Provision Rates for Bad Debts of Enterprises

According to the provisions of Article 6 Circular 48/2019/TT-BTC, enterprises must make provisions for bad debt with the following levels of provision:

Illustrative image (source: internet)

- For overdue receivables, the provision levels are as follows:

- 30% of the value for overdue receivables from 6 months to under 1 year.

- 50% of the value for overdue receivables from 1 year to under 2 years.

- 70% of the value for overdue receivables from 2 years to under 3 years.

- 100% of the value for overdue receivables from 3 years or more.

- For telecommunications service businesses and retail businesses, the provision levels for overdue telecommunications, information technology, postpaid television service receivables, and retail receivables by individuals following delayed payment/installment payment are as follows:

- 30% of the value for overdue receivables from 3 months to under 6 months.

- 50% of the value for overdue receivables from 6 months to under 9 months.

- 70% of the value for overdue receivables from 9 months to under 12 months.

- 100% of the value for overdue receivables from 12 months or more.

- For receivables not yet due but the business has collected evidence that the economic organization has gone bankrupt, has initiated bankruptcy procedures, has fled from the business location; the debtor is being prosecuted, detained, tried by legal authorities or is serving a sentence or is suffering from a terminal illness (certified by a hospital) or has died, or the debt has been requested for execution but cannot be enforced because the debtor has fled the place of residence; or the debt has been sued for recovery but the case has been suspended. The enterprise shall estimate the unrecoverable loss (maximum equal to the value of the debt recorded in the accounting book) to make provision.

See additional regulations in Circular 48/2019/TT-BTC effective from October 10, 2019.

Thu Ba

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