Recognition principle of revenue of microfinance institutions in Vietnam

According to Article 6 of Circular No. 18/2018/TT-BTC of the Ministry of Finance of Vietnam, determination of revenue for the purpose of calculation of corporate revenue tax shall be done in accordance with the Law on corporate revenue tax and its instructional documents. Specifically, for each revenue, there will be different recognition principles:

* With regard to interest revenue and similar revenue:

- Interest revenue from credit extension: Every microfinance institution shall evaluate the debt recoverability and classify debts as prescribed in the Law on banking as the basis for accounting for interests receivable as follows:

- The microfinance institution shall record the interest receivable in the period as revenue associated with the debts classified as standard debts for which loss reserves may not be set aside as regulated by the State Bank of Vietnam;

- The interest receivable of debts remaining classified in the standard debt category as a result of implementing the State policies and the interest receivable in the period of remaining debts shall not be recorded as revenue. In such cases, the microfinance institution shall monitor them in off-balance sheet so as to expedite the collection. They shall be recorded as revenue, when collected.

- Deposit interest revenue is the amount of deposit interest receivable during the period.

* Revenue from grants received by a microfinance institution for implementing its development programs and operations shall be actual amounts of grants received.

* Microfinance institutions shall recognize revenue from foreign exchange differences as a result of revaluation of foreign currency and gold in conformity with accounting standards and applicable laws.

View details at Circular No. 18/2018/TT-BTC of the Ministry of Finance of Vietnam, effective from March 29, 2018.

Thu Ba

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