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At a glance...
In August, the Ministry of Finance (“MoF”) released Circular 48/2019/TT-BTC, providing guidance on
several types of provisions. Circular 48 will take effect from 10 October and will apply for fiscal year
2019 onwards. Circular 48 replaces Circular 228/2009/TT-BTC and its amendments.
PwC Vietnam NewsBrief
27 August 2019
27 Aug 2019
New Circular on making provisions
Circular 48 states that its guidance on provisions is the basis to determine deductible expenses for
corporate income tax purposes. Provisions for the purposes of preparing financial statements are
made in accordance withaccounting regulations.
Some notable points are highlighted below:
● Banks will also need to follow Circular 48 regarding making provisions, except for provisions for credit
risks, which will be made under the guidance of the State Bank of Vietnam and the MoF. Other
specialised industries, such as insurance, securities, capital investment, debt trading or retail, will also
be governed by this Circular, but can also be subject to separate guidance by the MoF (if any).
In terms of provisions for bad debts, some changes were introduced in Circular 48, such as:
A separate scheme for making provisions by telecommunications and retail companies has been
introduced. Specifically, these companies can make a 100% provision for bad debts due from
individual customers, when they are overdue by 12 months, instead of three years as generally
Enterprises are not allowed to make provisions for overdue dividends.
Irrecoverable debts which are qualified to be written off now include bad bebts for which 100%
provisions have been made and could not be recovered within 3 years (or 1 year for certain
Conditions and required supporting documents for provisions for bad debts are clearer and more
reasonable under Circular 48. For instance, companies can now only need evidence of a request
for debt collection or a request for debt reconciliation, instead of the debt reconciliation itsel