Laws of Vietnam

THE FINANCE MINISTER

DECIDES:

Article 1.- To promulgate together with this Decision the "Business Household Accounting Regime".

Article 2.- The business household accounting regime shall apply to all production and business households which are not fully qualified for the establishment of private enterprises operating in the fields of industrial production, construction, transport, natural resources exploitation, aquaculture, trade business, food catering, services, repair and other services… with the sale turnover prescribed by the Finance Ministry (The General Department of Tax) for each specific production or business line (hereinafter called the business households).

Article 3.- The business household accounting regime shall take effect for implementation as of January 1, 2001, uniformly apply nationwide and replace the business household accounting regime promulgated together with Decision N0.1271-TC/QD/CDKT of December 14, 1995 of the Finance Minister.

Article 4.- The Tax Departments of the provinces and centrally-run cities shall coordinate with the concerned branches in the localities in assisting the provincial/municipal People’s Committees to guide and inspect business households in the localities in the implementation of this accounting regime.

Article 5.- The presidents of the provincial/municipal People’s Committees and the General Director of Tax, as well as the director of the Accounting Regime Department shall have to implement this decision and guide and inspect the implementation thereof.

For the Finance Minister
Vice Minister
TRAN VAN TA

GENERAL PROVISIONS

Article 1.- All production and/or business households not yet qualified for the establishment of private enterprises operating in the fields of industrial production, construction, transport, natural resources exploitation, aquaculture, trade business, food catering, services, repair and other services,… with sale turnover prescribed by the Finance Ministry (The General Department of Tax) for each specific production/business line (hereinafter referred collectively to as business households) shall have to observe this accounting regime.

Business households which strictly observe the provisions in this accounting regime shall have their accounting figures used by tax offices to calculate taxes.

Article 2.- The business households’ accounting must ensure that all the following major contents must be reflected:

- The quantity and value of assets, supplies, capital money, curent debts being used in production and/or business;

- The quantity and value of purchased goods and services;

- The quantity and value of already sold goods and products, services already provided;

- Expenses already paid for production and business;

- Production and/or business results and amounts of taxes and fees payable to the State, tax amounts refundable (if any).

Article 3.- Business households’ accounting must fully, accurately, promptly and truthfully record all arising economic and financial operations related to the households’ production and business activities. All arising economic and financial operations must be drawn up and fully recorded in the accounting vouchers. All figures inscribed in the accounting books must be evidenced by lawful and valid vouchers. The compilation of vouchers and recording of the accounting book must be compatible with the date of arising. At the end of a month, a quarter and a year, the accounting books must be closed, and tax declaration and lists must be made according to regulations.

Article 4.- Calculation units, currency units and writing system in the accounting:

- The universal writing and numeral systems must be used in the recording of the business households’ accounting;

- For the value, the currency unit used in the accounting recording shall be "Vietnam dong". Foreign currencies in arising economic operations must be converted into "Vietnam dong" at the actually arising exchange rate or the average transaction exchange rate announced by the Vietnam State Bank at the time when the economic operations arise.

- For objects, the calculation units shall be the official measuring units of the State of the Socialist Republic of Vietnam (such as "cai" (a, the), "chiec" (piece), kg, ton, m, sq.m, c.m, liter,…).

Article 5.- The accounting recording must be made in normal, non-fading ink, without blank lines, without abbreviations, without insert writing, overlap writing, and without erasing. Wrong inscriptions, if any, must be crossed out by a red-ink line so as to still be able to see the wrongly-written letters or numerals, then the correct letters or numerals shall be inscribed above and the correctors shall sign their names by the side. If any thing is left out in the inscription, the supplement shall be inscribed above the omission (in normal ink) and the supplement inscriber must sign his/her name by the side.

Article 6.- The business households must assign persons knowledgeable about accounting operations to keep and record the accounting books.

- Accounting books, vouchers and documents must be kept at the production and/or business establishments in service of daily recording and the inspection as well as control by the tax offices and State functional bodies.

- Other accounting books, vouchers and documents must be arranged, preserved and archived for the proper duration prescribed in the State regulations on preservation, archival of accounting documents and materials.

Article 7.- The following acts are strictly forbidden:

1. Selling goods or providing services without writing and handing invoices to the buyers (except for case of retail sale or service provision to consumers with the value of under VND 100,000 for each sale when the buyer does not request the invoice); making untruthful invoices on goods sale or service provision and over-declaration of expenses in order to evade tax or acting in complicity with buyers in order to gain illicit profits.

2. Using invoice and/or voucher forms not prescribed by the State;

3. Putting outside the accounting books the sale turnover, service provision turnover as well as assets, supplies, capital;

4. Forging vouchers, opening books, declaring taxes untruthfully.

Chapter II

REVENUE AND EXPENDITURE ACCOUNTING

Article 8.- Turnover:

1. Turnover is the amount from the sale of goods, products, the provision of services (including additionally collected amounts, surcharges outside the goods sale prices and service provision charges, enjoyed by the business establishments), already collected or not yet collected but accepted for payment by the buyers.

2. Turnover for calculation of taxable income:

a/ For business households liable to pay VAT by tax deduction method, it is the sale price without VAT;

b/ For business households liable to pay VAT by direct method on the added value, it is the total payment prices inscribed on the purchase invoices with VAT.

Article 9.- Production and business expenses:

1. The production and business expenses are those directly related to production and business.

2. The production and business expenses eligible for deduction from the turnover to determine the taxable income must be the expenses actually arising and fully evidenced with lawful and valid vouchers.

3. The contents of production and business expenses of business households shall include the following items:

a/ Fixed asset depreciation;

b/ Expenses for raw materials, materials, fuel, energy, goods and services bought from outside, which have been actually used for production and/or business related to the turnover for calculation of taxable income:

- For business households liable to pay VAT by method of tax deduction, the value of supplies, assets, goods and services bought in is the actual purchase prices without VAT;

- For business households liable to pay VAT by direct method calculated on added value and goods items not subject to VAT, the value of supplies, assets, goods and services bought in is the total payment prices inscribed in the purchase invoices including VAT.

c/ Remuneration and amounts of remuneration nature paid to hired laborers;

d/ House rental, taxes, charges and fees payable by business households (excluding the enterprise income tax and fines):

- House and shop rental shall be calculated according to the sum paid monthly or quarterly. For households which have paid in advance the house and shop rentals for many years, the monthly and yearly payments must be calculated in order to have ground for calculation of expenses.

- The payable taxes, charges and fees to be calculated into expenses shall include:

+ VAT (only for households liable to pay VAT by method of direct calculation on added value can the output VAT amount be calculated into the production and business expenses);

+ Other payable taxes, charges and fees.

e/ The loan interests payable to banks and other subjects. The loan interests payable to other subjects shall not exceed the ceiling interest prescribed by the State Bank for the credit institutions.

f/ Other expenses already paid for production and/or business.

For expenses paid for both the production and/or business and the daily life of households (such as electricity, water, telephone,…), the expenses shall be distributed on the basis of the percentages used for production, business and daily life.

Example: A household dealing in rest house has to pay VND 900,000 for the monthly electricity supply, knowing that the electricity used for business activities represents 2/3, the expense for electricity purchase to be calculated into the expense in the period shall be:

VND 900,000 x 2/3 = VND 600,000

Article 10.- Expense for fixed asset depreciation

1. Fixed assets are those with the unit value of VND 5,000,000 or more and the use duration of over one year.

2. Business households’ fixed assets used in production and/or business activities include: kiosks, stores, goods stalls, tables, cabinets, beds, chairs, television sets, refrigerators, sound system and audio equipment, petrol tanks and measuring, counting equipment for petrol sale, workshops, production machinery and equipment… meeting all conditions for being regarded as fixed assets.

3. Business households may calculate depreciation only for their own fixed assets used for production and/or business activities. The hired fixed assets must not be depreciated. The fixed asset rental may be calculated into business expenses.

4. The price (or value) of fixed assets to be used as basis for depreciation calculation is determined as follows:

+ Procured fixed assets: Based on the asset procurement invoices to determine the prices (value) of fixed assets;

+ Newly built fixed assets: Based on the actual expense for construction of the fixed assets. Where the actual expense for the construction of fixed assets cannot be determined, it shall be based on the construction prices prescribed by the State according to each house grade, each locality in order to determine the price;

+ For fixed assets without adequate vouchers and invoices for use as basis for determination of prices, it shall be based on the actual condition and price of such type of asset or similar asset being sold on the market in order to determine the price.

5. Methods of calculating fixed asset depreciation:

- Based on the prices (value) of fixed assets, estimated use duration to calculate the depreciation:

One-year Price (Value) of fixed asset
depreciation = —————————————
level The number of use years

One-month The one-year depreciation level
depreciation = —————————————
level 12 months

One-quarter The one-year depreciation level
depreciation = —————————————
level 4 quarters

- When calculating annual, quarterly or monthly depreciation of fixed assets, households may round up the odd amounts, if any.

- The number of years of using fixed assets shall be based on the fixed asset-using duration prescribed in the appendix to Decision No. 166-1999/QD-BTC of December 30, 1999 of the Finance Ministry promulgating the regime of management, use and depreciation deduction of fixed assets.

6. The principles for depreciation distribution:

- For fixed assets used totally for production and business, their depreciation shall be fully calculated into production and business costs;

- For assets used both for business and daily life of households:

+ For houses: Based on the areas actually used for production and business to calculate the depreciation to be distributed to production and business;

+ For other fixed assets: Based on use duration of each asset for each purpose (production, business or daily life) to distribute depreciation into production, business.

- The calculation or non-calculation of fixed asset depreciation into the production and business costs shall be made in full month. The fixed assets involved or ceased involving in production and/or business in month t, the depreciation shall be calculated or not calculated from month t +1. The depreciation amount from month t + 1 is calculated according to the formula:

The
The depreciation The The
depreciation amount depreciation depreciation
amount = already + amount - amount
deducted deducted increase decrease
for month t in month in month t in month t
t - 1

7. The business households shall have to make lists of fixed assets used for production and/or business in order to make registration with the tax offices, in which the name, cost price, use duration and annual as well as monthly depreciation level of each fixed asset must be clearly stated. In case of fixed asset increase or decrease, the business household owners shall have to register the asset increase or decrease with the tax offices and adjust the depreciation calculation level.

Article 11.- Taxable income:

A business household’ taxable income shall include:

- Taxable income from production and/or business activities is equal (=) to the turnover of goods sale and service provision, minus(-) reasonable expenses related to goods sale and service provision;

- Other taxable incomes (if any).

Chapter III

ACCOUNTING VOUCHERS

Article 12.- The business households’ accounting vouchers shall include:

- Outside vouchers: are those received by business households from outside agencies, economic organizations and/or individuals, such as invoices on purchase of supplies, fixed assets, goods, services; tax payment notices, tax payment receipts,….

- Vouchers made by business households, including VAT invoice, sale invoice, warehousing bill, ex-warehousing bill, revenue bill, expenditure bill and other vouchers relating to their production and business activities.

Article 13.- All economic and financial operations arising in the production and/or business activities of households must be recorded in accounting vouchers. All data inscribed on accounting books must be evidenced with lawful and valid accounting vouchers. An accounting voucher is made only once strictly according to reality, time and location where the economic operation has arisen by placing carbon papers to write once for all copies. Depending on the nature of things and the State management requirements, the accounting vouchers must be made according to set form (compulsory voucher) or guided forms (guiding vouchers). For guiding vouchers, basing themselves on guiding norms, the business households may apply in a way suitable to their production and/or business characteristics.

- The lawful accounting vouchers are those made strictly according to set forms, the inscription thereon must be in line with the contents and nature of the arising economic operations and such economic operations must be in accordance with law provisions, affixed with all necessary signatures and seals of business establishments (if any) as prescribed for each type of voucher.

- The valid accounting vouchers are those made by correct methods, orders prescribed for each type of voucher and fully inscribed with the following details:

+ Appellation, issuance date and serial number of the voucher;

+ Name, address of the business household that makes the voucher;

+ Name, address of the business household that receives the voucher;

+ Summarized content of arising economic operation;

+ Name, label, quality specification, quantity, unit price, payment price of each type of supplies, product, goods, service;

+ Total money amount in numerals and words;

+ Signature of person responsible for the accuracy and truthfulness of the economic operation.

Article 14.- Depending on the characteristics of production and business activities, the business households must use a number of following vouchers:

a/ Compulsory vouchers

- VAT invoice applicable to VAT payers by deduction method (Form No.01/GTKT- 3LL and Form No. 01/GTKT-2LN).

- Sale invoice (applicable to VAT payers by direct method and the goods and service types are not liable to VAT) (Form No.02/GTTT- 3LL and Form No.02/GTTT-2LN).

- The list of agricultural, forestry, aquatic products,… bought directly from producers (Form No.04/GTTT).

- The list of retail goods, services (Form No.05/GTTT).

- Exwarehousing-cum- internal transport bill (Form No.03- VT).

- Table of payment for agency, entrusted goods (Form 14-BH).

- Delivery bill for goods consigned to agency sale (Form 04- XKDL- 3LL).

- Assorted tickets (train, car tickets, entertainment and recreation ticket, vehicle watch ticket, custody ticket,…).

b/ Guiding vouchers

- Warehousing bill. Form No.01-VT

- Exwarehousing bill Form No.02-VT

- Workday sheet Form No.01- LDTL.

All types of invoices and vouchers relating to the goods sale and service provision shall be printed and distributed by the Finance Ministry; the business households shall have to buy them from the tax offices.

Chapter IV

ACCOUNTING BOOKS

Article 15.- Accounting books are those made according to prescribed form, which are closely interrelated and used for recording arising economic operations on the basis of data of the accounting vouchers.

- The business households’ accounting books must be bound in volumes, page-numbered and affixed with page-overlapping seals of tax offices. Their covers must be clearly inscribed with the names of the business households, tax payment codes, business locations, names of books, number of pages, date of book opening, the names of book keepers and recorders.

- On the first day of the year or when starting the business registration, the business households must open new accounting books, make a list of accounting books suitable to the method of tax determination, already registered with the district tax offices by the business households.

- When books are finished, the business households must open new books and transfer all relevant figures from the old accounting books into the new ones.

- The business households defined in Article 1 of this regime shall practice the recording of accounting books by method of "single entry".

- Daily, based on the accounting vouchers to make entries in relevant accounting books.

- At the end of each month, each quarter and each year, data in books must be added up in order to determine the turnover of sale of products, goods, the provision of services: the payment price with VAT (for households paying tax by direct method) or the payment price without VAT, and the payable VAT amount (for households paying VAT by the deduction method); the value of goods bought in, sold, left in stock at the end of the period; the production and business expenses arising in the period. To compare figures of accounting books; to compare figures on accounting books with actual figures on cash in funds and supplies, products, goods left in stock or at sale counters, on production lines and debts to be recovered, to be repaid….

Article 16.- Depending on the method of determining the payable VAT amounts, business households shall open the following accounting books:

1. Business households subject to VAT payment by the tax deduction method shall open the following compulsory accounting books:

1- Sales journal (Form No.S01- HKD);

2- Purchase journal (Form No.S02- HKD);

3- Production,business cost book (Form No.S03-HKD);

4- Detail book on materials, products, goods (Form No.S04- HKD);

5- Schedule of supplies, products, goods rotation (Form No.S05-HKD);

6- Table of fixed assets registered for use in production, business (Form No.S06-HKD).

2. Business households subject to VAT payment by direct method shall open the following compulsory accounting books:

a/ For business households which buy and sell goods and/or provide services with adequate invoices, purchase and sale vouchers, record the accounting books fully and calculate tax directly on added value shall open the following accounting books:

1- Sales journal (Form No.S01-HKD);

2- Purchase journal (Form No.S02-HKD);

3- Production, business cost book (Form No.S03-HKD);

4- Detail book on materials, products, goods (Form No.S04-HKD);

5- Sheet of supplies, product, goods rotation (Form No.S05-HKD);

6- Table of fixed assets registered for use in production, business (Form No.S06- HKD).

b/ Business households which have fully made sale invoices, vouchers and correctly determined the sale turnover but lacked vouchers and invoices on goods purchase and business households which are subject to tax fixing shall open the following accounting book:

1. The sales journal (Form No.S01-HKD).

Apart from the above-mentioned compulsory books, depending on the management requirements, business households may additionally open "book for monitoring cash, deposit money" (Form S07-HKD), "book for monitoring to be- recovered debts" (Form S08-HKD), "book for monitoring debts to be repaid" (Form S09-HKD).

Chapter V

ASSET INVENTORY AND ACCOUNTING INSPECTION

Article 17.- At the end of each month, the business households shall have to conduct the inventory of supplies, products and goods left in stock, at sale counters and the value of unfinished products being produced in order to make the "Table of supplies, products, goods rotation" and the declaration on VAT and enterprise income tax as provided for by tax laws and submit them to the district tax offices as scheduled.

At the end of each year, before closing accounting books, the business households shall have to inventory their assets, supplies, products, goods and capital money still available, list and compare debt amounts in order to ensure that the figures on accounting books are compatible with reality.

Article 18.- The business households shall be subject to the financial, tax and accounting inspection by competent State functional bodies.

The contents of accounting inspection include the inspection of the truthfulness, accuracy, fullness and timeliness of the recording, calculation and reflection on accounting vouchers, accounting books; the inspection of the observance of financial and accounting policies and regimes as well as the fulfillment of tax obligations towards the State.

The business household owners shall have to abide by the accounting inspection decisions of the competent bodies and to fully supply necessary accounting data and documents in order to facilitate the financial, accounting and tax inspection.

Chapter VI

ORGANIZATION OF IMPLEMENTATION

Article 19.- The business household owners shall have to strictly observe the provisions in this accounting regime.

For business households which have recorded, reflected accounting data inaccurately, untruthfully, the tax offices may refuse to accept the data on their accounting books as basis for tax calculation but base on the inspection documents to fix the turnover for tax calculation and the taxable income as prescribed by tax laws.

Article 20.- The administration at all levels (urban district, rural district, ward, commune) and functional branches such as police, finance, market management,… shall have to coordinate with the tax branch in guiding the inspection and handling of business households which deliberately fail to apply this accounting regime. All acts of covering up the above-said wrong doings by households shall be handled according to law.

For the Finance Minister
Vice Minister
TRAN VAN TA