Here is the article rewritten in markdown format:
Financial Compliance Procedures in Vietnam: A Guide for Businesses
Vietnam’s Accounting Law governes the principles of accounting, audits, and organizational structure to ensure compliance. The tax year is determined by the calendar year, and a Vietnamese-based auditing company must conduct the audit. Financial reports must be submitted to the local tax authority, Ministry of Finance, and statistics office 90 days before the end of the fiscal year.
Auditing and Compliance Requirements
Investors should note that audit and compliance requirements differ for foreign-owned enterprises (FOEs) and representative offices (ROs) in Vietnam.
Annual Compliance for Foreign-Owned Companies
- FOEs must submit audited reports to three government agencies within 90 days after the end of the fiscal year:
- Provincial Department of Planning and Investment (DPI)
- Provincial level tax departments
- Provincial-level statistical offices
Fiscal Year
The financial period in Vietnam usually coincides with the calendar year. FOEs can choose from four fiscal periods with a 12-month period beginning on the first day of each quarter after registering with the Tax Department.
Annual Compliance for Representative Offices
- ROs have simplified reporting requirements compared to FOEs.
- They are forbidden from conducting profit-generating activities and are limited to market research, developing trade contacts, and gathering information on regulations and laws.
Accounting Standards
Local and international companies must adhere to Vietnamese Accounting Standards (VAS), developed by the Ministry of Finance. The VAS provides guidelines for bookkeeping, financial reporting, and financial statement preparations. Industry-specific accounting guidelines apply to businesses engaging in insurance, securities, and funds management.
IFRS Implementation Roadmap
The government aims to replace VAS with International Financial Reporting Standards (IFRS) by 2025 through a draft IFRS roadmap. The implementation will be divided into three stages:
- Preparation stage (2019-2021): Preparation for the transition to IFRS.
- Pilot implementation stage (2022-2025): Pilot testing of IFRS in selected companies.
- Mandatory implementation stage (from 2025): Mandatory adoption of IFRS by all Vietnamese companies.
Annual Reports
Enterprises under foreign ownership must have their financial statements audited by an independent audit firm operating in Vietnam. Statutory audits are performed in accordance with VAS, and every organization is required to have a Chief Accountant.
Penalties for Non-Compliance
Businesses that fail to adhere to compliance laws can be held criminally responsible under the New Penal Code. Discrepancies in financial reports may result in a 20 percent tax on under-declared amounts and a 0.03 percent daily interest rate for late payment of tax.
About Us
ASEAN Briefing is produced by Dezan Shira & Associates, a firm that assists foreign investors throughout Asia and maintains offices in Vietnam, Indonesia, Malaysia, the Philippines, Thailand, China, and India. Please contact us at asean@dezshira.com or visit our website at www.dezshira.com.