– Pursuant to Clause 4, Article 2 of Circular No. 26/2015/TT-BTC dated February 27, 2015 of the Ministry of Finance guiding on value-added tax and tax administration in Decree No. 12/2015/ND-CP of the Government dated February 12, 2015 detailing the implementation of the Law amending and supplementing a number of articles of the Law on Taxation and amending and supplementing a number of articles of the Decrees on Taxation and amending and supplementing a number of articles of Circular No. 39/2014/TT-BTC dated March 31, 2014 of the Ministry of Finance on invoices for selling goods and providing services, specifically:
“4. Article 27 is amended as follows:
“Article 27. Tax payment currencies; determination of revenues, expenditures, taxable prices, and amounts payable to state budget.
…3. If there are revenues, expenditures, taxable prices in foreign currencies, they must be converted into VND at the practical exchange rates according to instructions of the Ministry of Finance in Circular No. 200/2014/TT-BTC dated December 22, 2014 on corporate accounting practice:
– The actual exchange rate for revenue statement is the buying rate announced by the commercial bank where the taxpayer’s account is opened.
– The actual exchange rate for cost accounting is the selling rate announced by the commercial bank where the taxpayer’s account is opened at the time of the foreign currency payment transaction.
– Other specific cases comply with the guidance of the Ministry of Finance in Circular No. 200/2014/TT-BTC dated December 22, 2014“
– Pursuant to Circular No. 200/2014/TT-BTC dated December 22, 2014 of the Ministry of Finance guiding the enterprise accounting regime:
+ Article 3 provides for monetary units in accounting, as follows:
“Article 3. Monetary unit in accounting
“Monetary unit in accounting” means Vietnamese dong (national sign: “đ”; international sign: “VND”) used for bookkeeping, preparation and presentation of financial statements of enterprises. If an accounting unit that mainly receives revenues and pays expenses in foreign currencies, provided that it conforms to standards prescribed in Article 4 of this Circular may choose a type of foreign currencies as a monetary unit for bookkeeping.
+ Article 4 provides for the selection of monetary units in accounting:
“Article 4. Selection of monetary unit in accounting
1. Any enterprise that mainly receive revenues and pays expenses in foreign currencies shall base on regulations of the Law on accounting for consideration of selection of monetary unit in accounting and take legal responsibility. When selecting the monetary unit in accounting, the enterprise must notify supervisory tax authority.
2. The monetary unit in accounting means a monetary unit meeting requirements below:
a) It is mainly used in sales, provisions of services of the enterprise, which have great impact on selling prices and service fees and it is normally used as posting prices and used for payments; and
b) It is mainly used in purchases of goods or services, which have great impact on labor costs, materials costs and other production costs or operating costs and it is normally used for payments of that costs…”
+ At point 1.3a, point 1.5, clause 1, Article 69 provides guidance on exchange rates and exchange rate differences.
“1.3. Principles of determining the actual exchange rate:
a) Actual exchange rate for foreign currency transactions arising in the period:
….
+ Actual exchange rate when recording receivables: is the buying rate of the commercial bank where the enterprise designates the customer to pay at the time of the transaction;
+ Actual exchange rate when recording a liability: Is the selling rate of the commercial bank where the enterprise intends to transact at the time the transaction occurs.
….
1.5. Principles of applying exchange rates in accounting
a) When transactions in foreign currencies arise, the actual exchange rate at the time of arising transactions is used to convert into the accounting currency for:
– The accounts reflect revenue and other income . Particularly in the case of selling goods, providing services or income related to revenue received in advance or transactions receiving money in advance from the buyer, the revenue and income corresponding to the amount received in advance will be applied the actual exchange rate at the time of advance receipt from the buyer (not applicable at the actual exchange rate at the time of revenue and income recognition).
– The accounts reflect production, business and other expenses. Particularly in case of allocating prepaid expenses to production and business expenses in the period, the expenses are recorded at the actual exchange rate at the time of prepayment (not applicable at the actual exchange rate at the time of expense recognition)… ”
– In addition, if the Company pays income to foreign employees in foreign currency, it must convert that income into VND for deduction, declaration and payment of personal income tax at the actual buying exchange rate of the commercial bank or credit institution where the Company opens the account at the time of the transaction. Refer to Article 13 of Circular 92/2015/TT-BTC dated June 15, 2015 of the Ministry of Finance amending and supplementing Article 5 of Circular No. 111/2013/TT-BTC dated August 15, 2013 of the Ministry of Finance as follows:
“Article 5. Converting taxable income into VND
1. Revenues and incomes subject to PIT are expressed as VND
Revenues and taxable incomes received in foreign currencies must be converted into VND at the buying rate of the bank where the person opens the transaction account at the time incomes are earned.
In case a taxpayer does not have a transact account in Vietnam, foreign currencies shall be converted into VND at the buying rate of Vietcombank at the time incomes are earned.
The foreign currencies without rates of exchange into VND shall be converted into a foreign currency that has a rate of exchange into VND.
2. Non-cash taxable incomes must be converted into VND at the market prices of such products/services or the similar products/services when the incomes are earned.”