Nov. 29 – There are a number of legally-mandated requirements with which FIEs in Vietnam must comply, failure of which will jeopardize the ability of the FIE to continue operating in Vietnam. These procedures and requirements may be different from what the FIEs are accustomed to in their home countries. Investors should therefore be sure to familiarize themselves with these requirements as well as to seek professional advice.
Accounting and Bookkeeping
Local and foreign-invested companies doing business in the country are required by law to comply with Vietnam Accounting Standards (VAS) when recording their financial transactions.
Foreign 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 companies maintain an accounting system according to VAS and only convert financial statements into IFRS on a quarterly basis for foreign parent company reference.
In a nutshell, the VAS requires that accounting records:
- Are in the Vietnamese language
- Use VND as the accounting currency
- Comply with the Vietnam 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 companies wanting to use another currency for their financial records need to submit an application to the local managing 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.
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