Conversion of accounting regime for small and medium-sized enterprises according to legal regulations

Can businesses switch from accounting for small and medium-sized enterprises to accounting for micro enterprises?

1. Who does the accounting regime for small and medium-sized enterprises apply to?

According to Article 2 of Circular 133/2016/TT-BTC stipulating the subjects applying the accounting regime for small and medium-sized enterprises as follows:

“Article 2. Subjects of application

1. This Circular applies to small and medium-sized enterprises (including micro-enterprises) in all fields and all economic sectors according to the provisions of law on supporting small and medium-sized enterprises, except for State-owned enterprises, enterprises with more than 50% charter capital owned by the State, public companies according to the provisions of law on securities, cooperatives and cooperative unions according to the provisions of the Cooperative Law.

2. Small and medium-sized enterprises in specific fields such as electricity energy, oil and gas, insurance, securities… have been issued or approved by the Ministry of Finance to apply special accounting regimes.”

Based on the above regulations, we see that the accounting regime for small and medium-sized enterprises applies to small and medium-sized enterprises, micro-enterprises, enterprises with more than 50% of charter capital owned by the State, public companies and cooperatives, cooperative unions commune.

2. How is the currency unit in the accounting regime for small and medium enterprises regulated?

According to Article 5 of Circular 133/2016/TT-BTC stipulations on the currency unit in the accounting regime for small and medium enterprises as follows:

The “currency unit in accounting” is Vietnam Dong (national symbol is “d”; international symbol is “VND”) is used to record accounting books, prepare and present financial statements of enterprises. In case the accounting unit mainly collects and spends in foreign currency and meets the standards specified in Article 6 of this Circular, it may choose a foreign currency as the currency to record in accounting books.

Accordingly, the selection of currency in accounting is carried out according to Article 6 of Circular 133/2016/TT-BTC as follows:

– Enterprises whose revenue and expenditure operations are mainly in foreign currency, based on the provisions of the Accounting Law, shall consider and decide on the choice of currency in accounting and shall be responsible for that decision before the law. When choosing a currency unit in accounting, the enterprise must notify the direct tax authority.

– The currency unit in accounting is the currency unit:

+ Used mainly in sales transactions and service provision of the unit, has a great influence on the selling price of goods and service provision, usually the currency used to list the selling price and be paid. math; and

+ Used mainly in purchasing goods and services, having a great impact on labor costs, raw materials and other production and business costs, usually the currency used to pay for those costs.

– The following factors are also considered and provide evidence of the unit’s accounting currency. unit:

+ Currency unit used to mobilize financial resources (such as issuing stocks and bonds);

+ Currency unit regularly obtained from business activities and stored.

– Currency unit in accounting reflects transactions, events, and conditions related to the unit’s operations. Once the accounting currency has been determined, the unit cannot be changed unless there is a material change in those transactions, events and conditions.

3. How to convert the accounting regime of small and medium-sized enterprises?

Pursuant to Article 3 of Circular 133/2016/TT-BTC stipulating the general principles for the accounting regime of small and medium-sized enterprises as follows:

– Small and medium-sized enterprises can choose to apply the Enterprise Accounting Regime issued under the Circular 200/2014/TT-BTC and documents amending, supplementing or replacing, but must notify the tax authority managing the business and must be implemented consistently during the fiscal year. In case of conversion back to applying the small and medium enterprise accounting regime according to this Circular, it must be done from the beginning of the fiscal year and must notify the Tax authority again.

– Small and medium-sized enterprises rely on accounting principles, content and structure of accounting accounts specified in this Circular to reflect and account for economic transactions arising in accordance with the operating characteristics and management requirements of the unit.

– In case during the fiscal year the enterprise has changes that result in it no longer being subject to the provisions of Article 2 of this Circular, then This Circular is applicable until the end of the current fiscal year and must apply the Accounting Regime in accordance with the provisions of law from the next fiscal year.

Accordingly, when there is a change in the accounting regime, specifically the conversion from the small and medium-sized enterprise accounting regime to the micro-enterprise accounting regime, the enterprise needs to notify the tax authority managing the enterprise and must do so consistently during the fiscal year. This conversion must be done from the beginning of the fiscal year and must be notified to the Tax authority.

Thus, the monetary unit in the accounting regime for small and medium-sized enterprises is specified in Article 5 and Article 6 of Circular 133/2016/TT-BTC. In case an enterprise changes its accounting regime, specifically converting from the small and medium-sized enterprise accounting regime to the micro-enterprise accounting regime, the enterprise needs to notify the tax authority managing the enterprise and must do so consistently throughout the fiscal year. This conversion must be done from the beginning of the fiscal year and must be notified to the Tax authority.