How to read financial statements in Vietnam? Do the tax declarations of enterprises include financial statements in Vietnam?
How to read financial statements in Vietnam?
Based on Clause 1, Article 3 of the Law on Accounting 2015, a financial statement is a system of economic and financial information of an accounting entity presented according to forms defined by accounting standards and policies.
Moreover, according to Clause 1, Article 97 of Circular 200/2014/TT-BTC, the purposes of financial statements are stipulated as follows:
- Financial statements are used to provide information about the financial situation, business performance, and cash flows of an enterprise, meeting the management needs of business owners, state agencies, and the useful needs of users in making economic decisions.
- Financial statements must provide information about an enterprise related to:
+ Assets;
+ Liabilities;
+ Owner's equity;
+ Revenue, other income, production and business costs, and other costs;
+ Profit, loss, and distribution of business results;
+ Cash flows.
Below is a guide on How to read Financial Statements:
| (1) Reading the Balance Sheet Important accounts to note are accounts 131 and 331 on the balance sheet, to determine whether accounts receivable from customers and accounts payable to suppliers match, specifically: - A decrease in accounts 131 and 331 compared to the same period is considered positive. - Account 131 should not hold too high a proportion in the asset section. - Account 331 should not hold too high a proportion in the owner's equity section. (2) Reading the Income Statement Steps to read the income statement: - Step 1: Separate the enterprise's revenue and expenses. - Step 2: Determine the proportion of each revenue item in total revenue, expenses in total expenses, and compare the changes in revenue and expenses with the same period. - Step 3: Observe, analyze, and evaluate changes in revenue and expenses. (3) Reading the Cash Flow Statement The cash flow statement informs the enterprise of the turnover cycle of capital, and the speed at which the enterprise can recover funds: - Cash flows from operating activities: Payments to suppliers, receipts from customers, payments to employees, tax payments, interest payments, etc. This cash flow includes the money made by the enterprise itself, not from fundraising or borrowing. - Cash flows from investing activities: Consists of cash flows related to investments, acquisitions or liquidation of fixed assets, and long-term assets of the enterprise. - Cash flows from financing activities: Involves cash flows related to increases or decreases in owner's equity and the enterprise's borrowing activities. When reading the cash flow statement, note that: - Except for cash flows from operating activities, cash flows from investing and financing activities generally increase in the current period and decrease in the future period or vice versa. - The focus should be on cash flows from operating activities, as they reflect the enterprise's actual ability to generate cash. - Cash and cash equivalents at the end of the period may decrease compared to the previous period, which is not necessarily a negative sign as the enterprise might have settled its debts earlier. (4) Reading the Notes to the Financial Statements The notes to the financial statements are used to explain the accounting policies applied during the reporting period, special issues during the accounting period, and post-closure events. This helps investors understand more clearly and accurately the enterprise's actual operations. The content and structure of the Notes to the Financial Statements include the following basic elements: - Business activities characteristics. - Accounting period, monetary unit used in accounting. - Applied accounting standards and policies. - Changes in fixed assets and capital. - Budget obligations performance. - Assets and liabilities of banks by maturity. - Additional information on items presented in the balance sheet. - Additional information on items presented in the income statement. - Additional information on items presented in the cash flow statement. - Events occurring after closure. - Enterprise's opinion. (5) Reading the Trial Balance The trial balance is used to check and evaluate the accuracy of recording entries, data logging, and changes in assets and capital. The content and structure of the trial balance are built on two bases: - The total debit balance of all accounts must equal the total credit balance of all accounts. - The total debit of all accounts must equal the total credit of all accounts. - The totals in the debit and credit columns of the opening saldo, transactions, and closing saldo must necessarily be equal (3 = 4, 5 = 6, 7 = 8). - The ending balance must equal the opening balance plus total debit transactions, minus total credit transactions. Any deviation from this indicates errors in recording or calculations. - The table provides a general assessment of the asset situation, capital, and business process of the unit. - Offers documentation for the preparation of the balance sheet. - Provides documentation for economic activity analysis. - Supplies detailed indicators supplementing the financial statement forms. |
Note: The content about "How to read Financial Statements?" is for reference only.
How to read financial statements in Vietnam? Do the tax declarations of enterprises include financial statements in Vietnam? (Image from the Internet)
Do the tax declarations of enterprises include financial statements in Vietnam?
Based on Clause 3 and Clause 6, Article 43 of the Law on Tax Administration 2019, regulations on tax declaration dossiers for taxes calculated annually are as follows:
Tax Declaration Dossier
...
- A tax declaration dossier for taxes calculated annually includes:
a) Annual tax declaration dossier consisting of annual tax returns and other documents related to determining the payable tax amount;
b) Tax finalization declaration dossier at year-end includes annual tax finalization return, annual financial statements, transfer price statements; other documents related to tax finalization.
...
- A tax declaration dossier in case of termination of activities, termination of contracts, transformation of business types, reorganization of enterprises includes:
a) Tax finalization return;
b) Financial statements until the time of termination of activities or contracts, or transformation of business type, or reorganization of business;
...
Thus, when a business submits a tax declaration file, it includes both financial statements for taxes with annual tax calculation and for cases involving cessation of activities, contract termination, transformation of business type, or reorganization of the enterprise.
What is the deadline for submitting tax declaration dossiers for taxes calculated annually in Vietnam?
Based on Clause 2, Article 44 of the Law on Tax Administration 2019, the deadline for submitting tax declaration dossiers for taxes calculated annually is as follows:
- No later than the last day of the third month from the end of the calendar year or fiscal year for the annual tax finalization dossier; no later than the last day of the first month of the calendar year or fiscal year for the annual tax return dossier;
- No later than the last day of the fourth month from the end of the calendar year for the individual income tax finalization dossier of individuals directly finalizing taxes;
- No later than December 15 of the preceding year for the lump sum tax declaration dossier of business households and individuals taxed by the lump sum method; for new business households and individuals, the deadline for submitting the lump sum tax declaration dossier is no later than 10 days from the start of business.
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