CIRCULAR 48/2019/TT-BTC GUIDING THE ESTABLISHMENT AND HANDLING OF PROVISIONS FOR INVENTORY PRICE REDUCTION, LOSSES IN INVESTMENTS, BAD DEBT RECEIVABLES AND WARRANTIES FOR PRODUCTS, GOODS, SERVICES, AND CONSTRUCTION WORKS AT ENTERPRISES ISSUED BY THE MINISTER OF FINANCE.
Some notable changes:
- One of the notable points in this Circular is that enterprises are no longer allowed to set aside provisions for losses on overseas investments (Clause 2, Article 2, Clause 4, Article 3).
- The balance of the provision for losses on overseas investments that the enterprise has set aside (if any) must be reversed and recorded as a reduction in expenses at the time of preparing the 2019 financial statements (Clause 5, Article 8).
- However, regarding inventory price reduction provisions, enterprises will be allowed to set up price reduction provisions for goods that are outside the warehouse, such as purchased goods in transit, goods sent for sale, and goods stored in bonded warehouses (Clause 1, Article 4).
- In addition, the calculation formula for the provision for securities price decline and provision for financial investment losses also changed compared to before.
- On the other hand, add the provision for bad debts for telecommunications service businesses and retail businesses, receivables for telecommunications, information technology, postpaid television services and receivables from retail sales of goods in the form of deferred/installment payments of debtors who are individuals who have overdue payments (Clause 2, Article 6).
- Regarding the time of provisioning and reversing provisions, it will be the time of preparing the annual financial statements (Clause 2, Article 3), instead of the old regulation of the end of the annual accounting period or the last day of the fiscal year (Clause 2, Article 3, Circular 228/2009/TT-BTC).
The Circular takes effect from October 10, 2019 and applies from fiscal year 2019.
Annul Circular No. 228/2009/TT-BTC dated December 7, 2009, Circular No. 34/2011/TT-BTC dated March 14, 2011, Circular No. 89/2013/TT-BTC dated June 28, 2013 and other documents regulating the establishment and use of reserves contrary to the provisions of this Circular.
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