FACULTY OF ACCOUNTING – AUDITING --- BACHELOR THESIS THE VALUE-ADDED TAX AND CORPORATE INCOME TAX ACCOUNTING PROCESS AT FPT SOFTWARE HOCHIMINH COMPANY LIMITED Lecturer: Assoc... Cơ sở
The necessity of the report’s topic
Taxes play a crucial role in the State Budget, serving as a primary revenue source for social construction and development As economic conditions evolve, tax systems are adapting to meet these changes Among the most significant taxes in this transformation are the value-added tax and corporate income tax, which are essential tools for effective management and regulation of Vietnam's economy.
VAT and CIT have been implemented in our country for over 20 years, undergoing numerous amendments to enhance management effectiveness Additionally, accountants must stay updated on new regulations to ensure prompt application within their businesses Each enterprise, varying in production lines and business models, requires tailored approaches to applying VAT and CIT, emphasizing the need for businesses to adapt accordingly.
Agency must always work together to provide the highest possible support may be for the benefit of both parties
Realizing that importance and being exposed to tax accounting work during the internship at FPT Software Hochiminh Co Ltd, the author has chosen the topic
“The VAT and CIT accounting process at FPT Software HCMC Ltd.”
Objectives of the report
- Applying knowledge learned at school to apply in practice to recognize the similarities and differences between theory and practice
- Describe the tax accounting process of FPT Software Hochiminh Co Ltd
- Assess and provide commentary on the VAT, CIT process of FPT Software Hochiminh Co Ltd., thus giving recommendations in respect of the remaining problems
- Read, research documents on accounting, tax accounting of FPT Software Co Ltd To grasp the accounting process;
- Directly observing accountants and participating in the accounting work of FPT Software Hochiminh Co Ltd
- Discuss and interview experienced accountants and practitioners to help better understand the accounting process.
Subject, scope, and the limitations of the report
- Subject: The VAT, CIT accounting process at FPT Software HCMC Ltd
- Scope: Value- Added tax in November 2022 and Corporate Income tax 2021
FPT Software Co Ltd maintains stringent requirements for customer information security, which means that all figures, spreadsheets, proofs, and vouchers provided are for illustrative purposes only Consequently, the practical application of the topic may be limited.
Report structures
The report consists of 3 main chapters, including:
OVERVIEW OF FPT SOFTWARE Hochiminh Co Ltd
Introduction about FPT SOFTWARE Hochiminh Co Ltd
Company’s Name: FPT SOFTWARE Co Ltd
Address: FPT Ho Chi Minh Lot T2, Street D1, High-tech Park, Tan Phu Ward, District 9, Ho Chi Minh city, Vietnam
Websites: https://www.fpt-software.com/
FPT Software, a key player in the FPT Ecosystem, is a leading company in technology and digital transformation in Vietnam Established 24 years ago, it operates three main offices in Vietnam—Hanoi, Da Nang, and Ho Chi Minh City—and has expanded its presence to 178 offices across 27 countries and territories worldwide as of 2022.
1.1.2 History of formation and development
FPT Software, founded on January 13, 1999, aimed for globalization with a focus on software export Initially seen as an inexperienced company, it quickly gained a reputation for quality The dedication of its team led to the signing of its first software development contract with a client in Belgium in 2000.
After 10 years of pursuing the strategy of bringing the name of a software company abroad, FPT software has been present in Japan, Singapore, the USA, Australia, and Malaysia as planned In 2001, FPT Software registered its name as the first software company in Vietnam to reach 200 million USD in sales with more than 10,000 employees working in 2016
In 2020, the company was taking steps towards digital transformation to catch up with the global trend with technology solutions for Artificial Intelligence, Big Data, and Cloud Computing…
FPT Software is known as the leading technology company in Vietnam because the main industries focus on developing software technology and applying it in specific industries, including:
Therefore, FPT Software is promoting support for the development of technology segments for a variety of industries at home and abroad
The Chief Executive Officer (CEO) serves as the representative of the Board of Management, overseeing the comprehensive management and strategic development of the entire company Each subsidiary and international branch is led by its own General Director.
In addition, the company also appoints directors for each field, including:
⚫ Head Office block like Delivery
⚫ Back Office block such as Quality Office, Finance, HR, Information and
⚫ In addition, there is a shared block without a director responsible for the organization of events, culture and sports for the company
- The chief accountant in each branch is responsible for the accounting and finance of the branch he is working for
- The chief accountant is responsible for making financial statements and finalization and then sending them to the Finance Director, Board of Directors, and tax authorities
The main tasks of the chief accountant include:
⚫ Approve payments to suppliers and employees;
⚫ Considering debts of suppliers, customers, ;
⚫ Approve financial statements and settlements for the year;
⚫ Assign work to another accountant to record and collect data for each financial transaction
- Tax accountant: responsible for collecting data for tax reporting before sending to Chief Accountant for approval; ask and answer dispatches from the Tax
Chief Accountant in each branches
Tax Accountant Bank Accountant Cost Accountant Revenue
- Cost accountant: responsible for receiving sufficient and reasonable input invoices to record in expenses; record payment deadlines on the Company's accounting system;
- Revenue Accountant: make sales invoices for customers and track payment due dates to make payment proposals; record revenue account;
- Payment Accountant: send money transfer orders through the online Bank to suppliers, plan and monitor the payment;
- Bank Accountant: record, analyze and handle banking-related transactions to manage the use of assets of the enterprise.
Organization of accounting work at the company
1.2.1 Organize the accounting method applied at the company
The company utilizes computer accounting to manage its extensive operations, which generate numerous transactions This approach enables accountants to save time while efficiently analyzing and synthesizing data.
Figure 3: Organization of accounting work
Various departments, including purchasing, sales, and HR, routinely provide vouchers to accountants to document economic transactions such as supplier invoices, bills, contracts, and delivery notes These vouchers serve as evidence for recorded transactions and are essential for posting in ERP Oracle, a tool used for managing accounting accounts and processing payments.
Moreover, accountants save original vouchers following to the different number which are kept in cabinet with lock or storage
At the end of each month and year, accountants finalize their records and prepare financial statements This crucial process involves reconciling the general ledger, detailed ledger, and financial statements to ensure accuracy and integrity in reporting.
With tax accounting, accountant notice the consistency between the accounting book and tax book
Finally, accountants print all detailed book each accounts, financial statement to make a book, write the year in the cover book and store in the cabinet
- Accounting regime: Vietnam Accounting Standards (VAS) according to
Circular 200/2014/ TT-BTC and amended circulars
- Accounting year: from 01/01/N to 31/12/N, the company makes a tax report quarterly, monthly or each time it is incurred in accordance with regulations of law
- General ledger form: computer form
- Inventories using the perpetual declaration method
- Principles of valuation of fixed assets: according to original cost and residual value; depreciated using the straight-line method.
The situation of using computers in accounting at the company
The company uses Oracle ERP software to record, plan and store economic transactions that occur
In addition, the company also uses E-payment software to track invoices, documents, payment due dates and payment orders for suppliers
This software efficiently stores input invoices and assesses their validity based on various criteria, including accurate supplier and customer information, digital certificates, and digital signatures At the end of the reporting period, accountants can generate an input invoice report that highlights which invoices do not meet the necessary conditions for VAT deduction.
FPT Software utilizes the latest HTKK software version 4.9.8 from the State Tax Agency to facilitate tax declaration and E-tax services for the Ministry of Finance The E-tax system aims to streamline the processes of tax declaration, payment, refunds, and notifications from the Tax Department.
IMPLEMENTATION OF VAT ACCOUNTING AT FPT
Legal basis related to the topic
2.1.1 Nature of Value Added Tax and Corporate Income Tax :
According to Article 2 of VAT Law No 13/2018/QH12, value-added tax (VAT) is calculated based on the added value generated from the production of goods and services, ultimately benefiting consumers.
When considering VAT, it is crucial to understand its four key characteristics Firstly, the final consumer is responsible for paying both the price of the goods and the associated VAT, as it is an indirect tax Secondly, VAT operates across multiple stages of production, ensuring that tax is only applied to the value added at each stage, thus preventing duplication of tax from previous periods Thirdly, all goods used for production and consumption in Vietnam, whether imported or domestically produced, are subject to VAT Finally, the broad nature of VAT leads to an extensive regulatory scope.
Corporate Income Tax (CIT) is a direct tax imposed on a business's taxable income, encompassing earnings from production and business activities, real estate transactions, and investment projects.
When considering Corporate Income Tax (CIT), three key points are essential: First, CIT is a direct and uniform tax imposed on taxpayers, with the rate subject to adjustments based on state policy Second, the CIT amount must be regularly updated in accordance with the taxable income of the taxpayer Lastly, CIT is calculated prior to Personal Income Tax (PIT), meaning that dividends and deposits are distributed after CIT has been declared.
The role of VAT and CIT:
In 2020, Corporate Income Tax (CIT) and Value Added Tax (VAT) contributed significantly to the State Budget, accounting for 3.9% and 5.2% of main tax revenues, respectively, according to the Department of Statistics These taxes serve as effective tools for macroeconomic management and economic regulation, as highlighted by Van Thi Quy (2007) Additionally, VAT and CIT enhance business accounting processes by facilitating invoice creation and tax examination, ultimately streamlining operations The encouragement of low-tax goods fosters increased production, boosting consumer demand and driving economic growth Furthermore, relatively high taxes on imports promote the expansion of domestic manufacturing and exports within the VAT framework.
Legal basis on VAT and CIT
In Vietnam, VAT payers include both organizations and individuals involved in the manufacturing and trading of taxable goods and services, referred to as business establishments, as well as those who import goods or acquire services from abroad, known as importers.
When a company transfers the risk and reward of VAT to the customer, VAT is applicable at the point of ownership transfer for goods or upon completion of service provision This means that VAT is calculated regardless of whether the payment has been made.
Taxable price is the price exclusive VAT
Taxable prices of imported goods= import price at border gate + import tax (if any) + special consumption tax (if any) + environmental protection tax (if any)
When calculating VAT for goods and services sold by production and business establishments, the price used is the selling price excluding VAT, while including any applicable special consumption tax or environmental protection fees.
The selling price exclusive of
Some other cases such as leasing, construction, processing goods, etc are similar
- Deduction method: The amount of VAT payable by deduction method is equal to the amount of output VAT minus the deductible input VAT which are written in invoice
Eligible businesses must generate a minimum revenue of 1 billion VND and comply with all regulations related to accounting, invoices, and documentation as mandated by law Additionally, these businesses are required to register for tax payments using the tax credit method.
Tax payable = input VAT- deducted output VAT
The VAT Law categorizes objects into three types: those subject to VAT, those not subject to VAT, and those exempt from declaration and payment of VAT Taxpayers must accurately identify these categories and stay informed about the latest laws, circulars, and amendments to ensure proper tax calculation and avoid penalties for any mistakes.
Initially, goods and services are not subject to VAT which don't input VAT is divided basically into 7 categories including:
Agricultural products and inputs, including unprocessed or minimally processed goods related to farming, breeding, and aquaculture, are essential for trade and importation.
◆ Goods and services served for social reasons such as: health services, veterinary medicine services, life insurance, student insurance, insurance on domestic animals, insurance on plants and reinsurance; etc
◆ Goods and services with international commitments
- Belongings of foreign organizations and individuals within diplomatic immunity quotas; and personal effects within duty-free luggage quotas, etc
◆ Goods not sold in Vietnam
- Goods transferred out of border gate or transited via the Vietnamese territory; goods temporarily imported for re-export goods temporarily exported for re- import
Raw materials imported for the production or processing of export goods are governed by contracts with foreign parties Additionally, trade in goods and services occurs between foreign nations and non-tariff areas, as well as among non-tariff regions.
◆ Below average income of business people
- Goods and services of business households and individuals with an annual turnover of 100 million VND or less;
◆ Goods and services paid by the State
- State budget-funded radio and television broadcasting;
- Special-purpose weapons and military equipment for security and defense purposes
- Transfer of right to use land (hereinafter referred to as land tenure);
- Technology transfer under the Law on Technology Transfer; transfer of intellectual property rights under the Law on Intellectual Property; computer software; etc
The secondly, the objects exempt declare, calculate and pay tax which deducted input VAT can contribute some categories below:
The transaction involves a simple flow of money from one party to another, lacking any exchange of goods or services This means there is no consumption involved, as it does not include monetary compensations, bonuses, allowances, payments for emission permits, or other forms of revenue.
◆ Only liquid assets, no cash flow, so it's not a sales transaction
To establish a new company, assets must be contributed, accompanied by essential documentation including a contribution record, a partnership or cooperation contract, an asset valuation record conducted by a licensed valuation organization or the contributor, and documentation proving the origins of the assets.
Goods circulated internally, including exports to internal warehouses and the transfer of materials and semi-finished products for ongoing production, are exempt from VAT calculation and payment.
Non-business organizations and individuals are exempt from paying VAT on asset sales, as are entities that transfer investment projects related to the manufacturing or trade of VAT-subject goods and services to other companies or cooperatives.
In Vietnam, revenue generated from consumer goods and services includes commissions earned by agents involved in selling products at prices set by the principal This encompasses various activities, such as postal and telecommunications services, lottery ticket sales, and airline ticket sales, all contributing to the overall income from agency operations.
◆ Due to the sale of crop, livestock, aquatic products, and seafood products that have not been processed into other products or are only preliminary processed
In Vietnam, taxable goods and services subject to VAT include those utilized for production, trading, and consumption, encompassing items acquired from foreign entities, with the exception of specific exemptions These taxable goods are categorized into three main VAT rates: 0%, 5%, and 10%.
- Construction and installation overseas and in free trade zones;
-International transport; exported goods and services that are not subject to VAT
- Clean water serving manufacture and everyday life, except for bottled water and other soft drinks
-Fertilizers; ores used for fertilizer manufacture; pesticides and Growth stimulants for plants and animals, etc
- Type of goods and services, whether they are imported, manufactured, processed, or traded
The formula for calculating VAT for taxable entities applying the VAT credit method is: Price including VAT = Taxable price x Tax rate
Deadlines for submission of tax declaration dossiers of taxes declared monthly and quarterly:
- For taxes declared monthly: the 20th of the month succeeding the month in which tax is incurred;
- For taxes declared quarterly: the last day of the first month of the succeeding quarter
Required papers for input VAT deduction:
- Sale invoices or receipts of tax payment at the importation stage;
- There are receipts of non-cash payments for purchased goods and services, except for the purchases below 20 million VND;
When exporting goods and services, it is essential to have a signed contract with a foreign party that outlines the sale, processing, or provision of services Additionally, exporters must provide invoices for the sale of goods and services, non-cash payment vouchers, and a customs declaration for the exported items.
Tax refund is the amount of tax paid to the State Budget that is returned to an enterprise in the following cases:
A business that utilizes the credit-invoice method for VAT payments can carry forward any remaining input VAT after deductions to offset against VAT incurred in subsequent months or quarters.
- Tax refund for new investment projects or oil and gas projects
VAT, CIT Accounting at FPT Software HCMC Co Ltd
2.2.1 VAT at the FPT Software
- FPT Software calculates value added tax by deduction method
- Tax period: calculate tax by month
- VAT objective: software ( not object VAT); exported goods ( VAT 0%); gift for customer (VAT 8%); resold goods, rental revenue ( VAT 10%), etc
- VAT refunds: tax refund for exported goods and services and tax refund for investment projects
In addition, FPT Software is implementing the project of FPT Software
Technology and Product Research and Development Center in Thu Duc City Hi- Tech Park This is defined as an expansion investment project implemented since
2016, the project has not generated revenue yet is still in the construction and development stage
FPT Software has established guidelines for the submission of input documents to the Accounting Department, ensuring that these documents are adequate for recognition and serve as evidence for the Tax and Audit Authority The general process for declaring VAT involves several key steps.
Purchase department Accounting & Finance department Production department Sale department
List of goods and services purchased
List of goods and services selled
Step 1: In term of purchasing, staffs need to gather documents and enter payment request into the online payment system (E payment).After being approved online, print the payment request approved by the department head and submit it to the accounting department with related invoices and hard copy documents
Documents identifying the needs and proving the approved needs include:
✓ Procurement request, budget approval sheet, procurement plan, etc
✓ Decision to send on business trip, report to attend conference
✓ Report of property damage, etc
✓ Contract, contract appendix, agreement (if any)
Regarding on selling, staffs send set of documents to accountants including purchase order, contract, list of customer, completion certification
Step 2: The accountant will check the authenticity of the transaction and the legitimacy of the e-invoices, avoiding the following cases: Invoices with the contents stated on the invoice are not real in part or in whole, etc
Step 3: After the accountant confirms the validity and accuracy of the transaction, the accountants record on general ledger software (Oracle)according to the date the accountant receives the complete documents
Step 4: In the end of month, accountant prepare list of goods and services purchased/ selled based on Account 133, 3331 and they are compared to Ubot software and FPT e-invoice Then accountant do tax distribution table and VAT declaration in HTKK for the month
Step 5: In 18 th every month, Accountant submit VAT declaration to tax department through E-tax and pay tax amount in 20 th every month (if any)
2.2.3 Realistic VAT procedure in the FPT Software
TS 1: On November 1, 2022, Thu Duc Power Company sent an electricity bill for the 3rd period of October, 2022 from October 16, 2022 to October 31, 2022 with a total amount of VND 115,329,904 (excluding VAT 8%)
TS 2: TS 5: On November 12, 2022, the Company bought 3 boxes of medicine to supplement the medical room with the price of 22,857 VND/box (excluding VAT 5%)
TS 3: On November 12, 2022, the company bought a Display-port to
VGA/Display-port to DVI cable for production for 112,000,000,000 (10% VAT included)
Since the cable is a product on the list not eligible for 2% tax reduction under Decree 43/2022/QH15, it is still subject to 10% tax rate
TS 4: On November 17, 2022, the Company organized a health check for employees in the company, medical services are provided by Vigor Health
Company for VND 44,856,000 (excluding VAT 0%)
Following the accounting process on Oracle software, the company will generate an accounting slip to accompany each document set This slip will include essential details such as the accounting date, voucher date, supplier name, relevant transaction information, the account recorded, and the debtor's credit amount.
To analyze the fluctuations in accounting accounts, the company will extract data from the specified ledger format within the software to prepare financial statements This process serves as the foundation for evaluating the firm's financial volatility and overall business performance.
On Oracle accounting software, you will be able to get tax-related account ledgers such as 133, 3311, etc
Figure 5: General ledger for Account 133
TS 5: On November 10, 2022, the company exported computer software to
EUROSAN CO., LTD for 100,000,000 VND
FPT Software Company, which produces software products, is not taxable, so it does not debit Account 3331
TS 6: On November 7, 2022, FPT Software Company exported software to XZY Services (Hong Kong) Limited in Singapore at a price excluding VAT of VND 42,580,242
FPT Software Company exports goods to foreign countries subject to 0% VAT, so account 3331 credits zero
TS 7 On November 30, 2022, FPT Software Company issued an electricity bill to HBS Bank, September 10, and November 11, 2022 at VND 7,240,023 (price excludes 5% VAT)
TS 8 : On November 21, 2022, FPT Software Company issued an invoice for the cost of providing system monitoring services in October and November 2022 at VND 698,661,098 (price includes 10% VAT)
The accountant at the end of the month can export the VAT account payable to the State budget (3331) to track the account's movements in November 2022
Output and input goods and service list
At the end of the tax period, the Company summarizes the invoices according to the output and input list for production and business activities
The output invoice statement is a crucial document for declaring goods and services sold by a manufacturer or business It follows the latest selling list format 01-1/VAT, as outlined in Circular 119/2014/TT-BTC issued by the Ministry of Finance on August 25, 2014.
The declaration of invoices for sold goods and services is essential for accurately reporting sales and cash flows during a specific period This process helps determine the sales amount necessary for completing value-added tax declarations, which must be submitted to customers Additionally, it ensures compliance during inspections and examinations conducted by tax authorities.
Figure 7: List of invoices, documments of goods and services selled
The list of input invoices is a document declaring purchased goods and services The input invoice statement includes the following information: taxpayer information (taxpayer name, tax identification number), invoice information
(invoice number, invoice date), seller information , sales without tax, etc The declaration form 01-2/VAT is made in 2 copies: submitted to the tax authority and kept at the unit
Invoices and vouchers declared on the list 01-2/GTGT include:
Figure 8: List of invoices, documents of goods and services purchased
Accountants prepare distinct lists of goods and services acquired for investment projects, following form 01-2/GTGT as outlined in Circular 119/2014/TT-BTC Consequently, the total for goods and services purchased for the investment project was zero, indicating that no purchases were made in November 2022.
When declaring taxes for FPT Software, it's important to note that the process differs from that of other companies due to its dual revenue streams from both domestic sales and software exports This results in a significant tax deduction amount Additionally, when purchasing goods and services, including fixed assets, for manufacturing or selling both VAT-applicable and non-VAT goods/services, only the VAT on those related to the taxable goods/services is relevant, as outlined in Circular 26/2015/TT-BTC.
When the input VAT to be deducted exceeds the output VAT, the accounting entries for tax deductions are recorded in the accounting books accordingly.
For non-deductible VAT, the accountant takes into account other expenses:
For tax declaration related to production and business activities, businesses must utilize form No 01/GTGT for VAT declaration Accountants are responsible for accurately recording the criteria that determine both the output tax and the input tax eligible for deduction within the specified tax period.
In the declaration form No 01/GTGT:
◆ VAT that is still deductible from the previous period to: is the VAT amount carried forward to the next period in the declaration 01/ VAT October 2022;
◆ VAT amount of goods and services purchased in the period to be deducted based on the tax distribution table prepared above is 551.005.959;
In the specified period, the accountant utilizes information from the prepared VAT declaration 01-1/VAT to accurately report the VAT amounts associated with each type of export tax for the goods and services sold.
◆ Adjustment of deductible value-added tax of previous periods includes a decrease adjustment by 327.326 and an increase adjustment by 2.171.634
◆ In November 2022, accountants discovered some error invoices in September
2021, April and October 2022 that have effect on VAT declaration in the past They made adjustment declaration PL01_KHBS for these months and explanation letter
Figure 10: 01/GTGT declaration of November 2022
The accountant prepares an appendix for VAT reduction in compliance with Decree 43/2022/QH15, which is attached to the 01/GTGT declaration submitted to the tax authority in November 2022 This appendix includes a detailed list of goods eligible for the VAT reduction to 8%, along with the pre-VAT amounts and the total VAT amount to be reduced.
Figure 11: Appendix to reduce VAT according to Resolution 43/2022/QH15
SOME SOLUTIONS TO COMPLETE VAT AND CIT
Comments on the process of organizing accounting
FPT Software excels in its accounting system by effectively utilizing various specialized software, including Eracle, Epayment, and Qbot, for different accounting activities This approach minimizes errors and streamlines the workflow for accountants, significantly saving time and effort in managing the company's transactions Additionally, the software generates reports that facilitate easy comparison of data across relevant accounts and actual transactions.
The company consistently provides updates on tax and accounting information through the accountant's perspective, ensuring that employees can enhance their knowledge and skills Accountants are encouraged to engage in direct discussions with their supervisors for clarification on any queries and can participate in workshops aimed at professional development This proactive approach empowers employees to enhance their competencies, ultimately contributing more effectively to the company's success.
FPT Software Corporation operates internationally, requiring adherence to various accounting systems like IFRS and GAAP, which differ based on local regulations To ensure a cohesive understanding of the group's financial statements, these accounts are mapped to a Vietnamese accounting framework, facilitating effective evaluation, management, and financial planning by the company's leadership.
While the Oracle accounting system streamlines accounting tasks, it presents several challenges for accountants Frequent faults and updates often require accountants to pause their work for system repairs, significantly hindering progress during critical periods like year-end closing Additionally, the necessity for constant data updates complicates reporting, as this process is time-consuming and prevents staff from engaging in other essential tasks Moreover, the lack of synchronization between different software used across departments, such as the purchasing department's E-purchase software and the accounting team's Oracle system, exacerbates these issues, leading to inefficiencies in the accounting process.
Comments on VAT process in organization
The company benefits significantly from its VAT accounting process by utilizing advanced computer software to manage input and output invoices By employing Ubot software, the company ensures the validity of invoices based on essential criteria, such as buyer and seller information, valid digital signatures, and tax authority codes This proactive approach allows the business to reassess invoices and promptly inform suppliers of any discrepancies regarding tax compliance Additionally, the Oracle system streamlines the management of all accounting accounts and credit amounts, enhancing overall efficiency in financial operations.
FPT Software's accounting system exhibits notable shortcomings due to its global presence and multiple headquarters in major cities, which leads to the creation of region-specific accounting processes This results in inconsistencies in financial statement handling, particularly for special cases While regular meetings at the headquarters aim to address significant issues, tax matters—though less critical—are often managed based on the perspective of individual regional department heads Consequently, this approach creates a lack of uniformity in accountants' decisions, posing a potential risk for the company.
Despite having regulations and tools in place to verify the validity of invoices and purchased goods, instances still arise where employees make upfront payments and subsequently submit payment requests, violating protocols This includes practices such as submitting fake invoices, requesting suppliers to inflate invoices, and engaging in the buying and selling of invoices with ghost companies If these fraudulent invoices pass through the company's internal control system and are recorded as VAT invoices eligible for tax deductions, it can result in incorrect VAT declarations, calculations, and payments Such discrepancies pose significant risks, including potential fines and tax evasion violations if discovered by the Tax Office Consequently, it is essential for not only accountants to exercise caution when reviewing invoices but also for all employees to maintain self-discipline in their financial dealings.
Solution suggestions
To successfully implement the solution, the company must ensure it has adequate human resources and IT system capacity to enhance its computer accounting system Furthermore, leadership should prioritize awareness and a proactive attitude towards minimizing tax risks and adhering to legal requirements, while also fostering ongoing education and understanding of tax policies and laws among employees.
To mitigate risks associated with the accounting system, it is recommended that the company enhance its IT team by hiring additional staff proficient in the electronic accounting system This will ensure immediate support and repairs for accountants when issues arise, as well as facilitate regular system checks to identify potential errors Furthermore, upgrading the internal internet infrastructure for greater stability is crucial to prevent connectivity losses during operations.
To effectively address tax issues, a company should establish a dedicated committee to provide guidance for both headquarters and branches This committee will not only assist in resolving tax problems but also compile a summary of common tax errors made by various entities, helping to raise awareness and implement internal controls to mitigate significant impacts on the organization Furthermore, the company must enforce strict penalties against fraudulent activities, such as the buying and selling of invoices or the misuse of company funds, as identified by accountants or tax authorities, to protect its financial integrity.
3.3.2 Preparing for IFRS application in 2025
The Ministry of Finance's Decision 345/QD-BTC has approved the application of International Financial Reporting Standards (IFRS) in Vietnam, highlighting its positive effects on company transparency and foreign trade facilitation In response, FPT Software Co is preparing for IFRS implementation in line with the government's roadmap, which mandates large companies to adopt these standards by 2025 As accountants delve into this transition, they will identify significant differences between IFRS and Vietnamese accounting standards, necessitating changes in both the accounting and tax calculation systems within enterprises.
The application of IFRS generally does not affect VAT, as this tax is levied solely on the added value of products, meaning that changes in accounting systems do not influence VAT amounts However, when a company transitions from VAS to IFRS, the discrepancies between accounting profit and taxable income can significantly impact the declaration and calculation of Corporate Income Tax (CIT).
Some differences need to consider such as:
Impairment loss refers to the reduction in the value of property, plant, equipment, intangible assets, or other long-term assets Under IFRS, companies are required to disclose impairment losses in their financial statements when there is a decrease in asset value, whereas VAS does not mandate such disclosures.
- Operating income in IFRS exclude income and cost from finance activities, etc
To effectively implement IFRS, companies must invest in training their accountants to improve their skills and ensure they can contribute to a suitable enterprise resource planning (ERP) system that integrates accounting and production-business processes.
In Vietnam's era of economic growth, the rapid increase in enterprises necessitates enhancements in management, particularly in accounting practices FPT Software Ho Chi Minh Company is committed to elevating the quality of its accounting team to boost work efficiency and achieve its objectives To ensure adherence to tax regulations, the company is progressively refining its Corporate Income Tax (CIT) and Value Added Tax (VAT) accounting processes.
This study presents updated Decrees and Circulars, enhancing previous research by focusing specifically on the accounting software utilized at FPT Software Company It compares the theoretical framework with the actual practices of Corporate Income Tax (CIT) and Value Added Tax (VAT) within the enterprise Overall, the company demonstrates compliance with Tax Law provisions However, the research is limited by the inability to access CIT data for 2022 and certain restricted data due to security requirements.
Therefore, the author has some suggestions for the next article:
- Expanding the research time to be able to comprehensively observe the tax accounting process at the enterprise;
- Expanding the scope of research on other taxes applied at enterprises such as Contractors, Special Consumption Tax, etc
- Expanding into other manufacturing or service industries with diverse sizes to get an overview in improving the CIT and VAT accounting process
The author expresses gratitude to Assoc Prof Dr Phan Duc Dung and the accounting department at FPT Software Hochiminh Co., Ltd for their invaluable support and assistance throughout this period The author also anticipates further engagement and contributions from the educators.
1 National Assembly (2008), Law on Value Added Tax, Hanoi
2 The National Assembly (2013), Law amending and supplementing some articles of value added tax law, Hanoi
3 National Assembly (2014), Law on Amending and Supplementing Some Laws on Taxation, Hanoi
4 The National Assembly (2016), law Amending and Supplementing some
Articles of the Law on Value-Added Tax, Special Consumption Tax Law, and Tax management law, Hanoi
5 National Assembly (2019), Law on Tax Administration, Hanoi
6 Government (2020), Decree No 123/2020/ND-CP dated October 19, 2020
Government regulations on invoices and documents, Hanoi
7 Government (2020), Decree No 126/2020/ND-CP dated October 19, 2020
Government detailing a number of articles of the Tax Administration Law, Hanoi
8 Ministry of Finance (2013), Circular No 219/2013/TT-BTC dated December
On December 18, 2013, the Government issued Decree No 209/2013/ND-CP, providing detailed instructions for the implementation of the Value-Added Tax (VAT) Law Following this, the Ministry of Finance released instructions on March 31, 2013, to guide the execution of VAT regulations in Hanoi These documents collectively aim to clarify the processes and requirements for compliance with VAT legislation.
9 The Ministry of Finance (2014), Circular No 119/2014/TT-BTC dated August
25, 2014 of the Ministry of Finance amending and supplementing a number of articles of Circular 156/2013/TT-BTC; Circular 111/2013/ TT-BTC; Circular
No 219/2013/TT-BTC, Circular No 08/2013/TT-BTC, Circular No 85/2011/TT-BTC; Circular 39/2014/TT-BTC and Circular 78/2014/TT-BTC to reform and simplify tax procedures, Hanoi
10 The Ministry of Finance (2015), Circular No 193/2015/TT-BTC dated
On January 10, 2016, the Ministry of Finance issued amendments to Circular No 219/2013/TT-BTC, originally dated December 31, 2013 These amendments provide detailed instructions for the implementation of the Value-Added Tax Law and Decree No 209/ND-CP, enacted by the government on December 18, 2013 This update aims to clarify and enhance the guidelines for the effective execution of value-added tax regulations in Hanoi.
11 The Ministry of Finance (2016), Circular No 26/2015/TT-BTC dated
On February 27, 2015, the Ministry of Finance issued instructions regarding valued tax and tax management, as outlined in Decree No 12/2015/ND dated February 12, 2015 This decree details the implementation of amendments to the tax law and introduces changes to several articles of existing decrees, including those related to currency, specifically referencing Circular No 39/2014/TT-BTC issued on March 31, 2014, concerning invoices for the sale of goods and the provision of services in Hanoi.
12 The Ministry of Finance (2021), Circular No 80/2021/TT-BTC dated
On September 29, 2021, the Ministry of Finance issued instructions regarding the implementation of specific articles from the tax management law, in alignment with Decree No 126/2020/ND-CP, which was enacted on October 19, 2020, by the government to provide detailed guidelines on tax management regulations in Hanoi.
13.Government (2021), Decree No 92/2021/ND-CP dated October 27, 2021 of the Government detailing the implementation of decree No.406/NQ-
UBTVQH15 of the Standing Committee of the National Assembly action some solutions support businesses and people suffering the impact of the Covid-19 pandemic , Hanoi
14.Government (2018), Decree No 119/2018/ND-CP dated September 12, 2018 of the Government on regulations on electronic invoices when selling goods, providing services, Hanoi
15 The National Assembly (2008), Law No.14/2008/ QH12 dated June 3, 2008 of the Law on Enterprise Income Tax, Hanoi
16 The Ministry of Finance (2015), Circular No.96/2015/TT-BTC dated June 22,
In 2015, the Ministry of Finance issued guidelines for corporate income tax through Government Decree No 12/2015/NĐ-CP, dated February 12, 2015 This decree provides amendments to existing taxation laws and updates several articles from Circulars No 78/2014/TT-BTC (June 18, 2014), No 119/2014/TT-BTC (August 25, 2014), and No 151/2014/TT-BTC (October 10, 2014).
17 Van Thi Quy (2007), Completing corporate income tax accounting in enterprises in Vietnam, Hanoi
VAT Invoice of FPT Software Co., Ltd
Appendix 1: VAT Invoice of FPT Software Co., Ltd.
