What are the accounting periods within a year in Vietnam? What are principles of accounting when determining input and output deductible VAT in Vietnam?

What are the accounting periods within a year in Vietnam?

Based on Article 12 of Law on Accounting 2015, which stipulates the accounting period. To be specific:

Accounting Period

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

a) The annual accounting period is 12 months, starting from January 1 to December 31 of the calendar year. Accounting units with specific characteristics regarding organization and activities may choose an annual accounting period of 12 full months according to the calendar year, starting from the first day of the first month of this quarter to the last day of the last month of the preceding quarter of the following year and must notify the financial authority and tax authority;

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

c) The monthly accounting period is 1 month, calculated from the first day to 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 date of issuance of the Business Registration Certificate to the last day of the annual, quarterly, monthly accounting period as stipulated in Clause 1 of this Article;

b) The first accounting period of another accounting unit is calculated from the effective date of the establishment decision of the accounting unit to the last day of the annual, quarterly, monthly accounting period as stipulated in Clause 1 of this Article.

3. When an accounting unit is divided, consolidated, merged, transformed in terms of type or form of ownership, dissolved, terminated, or goes bankrupt, the last accounting period is calculated from the start of the annual, quarterly, or monthly accounting period as stipulated in Clause 1 of this Article to the day before the effective decision of division, consolidation, merger, transformation, dissolution, termination, or bankruptcy.

4. In cases where the first or last annual accounting period is shorter than 90 days, it may be combined with the subsequent or preceding annual accounting period to form a complete annual accounting period; the first or last annual accounting period must be shorter than 15 months.

Thus, according to the above regulations, there are three accounting periods within a year: annual accounting (12 months), quarterly accounting (3 months), and monthly accounting (1 month).

What are the accounting periods within a year in Vietnam? (Image from the Internet)

How is the deductible VAT determined in accounting principles in Vietnam?

Based on Clause 1, Article 19 of Circular 200/2014/TT-BTC, which regulates the accounting principles for deductible value-added tax (VAT) as follows:

- Account 133 is used to reflect the input VAT deductible, deducted, and yet to be deducted by the enterprise.

- The accounting must separately account for deductible input VAT and non-deductible input VAT. In cases where separate accounting is not possible, the input VAT is accounted into Account 133. At the end of the period, the accounting must determine the deductible and non-deductible VAT as per the legal regulations on VAT.

- Non-deductible input VAT is included in the asset value purchased, cost of goods sold, or production expenses, depending on each specific case.

- The determination of deductible input VAT, declaration, settlement, and tax payment must conform to the legal provisions on VAT.

What are conditions for an enterprise to deduct input VAT in Vietnam?

According to Clause 2, Article 12 of the Law on Value-Added Tax 2008 (amended and supplemented by Clause 6, Article 1 of the Amended Law on Value-Added Tax 2013), the conditions for deducting input VAT are stipulated as follows:

- A value-added tax invoice for purchasing goods, services, or a document for VAT payment at the import stage is required;

- A non-cash payment document is required for purchased goods and services, except for goods and services purchased once with a value below twenty million VND;

- For exported goods and services, in addition to the conditions stipulated in Points a and b, Clause 6, Article 1 of the Amended Law on Value-Added Tax 2013, there must also be: a contract with a foreign party for selling, processing goods, providing services; an invoice for sold goods, services; a non-cash payment document; a customs declaration for exported goods.

Payment for exported goods and services by offsetting between exported and imported goods, services, or by repaying the state’s debt is considered non-cash payment.