed agricultural and forestry products for domestic consumption subject to VAT, record:

Debit Account 111, 112, 131 (Total payment amount)

Credit Account 511 - Sales Revenue (price excluding VAT)

Credit Account 333 - Taxes and Other Amounts Payable to the State

(3331 - VAT Due)

At the end of the period, when determining the deductible VAT input tax for the period, record:

Debit Account 133 - Deductible VAT

Credit Account 333 - Taxes and Other Amounts Payable to the State

(3331 - VAT Due)

- When paying VAT to the State Budget, record:

Debit Account 333 - Taxes and Other Amounts Payable to the State (3331)

Credit: Accounts 111, 112

3. Production activities of agricultural and forestry products directly sold to the market without processing, which are not subject to VAT:

When purchasing materials, goods, and services for production activities of agricultural and forestry products that are not subject to VAT, record:

Debit Accounts 152, 153, 156 or 611, 621, 627, 642, etc. (Total payment amount)

Credit Accounts 111, 112, 331, etc. (Total payment amount)

When generating revenue from selling agricultural and forestry products that are not subject to VAT, record:

Debit Accounts 111, 112, 131, etc.

Credit Account 511 - Sales Revenue (Total payment amount)

4. Production activities of agricultural and forestry products for export through processing.

When transferring agricultural and forestry products produced by the unit or receiving products submitted by farm households for processing, record:

Debit Account 621 - Direct Material Costs

Credit Account 512 - Internal Sales Revenue (production cost of the product, submission price, or local tax price)

When purchasing goods for export without a deductible VAT invoice, no refund of input VAT is allowed, record:

Debit Account 621 - Direct Material Costs

(Total payment amount)

Credit Accounts 111, 112, 331 (Total payment amount)

When purchasing other raw materials and services with a deductible VAT invoice serving directly the processing and export stages, record:

Debit Accounts 152, 621, 627, 642 (purchase price excluding VAT)

Debit Account 133 - Deductible VAT

Credit Accounts 111, 112, 331, etc. (Total payment amount)

When exporting agricultural and forestry products, determine export revenue, record:

Debit Account 111, 112, 131

Credit Account 511 - Sales Revenue

When refunded VAT by the state budget in cash, record:

Debit Accounts 111, 112

Credit Account 133 - Deductible VAT

III- IMPLEMENTATION

1. This circular takes effect from January 1, 1999.

2. Units engaged in construction investment, production, and processing of agricultural and forestry products shall implement and guide the implementation of this circular. Issues regarding accounting for VAT not covered in this circular shall be implemented according to current accounting regulations.

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