Vietnam’s Audit and Compliance Requirements

vietnam-audit-requirements

Under prevailing regulations, all enterprises with foreign ownership (regardless of the stake size) are required to have their annual financial statements audited by an independent audit firm. Statutory audits in Vietnam are performed in accordance with the Vietnam Standards on Auditing.

Audited financial statements and tax finalization filing must be done within 90 days from the end of a financial year. After fulfilling these obligations and giving notice to local managing tax offices at least seven working days in advance, foreign investors may remit profits abroad. There is no tax on repatriated profit.

Prior to the audit, a foreign-owned company is to maintain bookkeeping based on Vietnamese Accounting Standards (VAS), which – in a nutshell – require that accounting records:

  • be in the Vietnamese language (besides a foreign language, if any)
  • use VND as the accounting currency
  • comply with the Vietnamese chart of accounts
  • include numerous reports specified by VAS regulations, printed on a monthly basis, signed by the General Director, and affixed with the company seal

Foreign-owned companies wishing to use another currency for their financial records need to submit an application to the local tax office. This accounting currency unit must be one that is mainly used for the foreign company’s banking transactions, services and selling price quotations. The same foreign currency can also be used to account for revenues, employee salaries and payment of material costs.

Foreign-invested companies may choose to manage two accounting records; one based on the VAS and another compiled specifically for the overseas head office. In practice, many foreign-owned companies maintain an accounting system according to VAS and only convert into IFRS, for corporate consolidation purposes, on a quarterly or even annual basis – which can be helped by the audit firm after completing the statutory audit.

A financial year in Vietnam is usually coincide the calendar year. However, other 12-month periods beginning the first day of each quarter, e.g. April 1 to March 31 of the following year; July 1 to June 30 of the following year; or October 1 to September 30 of the following year, can also be adopted after registering with the local Tax Department.