Vietnam: Determining principles for recognizing revenues of microfinance program/project

According to Article 6 of Circular No. 37/2019/TT-BTC of the Ministry of Finance of Vietnam, revenues of the MF program/project shall be recognized according to the following principles:

- The recognition of and accounting for revenues, taxable corporate income shall conform to Vietnam’s accounting standards, the Law on Corporate Income Tax, guiding documents of the Law on Corporate Income Tax and relevant legislative documents.

- Regarding revenues from interests and similar income:

+ Revenue from interests on microfinance loans: The MF program/project shall record the interest receivable arising in the period to income with respect of loans within the terms. Regarding receivable interests on overdue loans, the MF program/project is not required to record them to the income but record them off-balance sheet to urge the receipt, once they are collected, they shall be recorded to the income.

+ Revenue from deposits: receivable interests on deposits of the MF program/project at credit institutions within the terms.

- Revenue from grant aids to carry out development programs, activities of the MF program/project apart from collection and payment: which is the actual amount at the time when the grant aid is received.

- Regarding revenues earned from exchange differences due to revaluation of foreign currencies and gold: the MF program/project shall recognize the revenues in accordance with accounting standards and relevant provisions of law.

- Regarding revenue from other activities: proceeds from sale of products, goods, provision of goods arising in the period that clients accept to pay (with valid documents, if any), regardless of whether cash has been collected or not.

- Regarding receivable revenues which were recorded to income but are considered uncollectible or uncollectable when they are due, the MF program/project shall record them as reduction in revenue, in case of within the accounting period, record them as expenses, in case of different accounting period and record them off-balance sheet to urge the collection. Once the revenue is collected, it must be recorded as income.

View other provisions at Circular No. 37/2019/TT-BTC of the Ministry of Finance of Vietnam, effective from August 09, 2019.

Thu Ba

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