1. Rules for accounting
2. a) This account is used to record input VAT which are deductible, deducted and shall be deducted of the enterprise.
3. b) The deductible input VAT and non-deductible input VAT must be recorded separately. In case they fail to be recorded separately, the input VAT shall be recorded to account 133. At the end of the tax period, the deductible input VAT and non-deductible input VAT shall be determined in accordance with regulations of law on VAT.
4. c) The non-deductible input VAT shall be recorded to value of assets, costs of goods sold or production or operation costs according to specific cases.
5. d) The input VAT eligible for deduction, declaration or tax payment shall be determined in accordance with regulations of law on VAT.

2. Structure and contents of account 133 – Deductible VAT

Debit:

Deductible VAT.

Credit:

- Deducted VAT.

- Transfer of non-deductible input VAT.

- Input VAT of goods which are returned or offered discounts;

- Refunded input VAT.

Debit balance:

Remaining deductible input VAT, refundable input VAT which has not been refunded by government budget.

Account 133 – Deductible VAT, comprises 2 sub-accounts:

- Account 1331 – Deductible VAT of goods or services: recording deductible input VAT of materials, goods or services bought to used in production of goods or provision of services subject to VAT using credit-invoice method.

- Account 1332 – Deductible VAT of fixed assets: recording deductible input VAT of fixed assets bought to use in production of goods or provision of services subject to VAT using credit-invoice method, or of the purchase of investment property.

3. Accounting methods for several major transactions:

3.1. When buying inventory, fixed assets, investment property, if the input VAT is deductible, the following accounts shall be recorded:

Dr 152, 153, 156, 211, 213, 217, 611 (prices excluding VAT)

Dr 133 – Deductible VAT (1331, 1332)

Cr 111, 112, 331, etc. (total payment).

3.2. When buying materials, goods or tools, if the input VAT is deductible, the following accounts shall be recorded:

Dr 621, 623, 627, 641, 642, 241, 241, etc. (VAT-exclusive prices)

Dr 133 – Deductible VAT (1331)

Cr 111, 112, 331, etc. (total payment).

3.3. When buying goods and buying them to customers immediately (without inventory), if the input VAT is deductible, the following accounts shall be recorded:

Dr 632 – Costs of goods sold (prices not excluding VAT)

Dr 133 – Deductible VAT (1331)

Cr 111, 112, 331, etc. (total payment).

3.4. When importing materials, goods, fixed assets:

- Accounting for value of import materials, goods or fixed assets including total amount payable to sellers (according to actual exchange rates), import tax, special excise duty, environment protection tax payable (if any), transport expenses, the following accounts shall be recorded:

Dr 152, 153, 156, 211, etc.

Cr 331 – Trade payables

Cr 3331 – VAT payable (33312) (if the input VAT of imported goods are not deductible)

Cr 3332 - Special excise duty.

Cr 3333 – Export or import tax (specific import tax)

Cr 33381 - Environment protection tax

Cr 111, 112, etc.

- If the input VAT of imported goods is not deductible, the following accounts shall be recorded:

Dr 133 – Deductible VAT (1331, 1332)

Cr 333 – Taxes and other payables to the State (33312).

3.5. With regard to returned goods or goods offering discounts due to their degradation: According to documents on sales returns and relevant documents, the value of returned goods or purchased goods eligible for sales rebate and the non-deductible input VAT) shall be recorded as follows:

Dr 111, 112, 331 (total payment).

Cr 133 – Deductible VAT (input VAT of returned goods or discounted goods)

Cr 152, 153, 156, 211, etc. (prices not excluding VAT).

3.6. With regard to deductible input VAT unable to record separately:

a) When buying materials, goods or fixed assets, the following accounts shall be recorded:

Dr 152, 153, 156, 211, 213 (prices excluding VAT)

Dr 133 – Deductible VAT (input VAT)

Cr 111, 112, 331, etc.

b) At the end of the tax period, the deductible input VAT and non-deductible input VAT shall be determined in accordance with regulations of law on VAT. The non-deductible input VAT shall be recorded to costs of goods sold in the accounting period, the following accounts shall be recorded:

Dr 632 – Costs of goods sold

Cr 133 – Deductible VAT (1331)

3.7. With regard to input materials, goods or fixed assets which are damaged by natural disasters, conflagration, lost and covered by an organization or individual, if the input VAT of those goods are not deductible:

- If it fails to uncover the reason for damages, the following accounts shall be recorded:

Dr 138 - Other receivables (1381)

Cr 133 – Deductible VAT (1331, 1332)

- If there is decision on compensation issued by the competent agency, the following accounts shall be recorded:

Cr 111, 334, etc. (amounts of compensation)

Dr 632 – Costs of goods sold (if they are recorded to costs)

Cr 138 - Other receivables (1381)

Cr 133 – Deductible VAT (if the reasons are uncovered and there is a resolution decision)

3.8. At the end of the month, when determining the VAT payable in the tax period by deducting the deductible input VAT from output VAT, the following accounts shall be recorded:

Dr 3331 – VAT payable (33311).

Cr 133 – Deductible VAT.

3.9. When the input VAT of goods or services are refunded, the following accounts shall be recorded:

Dr 111, 112, etc.

Cr 133 – Deductible VAT (1331)

Source: Circular 200