Some notes when preparing annual financial statements, corporate income tax settlement, personal income tax settlement; deadline for submitting financial statements & tax settlement dossiers according to regulations.
The end of the year is a time when businesses and accountants are very busy because they have to prepare tax settlements and annual financial reports. So when making these reports, what should accountants and businesses pay attention to? Let’s find out with fdiinvietnam.com right away.
I. What is a financial report? Notes when preparing a business financial report
1. What is a financial report?
Pursuant to Clause 1, Article 3 of the Accounting Law No. 88/2015/QH13, financial statements (FS) are the economic and financial information system of an accounting unit presented according to the form prescribed in the Accounting Regime and Accounting Standards.
In other words, financial statements show information about the results of production and business activities, financial situation, and cash flow of an enterprise over a specific period of time in written form according to regulations and standards.
According to regulations, all enterprises in all fields are obliged to prepare and submit financial statements accurately and on time.
2. Annual financial report documents applicable to enterprises
2.1. For small and medium-sized enterprises operating continuously
➨ According to Circular 200/2014/TT-BTC, the annual financial reporting dossier applicable to small and medium-sized enterprises operating continuously includes:
➨ According to Circular 133/2016/TT-BTC, the set of financial statements applicable to small and medium-sized enterprises operating continuously includes:
2.2. For small and medium enterprises that do not meet the going concern assumption
The set of financial statements applicable to small and medium-sized enterprises that do not meet the going concern assumption includes:
3. Points to note when preparing corporate financial reports
To prepare correct and complete financial reports, accountants need to pay attention to checking the following figures:
3.1. Carry forward undistributed profits at the beginning of the year
| In case of profit | Debit account 4212
There is account 4211 |
| In case of loss | Debit account 4211
Have account 4212 |
3.2. Record and pay business license fees
| Record the subject license fee payable | Debit account 6422 (TT133)/account 6425 (TT200)
There is account 3339 (TT133) |
| Pay business license fee | Debit account 3339
Credit account 1121/1111 |
3.3. Cash book
Beginning balance of account 111:
- Ensure that the balance does not go negative at any point during the year;
- In case of negative balance, it is necessary to recheck the order of cash receipts and payments and find a solution;
- Measures to handle negative cash fund:
- Carry out procedures to increase charter capital, record: Debit account 111, 112/Credit account 411;
- Record purchases of goods and services on account 331 and pay after having cash (note the actual payment period and the payment period specified in the contract to avoid late payment costs);
- Making a contract to borrow money from the director with interest and without interest is the method that most accountants often use to have a temporary source of money. However, it is important to pay the full amount and interest on time on the contract, recording: Debit account 111/Credit account 3388, 341.
3.4. Bank deposit book
- Ensure that the balance does not go negative at any point during the year;
- Compare bank deposit book account 112 with subsidiary ledger, bank statement, carefully check monthly balance and ending balance.
3.5. Calculation and payment of provisional corporate income tax
- Based on the results of production and business activities to determine the provisional corporate income tax amount to be paid to the State budget quarterly according to regulations, record: Debit account 8211/Credit account 3334;
- When paying corporate income tax to the state budget, record: Debit account 3334/Credit account 111/112.
3.6. Deductible VAT
Check the balance of indicator [43] on the VAT declaration of December or quarter 4 compared with the ending balance of account 1331:
- Normally, when declaring correctly and fully the monthly/quarterly invoices, the balance will be equal;
- The balance of account 1331 will be greater than the balance on indicator [43] in case the declared purchase invoice is not correct or complete.
3.7. Accounts receivable
- View, compare and contrast the summary and details of receivables to match reality;
- Make a debt reconciliation report for customer receivables as of December 31 (debit account 131);
- Check whether the collected amounts are subject to invoice issuance according to regulations (creditor account 131).
3.8. Accounts Payable
- Make a debt reconciliation report for payables to suppliers as of December 31 (debit account 331);
- Check whether contractual payables are overdue or not (credit side of account 331).
3.9. Inventory
- Check the imported goods are of correct quantity and price;
- Exporting the right quantity, with the warehouse price calculated (do not export more than the quantity in stock);
- Note inventory provision (if any).
3.10. Advance payment
Check and compare to refund unused advance payment (account 141).
3.11. Allocation of prepaid expenses and tools and equipment (CCDC)
- Ensure that prepaid expenses and CCCD have been fully recorded and allocated (TK 242);
- The monthly allocation amount on the allocation table must match the ledger (TK 242).
>> Learn more: How to calculate and account for tool allocation.
3.12. Fixed assets and fixed asset allocation
Depreciate fixed assets for production and business purposes, check reasonable and unreasonable costs.
3.13. Taxes payable
- VAT: Based on monthly/quarterly VAT declaration and tax payment documents for accounting and inspection;
- Personal Income Tax: Check monthly/quarterly payable personal income tax in accordance with personal income tax declaration, prepare annual settlement as basis for financial statement preparation.
3.14. Salary and salary deductions
- Compare the recorded data with the payroll and salary payment documents;
- Compare insurance payment process with data from social insurance agency.
3.15. Revenue
- Check and ensure full and correct accounting;
- Determine taxable and non-taxable revenue to facilitate corporate income tax settlement.
3.16. Cost of goods sold
- Determine deductible and non-deductible cost of goods sold;
- Check the calculated data against the norms and basis for calculating the cost (note not to exceed the allowed norms);
- Transfer of cost of goods.
3.17. Incurred expenses
- Selling expenses & business management expenses: Accountants check the records, documents and invoices related to expenses to see if they are complete and valid to determine reasonable and unreasonable expenses;
- Interest expenses: Check the full cost profile to see if it is controlled because it belongs to related party transactions (based on Decree No. 132/2020/ND-CP issued on November 5, 2020) to determine reasonable and unreasonable costs.
Note:
Invoices with a total value of 20 million VND or more or invoices purchased on the same day from a supplier with a total value of 20 million VND or more must be paid by bank transfer from the company account to be included in sales expenses & business management expenses.
3.18. Other accounts
In order to fully and accurately summarize the arising transactions, accountants base on the actual arising transactions at the enterprise and records and documents to check and review accounting data before preparing financial statements and tax settlement.
3.19. Monthly profit and loss transfer, ending balance
Transfer all revenue and expenses to account 911 (determine business results), ensuring that the revenue account, cost of goods sold account and expense account have no ending balance.
3.20. Determining and accounting for corporate income tax payable
At the end of the year, based on the production and business results to determine the amount of corporate income tax payable for the whole year.
➨ In case the actual corporate income tax payable < Corporate income tax provisionally paid during the year
- Record the difference: Debit account 3334 / Credit account 8211.
➨ In case the actual corporate income tax payable > Corporate income tax provisionally paid during the year
- Accounting for tax difference: Debit account 8211 / Credit account 3334;
- When paying money to the State budget, record: Debit 3334 / Credit 111,112;
- Make a journal entry to transfer current corporate income tax expense from account 8211 to account 911.
3.21. Transfer of business and production results to undistributed profit after tax
| Interest carryforward | Debit account 911
Have account 421 |
| Loss carryover | Debit account 421
Have account 911 |
>> See details: How to prepare financial statements according to Circular 200.
II. Corporate income tax settlement
Enterprises need to note the following points when declaring corporate income tax (CIT):
1. Determine the exact corporate income tax rate, whether the enterprise is eligible for preferential tax rates according to regulations or not, and note the preferential period to avoid under-calculating the corporate income tax payable.
2. Determine non-deductible expenses according to Clause 2, Article 9 of the Law on Corporate Income Tax 2008.
3. Choose the appropriate tax period when making a declaration according to the following steps:
➤ Step 1. Select settlement case
➤ Step 2. Select the tax settlement period that matches the fiscal period registered with the tax authority, the time of declaration submission (first/additional) and select the appropriate accompanying declaration appendix
➤ Step 3. Declare the appendix before filling out the declaration form
4. Compare the data on the newly prepared corporate income tax settlement with the financial statements before sending them to the tax authority.
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In addition, according to the Law on Corporate Income Tax 2008, Decree 218/2013/ND-CP, Decree 91/2022/ND-CP, Circular 96/2015/TT-BTC and some other general regulations that enterprises need to know when settling corporate income tax are:
- At the end of each quarter, if the enterprise temporarily calculates a profit, it must temporarily pay corporate income tax no later than the 30th day of the first month of the following quarter, including temporarily paying corporate income tax to the provincial-level locality where the dependent unit, business location or transferred real estate is located, which is different from the place where the enterprise has its head office;
- The total amount of corporate income tax provisionally paid for 4 quarters must not be less than 80% of the corporate income tax payable according to the annual settlement.
>> Refer to related article: Instructions for corporate income tax settlement.
III. Personal income tax settlement
1. Who must pay personal income tax?
Pursuant to the provisions of Point d, Clause 6, Article 8 of Decree 126/2020/ND-CP, subjects required to finalize personal income tax include:
1.1. Organizations and individuals paying salaries and wages
Organizations and individuals paying income will settle taxes on behalf of authorized individuals regardless of whether tax is deducted or not.
Accordingly, resident individuals with income from salaries and wages are authorized to settle personal income tax for organizations and individuals paying income if they fall into one of the following two cases:
➤ Case 1 : Individuals with income from salaries and wages sign labor contracts of 3 months or more at one place and are actually working at that place at the time the organization or individual pays the income to make tax settlement, even if they do not work for 12 months in a year. In case the individual is an employee transferred from the old organization to the new organization according to the provisions of Point d.1, Clause 6, Article 8 of Decree 126/2020/ND-CP, the individual is authorized to make tax settlement for the new organization.
➤ Case 2 : Individuals with income from salary and wages sign labor contracts of 3 months or more at one place and are actually working there at the time the organization or individual pays income for tax settlement, including cases where they do not work for 12 months in the year; at the same time, they have irregular income in other places with an average monthly income of no more than 10,000,000 VND in the year and have had personal income tax deducted at a rate of 10% if there is no request for tax settlement for this income.
1.2. Individuals with income from salaries and wages
Individuals with income from salaries and wages who directly settle taxes with tax authorities include the following subjects:
- Individuals with additional/overpaid tax amounts may request a refund/offset in the next declaration period, except in the following cases:
- The amount of tax payable after settlement of each year is less than 50,000 VND;
- Tax payable < Provisional tax paid and no refund required but offset to the next period.
- Individuals present in Vietnam for less than 183 days in the first calendar year, but for 12 consecutive months from the first day of presence in Vietnam for 183 days or more;
- Foreigners whose work contracts in Vietnam have expired must settle their payments before leaving the country.
See related articles:
>> Instructions for online personal income tax settlement;
>> How to make a personal income tax declaration.
2. Family deduction for personal income tax payers
Personal income tax payers are entitled to annual family deductions as follows:
- Personal family deduction: 11,000,000 VND/month;
- Dependent deduction: VND 4,400,000/month (calculated based on actual month of care – in case of registration and issuance of dependent tax code).
You may be interested in:
>> What is a dependent?
>> How to register for a dependent tax code.
IV. Deadline for submitting tax settlement and annual financial report
1. Deadline for submitting annual financial statements
The deadline for submitting annual financial reports is specifically stipulated as follows:
- For small and medium enterprises and other enterprises: The deadline for submitting financial statements is no later than the 90th day from the end of the calendar year or fiscal year;
- For private enterprises and partnerships: The deadline for submitting financial statements is no later than 30 days from the end of the fiscal year.
2. Deadline for submitting corporate income tax finalization dossier
Pursuant to Article 44 of the Law on Tax Administration 38/2019/QH14, the deadline for submitting corporate income tax finalization is specifically prescribed as follows:
- For annual tax settlement dossiers: Deadline for submission is the last day of the third month from the end of the calendar year/fiscal year;
- For tax settlement dossiers of enterprises that split, merge, consolidate, etc.: The deadline for submission is the 45th day from the date of decision on this matter.
3. Deadline for submitting personal income tax finalization dossier
Pursuant to Clause 2, Article 44 of the Law on Tax Administration No. 38/2019/QH14, the deadline for submitting personal income tax finalization dossiers is specifically prescribed as follows:
- For individuals authorizing personal income tax settlement through enterprises: The deadline for submitting documents of enterprises is no later than the last day of the third month from the end of the calendar year;
- For individuals directly making personal income tax settlement: The deadline for submitting documents is the last day of the 4th month from the end of the calendar year.
V. Frequently asked questions when preparing tax settlement and annual financial statements
1. How to handle incorrect submitted financial statements?
In case the submitted financial report is incorrect, it must be supplemented or resubmitted before the tax authority makes a decision to inspect or examine.
2. Can financial statements for two consecutive years be combined?
Yes. However, to be able to combine financial statements, enterprises need to meet the following conditions:
- The accounting period of the first/last year is shorter than 3 months;
- The total annual accounting period of two consecutive years combined is less than 15 months;
- Submitted the request to merge financial statements and corporate income tax period to the tax authority on time.
3. Does a newly established company that has not yet generated invoices have to submit financial statements and tax settlement?
Yes. According to regulations, all enterprises are required to submit financial statements, corporate income tax settlement and personal income tax settlement, regardless of whether invoices have been issued or not.