Circular No. 50-TC/CĐKT provides guidance on accounting for turnover tax, special consumption tax, profit tax, and other types of taxes at business units.

MINISTRY OF FINANCE ********	SOCIALIST REPUBLIC OF VIETNAM Independence - Freedom - Happiness ********
NUMBER: 50-TC/CĐKT	HA NOI, OCTOBER 20, 1990

 

CIRCULAR

OF THE MINISTRY OF FINANCE NUMBER 50-TC/CĐKT DATED OCTOBER 20, 1990 GUIDING ACCOUNTING FOR BUSINESS INCOME TAX, SPECIAL CONSUMPTION TAX, PROFIT TAX AND OTHER TAXES AT BUSINESS UNITS

IMPLEMENTING Decrees No. 351/HĐBT, 352/HĐBT and 353/HĐBT dated October 2, 1990 of the Council of Ministers detailing the implementation of the Business Income Tax Law, Special Consumption Tax Law, Profit Tax Law, and the Resource Tax Ordinance of the State Council... The Ministry of Finance guides the accounting for the aforementioned tax payments at business units as follows:

I- ACCOUNTS USED

1. In accordance with the current unified accounting chart system, the account 64 "Settlement with the State Budget" is used to reflect the situation of calculating, withholding, and paying taxes and other payments to the State budget. Account 64 "Settlement with the State Budget" now includes the following sub-accounts:

- Sub-account 641 "Business Income Tax and Special Consumption Tax," reflecting the situation of paying business income tax and special consumption tax to the State budget. For units that must pay both business income tax and special consumption tax simultaneously, detailed records must be kept on account 641 to separately track the payment of each type of tax;

- Sub-account 642 "Profit Tax," reflecting the situation of paying profit tax to the State budget;

- Sub-account 643 "Revenue from Capital," reflecting the situation of paying revenue from capital to the State budget;

- Sub-account 644 "House and Land Tax," reflecting the situation of paying house and land taxes;

- Sub-account 645 "Income Tax," reflecting the situation of paying income taxes;

- Sub-account 646 "Other Taxes," reflecting the situation of paying other taxes not recorded in the above sub-accounts such as resource tax, export and import tax... This sub-account is detailed according to each type of tax;

- Sub-account 647 - Depreciation;

- Sub-account 648 - Subsidies;

- Sub-account 649 - Other Settlements.

On the business results report of units, under the section "Performance of Obligations to the State Budget," tax items are recorded in the order of the sub-accounts mentioned above.

2. To align with the new tax regime and facilitate tax calculation and inspection, the following accounting methods are revised:

- Accounting for the sale of fixed assets (FA):

+ When receiving money from selling FA, the accountant records:

Debit Account 50 - Cash

Debit Account 51 - Bank Deposits

Debit Account 61 - Settlement with Purchasers

Credit Account 40 - Sales and Results (402)

+ The remaining value of FA (the portion not fully depreciated) is the cost of sold FA, recorded as:

Debit Account 40 - Sales and Results (402)

Credit Account 82 - Construction Fund (822).

+ Business income tax payable on the sale price of FA (if applicable), recorded as:

Debit Account 40 - Sales and Results (402)

Credit Account 64 - Settlement with the State Budget (641)

+ If there are selling expenses, they are included in the cost of sold FA, recorded as:

Debit Account 40 - Sales and Results (402)

Credit Account 50 - Cash

Credit Account 51 - Bank Deposits

...

+ The difference between the sale price and the cost of sold FA and business income tax on the sale of FA (if applicable) is taxable income, recorded as:

Debit Account 40 - Sales and Results (402)

Credit Account 70 - Income (702)

If there is a loss, it is recorded in reverse.

Additionally, the accountant must record the cancellation of FA as specified in the unified accounting chart system.

- Accounting for the liquidation of FA:

+ The amount recovered from the liquidation of FA, the accountant records:

Debit Account 21 - Raw Materials, Materials

Debit Account 50 - Cash

Debit Account 51 - Bank Deposits

Credit Account 40 - Sales and Results (405).

+ The remaining value of FA (the portion not fully depreciated) is considered damage due to early liquidation of FA, recorded as:

Debit Account 40 - Consumption and Results (405)

Credit Account 82 - Construction and Development Investment Capital (822)

+ Liquidation costs of FA, the accountant records:

Debit Account 40 - Consumption and Results (405)

Credit Account 50 - Cash

Credit Account 51 - Bank Deposits

Credit Account 31 - Ancillary Production and Business

The difference between the recovery and expenditure on the liquidation of FA is the liquidation income of FA, recorded as:

Debit Account 40 - Consumption and Results (405)

Credit Account 70 - Income (705)

If there is a loss, it is recorded in reverse.

Additionally, the accountant must record the cancellation of FA as specified in the unified accounting chart system.

- Accounting for interest expense:

All interest payable on bank loans and other borrowings (excluding overdue debts) are recorded as enterprise management expenses.

Debit Account 33 - Business Management Expenses

Credit Account 51 - Bank Deposits

Credit Account 50 - Cash

For trading businesses (commerce, materials), interest expense is still recorded as circulation expenses as currently prescribed.

II- METHODS OF ACCOUNTING FOR TAXES

1. Method of accounting for business income tax and special consumption tax.

- Business income tax:

Business income tax payable = Taxable revenue x Tax rate

Taxable revenue is the total amount of sales proceeds, processing fees, commission fees, service charges of goods and services determined as consumed during the tax payment period. The time point for determining consumption as the basis for taxable revenue is when the buyer pays the seller, regardless of whether the seller has received the payment or not, as stipulated in Circular No. 45-TC/TCT dated October 4, 1990 of the Ministry of Finance guiding the implementation of business income tax.

For revenue in foreign currency: it must be converted into Vietnamese Dong based on the exchange rate after:

For units operating under the self-balancing foreign exchange mechanism, the conversion rate is the buying rate published by the State Bank at the time of revenue determination. For non-convertible foreign currencies where the Bank does not publish an exchange rate, the conversion rate is the market rate at which the unit can sell at the time of revenue determination.

For export businesses under Protocol, the conversion rate is the rate formed for each commodity group approved by the State for settlement with the unit.

- Special consumption tax:

Special consumption tax payable

=

Taxable turnover

x

Machine tools for machining complete units (one operation position) and machine tools for multi-position machining to process metals.

-

Special consumption tax paid for the raw material component of consumed goods

Special consumption tax is calculated on each taxable item when the item is determined as consumed. The time point for determining consumption for goods subject to special consumption tax is the same as the time point for determining consumption for products and goods subject to business income tax.

Regarding accounting: all taxable revenue is reflected on the credit side of sub-accounts 401 "Main Production and Business Activities" and 402 "Ancillary Production and Business Activities".

- When determining the amount of business income tax or special consumption tax payable, the accountant records:

Debit Account 40 - Sales and Results (401, 402)

Credit Account 64 - Settlement with the State Budget (641)

- When paying business income tax or special consumption tax, the accountant records:

Credit Account 51 - Bank Deposits

Credit Account 50 - Cash

...

Business establishments receiving consignment sales must pay the types of taxes stipulated generally. In cases where business establishments receive consignment sales for wholesale business establishments, in addition to the turnover tax that the unit must pay (calculated based on the commission received), they must also deduct 4% of the revenue of the wholesale business establishment with consigned goods to pay to the tax authority (1% for turnover tax; 3% for income tax). The establishment receiving consignment sales is entitled to a fee of 3% calculated based on the amount of tax deducted and paid to the tax authority:

+ Wholesale business establishments with consigned goods, upon receipt of notification about the tax paid by the establishment receiving consignment sales, shall record the turnover tax and income tax payable according to the provisions of this Circular;

+ When the establishment receiving consignment sales pays the tax on behalf of others, the accounting records shall be made as follows:

Debit Account 62 - Receivables and Payables (622)

Credit Account 51 - Bank Deposits

Credit Account 50 - Cash

...

+ When receiving a 3% fee on the tax paid on behalf of the consignment sales establishment from the tax authority, the consignment sales establishment shall record an increase in income:

Debit Account 51 - Bank Deposits

Debit Account 50 - Cash

Credit Account 70 - Income (705)

- In cases where the entity is exempted or granted reductions in turnover tax and special consumption tax for the taxes already paid.

+ If it belongs to the tax of the previous year, then the tax refund is considered other income of the current year, the accounting records shall be made as follows:

Debit Account 51 - Bank Deposits

Credit Account 70 - Income (705)

+ If it belongs to the tax of the current year:

In cases where it has not been paid, the accounting entry shall be recorded in red ink.

Debit Account 40 - Consumption and Results (401, 402)

Credit Account 64 - Settlement with the State Budget (641)

In cases where it has been paid, apart from the above accounting entry, the accounting shall reflect the amount refunded received.

Debit Account 51 - Bank Deposits

Credit Account 64 - Settlement with the State Budget (641)

At the same time, the false number on Account 64 (641) regarding the tax refund shall be deleted to accurately reflect the tax due and paid by the entity, the accounting entry shall be recorded in red ink.

- When paying business income tax or special consumption tax, the accountant records:

Credit Account 64 - Settlement with the State Budget (641)

- In cases where the entity is subject to additional tax collection:

+ If it belongs to the tax payable of the previous year, it shall be treated as a loss of the entity, the accounting records shall be made as follows:

Debit Account 70 - Income (705)

Credit Account 64 - Settlement with the State Budget (641)

+ If it belongs to the tax payable of the current year, the accounting records shall be made to supplement the tax payable:

Debit Account 40 - Consumption and Results (401, 402)

Credit Account 64 - Settlement with the State Budget (641)

2. Method of Accounting for Income Tax:

Income tax payable (per year)

-

Total taxable income for the whole year

x

Machine tools for machining complete units (one operation position) and machine tools for multi-position machining to process metals.

Or:

Income tax payable for one year

=

Revenue

-

Reasonable and legitimate expenses

+

+ Actual total reasonable annual salary according to regulations: 864 million

x

Machine tools for machining complete units (one operation position) and machine tools for multi-position machining to process metals.

When calculating taxable income, it should be noted that there are certain expenses and losses under the prescribed regulations that cannot be deducted from taxable income. Therefore, at the end of the year, to accurately determine the taxable income, the accountant must base on the total credit balance of Account 70 - "Income" and add the following non-deductible expenses:

+ Penalties, compensation payments, when they occur, are recorded on the debit side of Account 404 - "Financial Transactions" at the end of the period and transferred to the debit side of Account 704 - "Income from Financial Transactions".

+ Losses from disposal and sale of fixed assets, at the end of the period, are reflected on the debit side of Account 705 - "Other Income" and Account 720 - "Income from Ancillary Activities".

+ Raw material costs, product damage losses, inventory shortages exceeding allowable limits, which must be deducted from retained earnings after income tax calculation (excluding personal compensation) are transferred to the debit side of Account 70 - "Income".

+ Losses from production stoppages outside the plan caused by the enterprise's own fault, which must be deducted from retained earnings, are reflected on the debit side of Account 705 - "Other Income" at the end of the period.

+ The basic depreciation of fixed assets that have been fully depreciated but are still in use has been included in the cost of products and circulation fees.

- Monthly, when temporarily paying income tax, the accountant records:

Debit Account 71 - Distribution of Income (711)

Credit Account 51 - Bank Deposits

- When the annual settlement report is approved and the total income tax payable for the year is determined, the accountant records:

Debit Account 70 - Income

Credit Account 64 - Settlement with the State Budget (642)

- Payment of amounts already paid:

+ If the income tax paid is less than the amount payable, the accountant records the payment as follows:

Debit Account 64 - Settlement with the State Budget (642)

Credit Account 71 - Distribution of Income (711)

When paying the remaining amount, the accountant records:

Debit Account 64 - Settlement with the State Budget (642)

Credit Account 51 - Bank Deposits

+ If the income tax paid exceeds the amount payable, the accountant only transfers the exact amount payable.

Debit Account 64 - Settlement with the State Budget (642)

Credit Account 71 - Distribution of Income (711)

The excess payment is carried forward as the income tax payable for the next year to the state budget:

Debit 711 - Current Year

Credit 711 - Previous Year

If the excess payment is refunded by the tax authority to the enterprise, the accountant records:

Debit Account 51 - Bank Deposits

Debit Account 50 - Cash

Credit Account 71 - Distribution of Income

In cases where the entity is exempted or granted reductions in income tax paid, the accountant only needs to track the detailed amount of income tax exempted or reduced, treating it as prepaid income tax for the subsequent cycle.

In cases where the entity is subject to additional income tax collection, if it belongs to the taxable income of the current year, it is recorded as an additional entry; if it belongs to the taxable income of the previous year, it is added to the income tax payable for the current year as another loss of the entity, when it occurs, the accountant records:

Debit Account 70 - Income (705)

Credit Account 64 - Settlement with the State Budget (642)

3. Method of Accounting for Resource Tax:

Resource tax payable = Quantity extracted x Taxable price x Tax rate

When extracting resources, enterprises must pay the tax regardless of whether the extracted resources have been sold or remain in stock.

The resource tax payable is included in the cost of extracted products:

- When calculating the resource tax, the accountant records:

Debit Account 30 - Main Production and Business Operations (details by product)

Credit Account 64 - Settlement with the State Budget (646)

- When paying the resource tax, the accountant records:

Debit Account 64 - Settlement with the State Budget (646)

Credit Account 50 - Cash

Credit Account 51 - Bank Deposits

...

In cases where the entity is exempted or granted reductions in the resource tax paid, if it belongs to the period of cost calculation, it is recorded as a reduction in cost; if it belongs to the previous period of cost calculation, it is treated as other income of the current period.

4. Method of Accounting for Import and Export Duties.

4.1. Method of Accounting for Export Duties Paid Directly by the Entity.

- When determining the export duty payable for exported goods, the accountant records:

Debit Account 40 - Consumption and Results (401, 402)

Credit Account 64 - Settlement with the State Budget (646 - details export duties)

- When paying the export duty, the accountant records:

Debit Account 64 - Settlement with the State Budget (646 - details export duties)

Credit Account 51 - Bank Deposits

Credit Account 50 - Cash

...

In cases where the entity is exempted or granted reductions in the export duty paid or is subject to additional collection of export duty, it is accounted for similarly to turnover tax.

4.2. Method of Accounting for Import Duties Paid Directly by the Entity.

Enterprises importing goods use Account 20 - "Purchases" to reflect the total purchase amount of imported goods.

- When the goods arrive at the customs port, the customs calculates the import duty payable, which is recorded in the cost of purchased goods by the accountant as follows:

Debit Account 20 - Purchases

Credit Account 64 - Settlement with the State Budget (646 - details import duties)

- When paying the import duty, the accountant records:

Debit Account 64 - Settlement with the State Budget (646 - details import duties)

Credit Account 51 - Bank Deposits

...

- When the goods are warehoused at the enterprise, the accountant records the actual purchase price plus (+) import duty.

Debit Account 23 - Goods

Debit Account 21 - Raw Materials, Materials

Debit Account 20 - Purchase of Goods

- In cases where the amount of tax paid is refunded, upon receipt of notification regarding the refund of tax:

+ If the goods remain in inventory, the accountant records the journal entry in red ink:

Debit Account 20 - Purchases

or Debit Account 23 - Inventory of Goods

Debit Account 21 - Raw Materials, Materials

Credit Account 64 - Settlement with the State Budget (646 - details import duties)

+ In cases where the goods have been consumed, the accountant records:

Debit Account 64 - Settlement with the State Budget (646 - details import duties)

Credit Account 70 - Income (705)

- Upon receiving the refunded tax amount, the accountant records:

Debit Account 51 - Bank Deposits

Debit Account 90 - Short-term Loans from Banks

...

Credit Account 64 - Settlement with the State Budget (646 - Detailed Customs Duties and Excise Taxes)

4.3. Method of Accounting for Entrusted Import and Export Duties

The entrusted entity has the responsibility to pay taxes on behalf of the entrusting entity.

a) Entrusting Entity:

- When transferring money to the entrusted entity to pay the tax on its behalf, the accountant records:

Debit Account 62 - Receivables and Payables (622)

Credit Account 50 - Cash

Credit Account 51 - Bank Deposits

Credit Account 90 - Short-term Loans from Banks

- Upon receiving the payment statement from the entrusted entity regarding the tax paid, the accountant records:

Debit Account 40 - Consumption and Results (401, 402 for export goods)

or Debit Account 20 - Purchase of Goods

or Debit Account 23 - Inventory of Goods

(for imported goods)

Credit Account 64 - Settlement with the State Budget (646 - Detailed Customs Duties and Excise Taxes)

- Simultaneously, the accountant records the transfer of the tax paid:

Debit Account 64 - Settlement with the State Budget (646 - Detailed Customs Duties and Excise Taxes)

Credit Account 62 - Receivables and Payables (622)

b) Entrusted Entity:

- Upon receiving the money transferred from the entrusting entity, the accountant records:

Debit Account 50 - Cash

Debit Account 51 - Bank Deposits

Credit Account 62 - Receivables and Payables (622)

- When paying the tax on behalf of the entrusting entity, the accountant records:

Debit Account 62 - Receivables and Payables

Credit Account 50 - Cash

Credit Account 51 - Bank Deposits

...

5. Methods of Accounting for Other Tax Items (land tax, income tax, capital gains tax, etc.) will be specifically guided when the State officially enacts such taxes.

This guide on the accounting methods for turnover tax, special consumption tax, profit tax, resource tax, customs duties, and excise taxes applies uniformly to all business entities across various sectors and economic components nationwide starting from October 1, 1990.

Based on this guidance, Ministries, industries, and localities shall disseminate instructions to managed units to implement uniformly. During implementation, if there are any difficulties, they are requested to report to the Ministry of Finance for research and resolution.

Hồ Tế (Signed)