What is the VAT deduction entry in Vietnam? Which account is used for VAT accounting?

What is the VAT deduction entry in Vietnam?

The VAT deduction entry is one of the important entries in tax accounting, especially for businesses engaged in the trading of goods and services. It reflects the process by which a business determines and records the input VAT amount that can be deducted from the output VAT payable.

In accounting transactions, the VAT deduction entry is guided by Article 31 of Circular 200/2014/TT-BTC as follows:

Account 158 - Goods in Bonded Warehouse

...

3. Accounting method for some main economic transactions

a) When importing raw materials, materials for producing export products, or processing export goods if placed in Bonded Warehouse, the enterprise does not need to pay import tax and VAT for imported goods, record:

Debit Account 158 - Goods in Bonded Warehouse

Credit Account 331 - Payables to Suppliers.

b) When releasing imported raw materials from Bonded Warehouse to produce products, or process export goods, record:

Debit Account 621 - Direct Material Costs

Credit Account 158 - Goods in Bonded Warehouse.

c) When exporting finished products or export goods, processing goods for export into a Bonded Warehouse (if any), record:

Debit Account 158 - Goods in Bonded Warehouse

Credit Accounts 156, 155,...

d) When exporting goods from the Bonded Warehouse (if any):

- Reflect the cost of exported goods from Bonded Warehouse, record:

Debit Account 632 - Cost of Goods Sold

Credit Account 158 - Goods in Bonded Warehouse.

- Reflect the revenue from exported goods from the Bonded Warehouse, record:

Debit Accounts 111, 112, 131,...

Credit Account 511 - Sales Revenue and Service Provision.

đ) If the export ratio is lower than the tax-sheltered ratio, the company must pay import tax and VAT for the difference between the quantity of products required to be exported and the actual quantity exported:

- When determining the import tax payable (if any), record:

Debit Account 632 - Cost of Goods Sold

Credit Account 333 - Taxes and Liabilities to the State (3333).

- When determining the VAT for imported goods payable (if any), record:

Debit Account 133 - Deductible VAT (1331)

Credit Account 333 - Taxes and Liabilities to the State (33312).

- When actually paying import tax and VAT for imported goods (if any), record:

Debit Account 333 - Taxes and Liabilities to the State (3333, 33312)

Credit Accounts 111, 112,....

e) In cases where the business is allowed by the competent authority to sell goods from the Bonded Warehouse in the domestic market, the enterprise must pay import tax and other taxes as prescribed.

- When allowed to use goods from the Bonded Warehouse, the enterprise must perform procedures to release goods from the Bonded Warehouse, re-enter the company's product and goods warehouse, and pay tax on these goods, record:

Debit Accounts 155, 156

Credit Account 158 - Goods in Bonded Warehouse.

- When determining the import tax payable (if any), record:

Debit Accounts 155, 156

Credit Account 333 - Taxes and Liabilities to the State (3333).

- When determining the VAT for imported goods payable (if any), record:

Debit Accounts 155, 156 (if not deductible)

Debit Account 133 - Deductible VAT (1331)

Credit Account 333 - Taxes and Liabilities to the State (33312).

- When actually paying import tax and VAT for imported goods, record:

Debit Account 333 - Taxes and Liabilities to the State (33312, 3333)

Credit Accounts 111, 112,....

g) In cases of selling goods stored in Bonded Warehouses in the domestic market:

- Reflect the cost of goods in Bonded Warehouse sold, record:

Debit Account 632 - Cost of Goods Sold

Credit Account 158 - Goods in Bonded Warehouse.

Simultaneously, the accountant must determine and record the import tax and VAT for imported goods, materials, these items.

- Reflect the revenue from selling goods stored in Bonded Warehouses in the domestic market, record:

Debit Accounts 111, 112, 131,...

Credit Account 511 - Sales Revenue and Service Provision

Credit Account 333 - Taxes and Liabilities to the State (33311).

h) In cases where materials, goods are brought into Bonded Warehouse, if damaged, deteriorated, not meeting export requirements, must be re-imported or destroyed:

- In case of re-import, record:

Debit Accounts 155, 156,....

Credit Account 158 - Goods in Bonded Warehouse.

- Simultaneously, must pay the import tax and VAT for the goods, materials,. determine the tax payable as recorded in entry (e); When actually paying tax, record:

Debit Account 333 - Taxes and Liabilities to the State (33312, 3333)

Credit Accounts 111, 112,....

- In case of re-export (return to the seller), record:

Debit Account 331- Payables to Suppliers

Credit Account 158 - Goods in Bonded Warehouse.

- In case of destruction of goods, materials, stored in Bonded Warehouse, record:

Debit Account 632 - Cost of Goods Sold (destroyed goods, materials)

Credit Account 158 - Goods in Bonded Warehouse.

What is the VAT deduction entry in Vietnam? Which account is used for VAT accounting? (Image from the Internet)

Which account is used for VAT accounting in Vietnam?

Based on Clause 2, Article 52 of Circular 200/2014/TT-BTC, provisions are as follows:

Account 333 – Taxes and State Liabilities

...

3. Accounting method for some main economic transactions

3.1. VAT Payable (3331)

3.1.1. Accounting for Output VAT (Account 33311)

a) Accounting for output VAT payable by deduction method:

When issuing VAT invoices by deduction method and the enterprise pays VAT by deduction method, the accountant reflects revenue, income at sales prices excluding VAT; VAT payable is recorded separately at the time of issuing the invoice, record:

Debit Accounts 111, 112, 131 (total payment amount)

Credit Accounts 511, 515, 711 (prices excluding VAT)

Credit Account 3331 - VAT Payable (33311).

b) Accounting for output VAT payable by direct method

The accountant can choose one of the two following recording methods:

- Method 1: Immediately separates VAT payable when issuing invoices, perform as point a above;

- Method 2: Records revenue including VAT payable by direct method, periodically when determining VAT payable accountants reduce revenue, corresponding income:

Debit Accounts 511, 515, 711

Credit Account 3331 - VAT Payable (33311).

c) When paying VAT to the State Budget, record:

Debit Account 3331 - VAT Payable

Credit Accounts 111, 112.

3.1.2. Accounting for VAT on Imported Goods (Account 33312)

a) When importing materials, goods, fixed assets, the accountant reflects the import tax payable, the total payment amount, and the value of materials, goods, fixed assets imported (excluding imported goods VAT), record:

Debit Accounts 152, 153, 156, 211, 611,...

Credit Account 333 - Taxes and Liabilities to the State (3333)

Credit Accounts 111, 112, 331,...

b) Reflect the VAT payable of imported goods:

- In case the VAT on imported goods payable is deductible, record:

Debit Account 133 - Deductible VAT

Credit Account 3331 - VAT Payable (33312).

- In case the VAT on imported goods payable is not deductible and must be included in the value of materials, goods, fixed assets imported, record:

Debit Accounts 152, 153, 156, 211, 611,...

Credit Account 3331 - VAT Payable (33312).

c) When actually paying VAT of imported goods to the State Budget, record:

Debit Account 3331 - VAT Payable (33312)

Credit Accounts 111, 112,...

d) In case of entrusted imports (applied to the entrusting party)

- When receiving notification about VAT obligation on imported goods from the trustee, the entrusting party records the VAT on imported goods payable as deductible, record:

Debit Account 133 - Deductible VAT

Credit Account 3331 - VAT Payable (33312).

- When receiving the tax payment voucher into the state budget from the trustee, the entrusting party reflects the reduction in VAT obligation on imported goods, record:

Debit Account 3331 - VAT Payable (33312)

Credit Accounts 111, 112 (if paid immediately to the trustee)

Credit Account 3388 - Other Payables (if payment to the trustee is not immediate)

Credit Account 138 - Other Receivables (recognize reduction on prepayment to the trustee for VAT on imported goods)

...

Thus, according to the regulations, the account used for VAT accounting is Account 3331, including: Account 33311 - Output VAT and Account 33312 - VAT on Imported Goods.

What are regulations on VAT deduction method in Vietnam?

Based on Article 10 of Value Added Tax Law 2008, as amended by Clause 4 of Article 1 Amended Value Added Tax Law 2013, the provisions are as follows:

- The deductible VAT method is regulated as follows:

+ VAT payable according to the deduction method is equal to output VAT minus input VAT that is deductible;

+ Output VAT is the total VAT of sold goods, services stated on the VAT invoice.

The VAT of goods, services sold, stated on the VAT invoice, is the taxable amount of the goods, services sold, multiplied by the VAT rate of those goods, services.

In cases where payment documents state the price as including VAT, the output VAT is determined by the payment price minus the deductible VAT determined according to the provisions of point k, clause 1, Article 7 of the Value Added Tax Law 2008;

+ Deductible input VAT is the total VAT stated on VAT invoices for purchased goods, services, tax documents of imported goods, meeting the conditions stipulated in Article 12 of the Value Added Tax Law 2008.

- The deductible tax method applies to business establishments that fully implement accounting policies, invoices, and documents according to the provisions of the law on accounting, invoices, documents, including:

+ Business establishments with annual revenue from the sale of goods, providing services from one billion VND or more, except households and individual businesses;

+ Business establishments voluntarily registered to apply the deduction tax method, except households and individual businesses.

- The Government of Vietnam provides detailed regulations on this Article.