Is it allowed to combine a short previous accounting period with the next accounting period in Vietnam?

Is it allowed to combine a short previous accounting period with the next accounting period in Vietnam?

Based on Article 12 of the Law on Accounting 2015 regarding accounting periods, the provisions are as follows:

Accounting Period

1. The accounting period includes the annual accounting period, quarterly accounting period, and monthly accounting period and is regulated as follows:

a) The annual accounting period is 12 months, beginning from January 1 to December 31 of the calendar year. Accounting units with specific organizational and operational characteristics can choose an annual accounting period of 12 full months according to the calendar year, starting from the beginning of the first day of the month in the quarter until the last day of the last month of the preceding year’s quarter and must notify the financial and tax authorities;

b) The quarterly accounting period is 3 months, calculated from the beginning of the first day of the first quarter month to the end of the last day of the last quarter month;

c) The monthly accounting period is 1 month, calculated from the beginning of the first day to the end of the last day of the month.

2. The accounting period for newly established accounting units is regulated as follows:

a) The first accounting period of a newly established enterprise is calculated from the first day on which the Business Registration Certificate is issued until the end of the annual accounting period, quarterly accounting period, or monthly accounting period as regulated in Clause 1 of this Article;

b) The first accounting period of other accounting units is calculated from the first day the establishment decision of the accounting unit takes effect until the end of the annual accounting period, quarterly accounting period, or monthly accounting period as regulated in Clause 1 of this Article.

3. For accounting units subject to division, merger, consolidation, conversion of type or form of ownership, dissolution, operation termination, or bankruptcy, the last accounting period is calculated from the beginning of the annual accounting period, quarterly accounting period, or monthly accounting period as regulated in Clause 1 of this Article until the day before the decision on division, merger, consolidation, conversion of type or form of ownership, dissolution, operation termination, or bankruptcy of the accounting unit takes effect.

4. In cases where the first or last annual accounting period is less than 90 days, it may be combined with the following annual accounting period or combined with the preceding annual accounting period to constitute a full annual accounting period; the first or last annual accounting period must be under 15 months.

Therefore, if the first or last annual accounting period is less than 90 days, it is permissible to combine it with the next annual accounting period or with the preceding annual accounting period to form a complete annual accounting period.

Note: The first or last annual accounting period must be under 15 months.

Is it allowed to combine a short previous accounting period with the next accounting period in Vietnam? (Image from the Internet)

What are the period-based accounting principles in Vietnam?

According to Clause 2, Article 8 of Circular 111/2021/TT-BTC, the period-based accounting principles are specified. To be specific:

- The date for tax accounting entry is determined as the accounting entry date recorded in the tax accounting subsystem.

- The date for collecting input information for tax accounting must adhere to the principle of the day on which the tax administration transaction arises or the latest on the next consecutive day after the tax administration transaction arises.

Except on public holidays as regulated, the information collection day is the next working day following the public holiday.

- In case adjustments arise in the tax management transactions that have been accounted for the tax period of the previous year during the tax period reporting timeframe, if it occurs before the closing of the tax accounting period, adjustments are accounted for in the tax period of the previous year and determined based on the accounting year’s information specified in Clause 1, Article 8 of Circular 111/2021/TT-BTC

- After the closing of the tax accounting period, any adjustment of data pertaining to the tax accounting period of the previous year can only be executed upon the request of competent state authorities and in accordance with Clauses 3 and 4, Article 27, and Clauses 2 and 3, Article 30 of Circular 111/2021/TT-BTC.

When shall the tax accounting documents be prepared in Vietnam?

According to Clause 2, Article 16 of Circular 111/2021/TT-BTC, there are two cases where tax accounting documents must be prepared:

- The case where the tax authority must adjust the state budget revenue data at the request of the State Treasury or competent authority, wherein the adjustment information only affects the tax accounting report data without changing the taxpayer’s tax obligation in the taxpayer obligation management subsystem.

- The case where policy changes lead to adjustments to the tax accounting report data without changing the taxpayer’s tax obligation.