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Balance Sheet and Notes: A Comprehensive Guide for Foreign-Owned Enterprises in Vietnam
In an effort to streamline financial reporting and compliance, the Vietnamese government has introduced a series of regulations for foreign-owned enterprises (FOEs) operating in the country. This article provides a comprehensive overview of the balance sheet and notes required by FOEs, as well as key deadlines and requirements for submission.
Balance Sheet
The balance sheet is a critical component of an FOE’s financial reporting obligations. It provides a snapshot of the company’s financial position at a specific point in time, including its assets, liabilities, and equity. The balance sheet must be prepared in accordance with Vietnamese accounting standards and submitted to the relevant authorities within 90 days of the end of the fiscal year.
Notes
In addition to the balance sheet, FOEs are also required to provide notes that provide additional information about their financial transactions and positions. These notes should include:
- Details on the company’s revenue streams
- Outstanding obligations
- Investment incentives
- Significant changes in the company’s financial position or operations during the reporting period
Deadlines
FOEs must submit their balance sheet and notes to the following authorities within the specified deadlines:
- Provincial Department of Planning and Investment (DPI) or the provincial-level export processing and industrial zone department
- Provincial-level statistical offices
- Municipal Department Finance
The deadline for submission is 90 days after the end of the fiscal year.
CIT Finalization
FOEs are also required to conduct CIT finalization at the end of every year. This involves preparing a CIT finalization statement, which includes details on the company’s revenue streams, outstanding obligations, and investment incentives. The deadline for submission is the last day of the third month after the close of the annual accounting period.
PIT Finalization
FOEs are also required to conduct PIT finalization at the end of every year. This involves preparing a PIT finalization statement, which includes details on the company’s employees’ salaries and wages, as well as any taxes owed by the company. The deadline for submission is the last day of the third month after the close of the annual accounting period.
Annual Reports
Representative offices (ROs) are required to submit an annual report that includes:
- Basic information about the office
- Human resource reports
- Activities reports
- Notes on financial transactions and positions
Key Considerations for Conducting an Annual Audit in Vietnam
When conducting an annual audit in Vietnam, it is essential to:
- Allow enough time for the audit
- Ensure that all key staff are available when required
- Go digital by scanning and uploading documents onto the cloud
Additionally, FOEs should be aware of the requirement to have their annual financial statements audited before transferring profits to their respective markets. This involves a statutory audit, audited financial statements, and tax finalization filings.
By understanding these requirements and deadlines, FOEs can ensure compliance with Vietnamese law and maintain good relations with local authorities.