Tax Alert - Circular 48/2019/TT-BTC (“Circular 48”) guiding the recognition and settlement of provisions

On 8 August 2019, the Ministry of Finance issued Circular 48/2019/TT-BTC (“Circular 48”) replacing Circular 228/2009/TT-BTC (“Circular 228”), guiding the recognition and settlement of provisions. This Circular takes effect from 10 October 2019, applies for the financial year 2019 and has some notable points as follows:

Scope and subject of application

  • The guidance of Circular 48 shall be used as a basis for determining deductible expenses for calculation of Corporate Income Tax (“CIT”).
  • The preparation and presentation of the provisions on the financial statements must still comply with the Law on Accounting.

Regarding provisions for inventory

  • Remove guidance that allows the company to set up provisions for work-in-progress of rendering services.

Provision for investment loss

  • Enterprises are only allowed to make provision for domestic investments, not for overseas investments. In case a provision for foreign investments have been recorded, the enterprise must revert this provision and decrease expenses for financial year 2019.
  • Supplement in more details the regulations to determine residual value of an investment.

Provision for doubtful debts

  • In case of absence of debt reconciliation, it could be substituted by a request for debt confirmation or a debt collection request, which has been sent by the enterprise (with postmark or confirmation from mailing services suppliers), as a basis for provisions recognition.
  • Supplement regulations that allow enterprises in telecommunication services and retailing business to make provision in a shorter time-frame.
  • Supplement cases that can be recognized as irrecoverable debts: (i) where there has been notice of business suspension/dissolution of the debtor, which is confirmed or published on the business registration website of licensing or tax authorities; (ii) Receivable debts for which a provision have been made for 01 or 03 years, depending on the business activity, but has not been collected yet.
  • Regarding the handling of irrecoverable debts, enterprises must maintain the dossiers and documents related to provisions made.

Provision for warranty

  • Supplement regulations on recognizing provision for warranty of provided services.


We do trust the above points are notable and sufficient, but should you have any question or need a deeper discussion on this issue, please do not hesitate to contact us.

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Mazars Vietnam_​Tax Alert_​Circular 48/2019/TT-BTC
Mazars Vietnam_Bản tin Thuế_Thông 48/2019/TT-BTC hướng dẫn trích lập và xử lý các khoản dự phòng
Mazars Vietnam_​Bản tin Thuế_​Thông 48/2019/TT-BTC hướng dẫn trích lập và xử lý các khoản dự phòng