Determine the exchange rate for a transaction in a foreign currency ?

For transactions in foreign currencies arising in an accounting period without a contract specifying the payment exchange rate, what are the rules for enterprises to determine the actual exchange rate applicable for accounting records ?

DMS Lawyers in Danang, Vietnam advise about determine the exchange rate for a transaction in a foreign currency ?

Rules for determining exchange rates:

Actual exchange rate for transactions in foreign currencies arising in the period:

- The actual exchange rate when buying and selling foreign currencies (foreign currency trading spot contracts, forward contracts, futures contracts, options contracts, swap contracts): is the exchange rate specifying in the contract for buying and selling foreign currency signed between an enterprise and a commercial bank;

- In case the contract does not specify the payment rate:

+ Enterprises shall record accounting books at the actual exchange rate: When recording capital contribution or receiving capital contribution, it is the buying rate of the bank where the enterprise opens an account to receive capital from investors at the date of capital contribution; When recording receivables, it is the buying rate of the commercial bank where the enterprise nominates the customer to pay at the time of the transaction; When recording a liability (payable), it is the selling rate of the commercial bank where the enterprise intends to transact at the time of the transaction; When recording asset purchase transactions or expenses paid immediately in foreign currencies (not through Accounts payable) is the buying rate of the commercial bank where the enterprise makes the payment.

+ In addition to the above-mentioned actual exchange rate, the enterprise can choose the actual exchange rate which is approximately the average transfer rate of the commercial bank where the enterprise regularly conducts transactions. The approximate exchange rate must ensure that the difference does not exceed +/-1% compared to the average transfer exchange rate. The average transfer trading rate is determined on a daily, weekly or monthly basis based on the average of the daily transfer buying and selling rates of commercial banks (Clause 3 Article 1 of Circular No. 53/2016/TT-BTC dated March 21, 2016, amending and supplementing Point a Clause 1.3 Article 69 of Circular No. 200/2014/TT-BTC dated December 22, 2014).

Thus, in addition to determining the exchange rate according to the actual exchange rate, the enterprise can also choose the actual exchange rate which is approximately the average exchange rate of the commercial bank where the enterprise regularly conducts transactions./.

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DMS LAW LLC
Director
(Signed)
Lawyer Do Minh Son