Official Dispatch 25944/CTBDU-TTHT Binh Duong 2024 on exchange rate upon creation of invoices

In response to the Document No. SR-AC202409001 dated September 12, 2024 of SR SUNTOUR (VIETNAM) CO.,LTD (hereinafter referred to as “Company”) regarding the exchange rate for issuing invoices when the payment for goods has been received in advance, the Tax Department gives the opinions as follows:

- Pursuant to the Law on Tax Administration No. 38/2019/QH14 dated June 13, 2019 of the National Assembly:

+ Clause 1, Clause 2 Article 7 provide regulations on currency used in tax declaration and payment as follows:

“1. The currency used in tax declaration and payment is Vietnam dong, except cases of tax declaration and payment in which freely convertible foreign currencies are allowed to be used.

2. Taxpayers that apply accounting in a foreign currency under the Accounting Law shall convert such foreign currency into Vietnam dong at the actual exchange rate applicable at the time a relevant transaction arises...”

+ Clause 2 Article 42 provide regulations on principles of tax declaration and calculation as follows:

“2. Taxpayers shall calculate by themselves payable tax amounts, unless the tax calculation is conducted by tax administration offices under the Government’s regulations.”

- Pursuant to the Government’s Decree No. 123/2020/ND-CP dated October 19, 2020 on invoices and documents:

+ Article 4 provide regulations on principles of creation, management and use of invoices and documents as follows:

“Article 4. Principles of creation, management and use of invoices and documents

1. When selling goods or providing services, the seller must create an invoice to the buyer (including goods or services for promotion or advertising or used as samples; goods and services donated, granted, presented as gifts, exchanged or given as salary for employees and for internal consumption (except goods internally circulated for further production); and goods loaned, lent or returned); and must fill in all contents as required in Article 10 of this Decree; in case of using e-invoices, the seller must use the standardized data format provided by the tax agency as prescribed in Article 12 of this Decree.”

+ Article 9 provide regulations on invoicing time as follows:

“Article 9. Invoicing time

1. The time of creating an invoice for goods sale (including sale of state property, property confiscated and expropriated to the state fund and sales of national reserve commodities) is the time of transfer of the right to own or use goods to the buyer, regardless of whether the invoiced amount is paid or not.

+ Point c Clause 13 Article 10 provide regulations on contents of an invoice as follows:

“Article 10. Contents of an invoice

...

13. The words, numbers and currency shown on invoices

...

c) The currency in the invoice is Vietnam dong with the national currency sign as “đ”.

- In case of economic and financial operations arising in foreign currencies according to the law provisions on foreign exchange, the unit price, the total amount, the total amount of value-added tax on each tax rate, total amount of value-added tax and total payment shall be displayed in the foreign currency, the currency specified in the foreign currency. The seller shall also show exchange rate between the foreign currency with Vietnam dong on the invoice according to the exchange rates specified in the Law on Tax Administration and its guiding documents.

...”

- Pursuant to Clause 2 Article 4 of Circular No. 80/2021/TT-BTC dated September 29, 2021 of the Ministry of Finance of Vietnam guiding the implementation of a number of articles of the Law on Tax Administration and the Government’s Decree No. 126/2020/ND-CP of October 19, 2020, detailing a number of articles of the Law on Tax Administration:

“Article 4. Freely convertible foreign currencies used in tax declaration and payment and actual exchange rates

...

2. Actual exchange rates must comply with the accounting law.

...”

- Pursuant to Clause 1 Article 8 of Circular No. 219/2013/TT-BTC dated December 31, 2013 of the Ministry of Finance on time of value-added tax (VAT) determination

“Article 8. Time of VAT determination

1. For sale of goods, it is the time of transfer of the right to own or use goods to the purchaser, regardless of whether money has been collected.

...”

- Pursuant to Circular No. 200/2014/TT-BTC dated December 22, 2014 of the Ministry of Finance on guiding the corporate accounting regime:

+ Article 69. Account 413 - exchange differences:

“1. General regulations on exchange rates and exchange differences:

...

1.5. The principle for application of exchange rates in the accounting

a) When incurring transactions in foreign currency, the real exchange rate at the time of incurred transactions shall be used to convert into the currency recorded in accounting book for:

- These accounts recording other revenues, income.  Particularly for the sale of goods or provision of services or income related to revenue received in advance or transactions received cash in advance of buyers, revenue, income corresponding to the sum received in advance shall be applied the real exchange rate at the time of receipt in advance of buyers (not applicable under real exchange rate at the time of recording of revenues, income).

...”

+ Article 79. Account 511- Turnovers from selling goods and provisions of service

“...

3.2. In case turnover from sales and service provision incurred in foreign currency:

- In addition to record in details amount of foreign currency collected or receivable, accountants must base on actual transactional exchange rate at the time economic operation is incurred, to convert into accounting currency unit to account for in account 511 “turnover from sale and service provision”.

- In case of receipt of advance payments of customers in foreign currency, turnover corresponding to the advanced amount shall be converted into the accounting currency unit in accordance with the actual exchange rate at the time of receipt of such advance.

...”

- Pursuant to Circular No. 53/2016/TT-BTC on amending and supplementing a number of articles of the Circular No. 200/2014/TT-BTC dated December 2, 2014 of the Ministry of Finance on guiding the corporate accounting regime:

+ Clause 3 Article 1:

“1.3. Principles to determine the exchange rate:

a) Actual exchange rate for foreign currency-using transactions arising in the period:....

- Where the contract does not specify the payment rate:

+The enterprise makes entries in the accounting books according to the actual exchange rate: when recording the contributed capital or receipt of contributed capital as the foreign currency buying rate of the bank where the enterprise opens its account to receive capital from the investors on the day of capital contribution; when recording the debts receivable as the buying rate of the commercial bank where the enterprise requires its customer to make payment at the time of transaction; when recording the debts payable as the selling rate of the commercial bank where the enterprise is expected to enter into a transaction at the time of transaction; when recording the asset procurement transactions or costs which are paid immediately in foreign currency (not through the accounts payable) which is the buying rate of commercial bank where the enterprise makes payment.

+ In addition to the above actual exchange rate, the enterprise can choose the actual exchange rate as the one which approximates the average rate of selling and buying by transfer of the commercial bank where the enterprise has regular transactions. The approximate exchange rate must ensure that its difference does not exceed+/-1% compared with the average transfer and sale rate. The average rate of selling and buying by transfer is determined daily, weekly or monthly on the basis of arithmetic average between the daily buying rate and selling rate by transfer of commercial bank.

...”

+ Point g Clause 5 Article 1:

“g)When receiving the advance from the buyer in foreign currency to provide the materials, goods, immovable property or services:

- The accountant shall record the advance form the buyer according to the actual exchange rate at the time of receipt of advance, record:

Debit of accounts 111 (1112), 112 (1122)

Credit of account 131 -Receivables from customers

- When delivering the materials, goods, immovable property or services to the buyer, the accountant shall record it on the principle:

+ For the revenues and incomes corresponding to the amount in foreign currency received in advance from the buyer, the accountant shall record it according to the actual exchange rate at the time of receipt of advance, record:

Debit of account 131 – Receivables from customers (actual exchange rate at the time of receiving the buyer’s cash in advance)

Credit of accounts 511, 711.

+For the revenues and incomes whose money has not yet been collected, the accountant shall record according to the actual exchange rate at the time of generation, record:

Debit of account 131 – Receivables from customers

Credits of accounts 511, 711.

...”

According to the above-mentioned provisions, if the Company has a transaction of selling goods in foreign currency in accordance with current law, the creation of invoices shall comply with Article 9 and Point c Clause 13 Article 10 of the Government’s Decree No. 123/2020/ND-CP dated October 19, 2020. If the Company has revenue corresponding to the amount of foreign currency received in advance and the revenue of which the money has not yet been collected, the Company shall record the exchange rate between the foreign currency and Vietnamese Dong on the invoice created to the buyer in accordance with Clause 3 Article 1 of Circular 53/2016/TT-BTC and Point g Clause 5 Article 1 of Circular 53/2016/TT-BTC mentioned above.

The Company shall base on the above-mentioned guidance and the actual business situation at the unit to comply with the regulations.

The Tax Department of Binh Duong province hereby informs the Company for implementation./.

For the Director

The Deputy Director

Nguyen Manh Dong