Other BriefingsUnderstanding Vietnam Accounting Standards (VAS) for Foreign Companies
Foreign-invested enterprises in Vietnam are required to prepare statutory financial statements under Vietnam Accounting Standards. This obligation applies regardless of whether the parent company uses IFRS or another international reporting framework. VAS governs how revenue, expenses, assets, and liabilities are recognized in Vietnam and forms the basis for corporate income tax filings, statutory audits, and compliance inspections.
For foreign investors, understanding this framework early is essential because VAS influences how contracts are structured, how ERP systems must be configured, and how tax positions are supported during finalization. A strong grasp of VAS reduces compliance risk and provides a stable financial foundation as a company establishes operations in Vietnam.
The structure and principles of VAS
VAS is a rules-based accounting system grounded in historical cost and extensive documentation requirements. The standards specify how transactions must be recognized and presented, and they require accounting policies to be supported by source evidence.
Unlike IFRS, which relies more on management judgment, VAS emphasizes prescribed formats and documentary substantiation. This creates an environment where the accuracy of financial reporting depends on disciplined recordkeeping and consistent application of statutory procedures.
Key differences between VAS and IFRS that affect foreign investors
The differences between VAS and IFRS shape how foreign companies present their financial position in Vietnam. VAS applies stricter revenue recognition rules and does not use the performance-based allocation methods found in IFRS, which affects how contracts are booked across delivery stages. Asset values are generally kept at historical cost, as fair-value measurement is only permitted in limited situations under Vietnam’s regulations.
For groups with complex structures, consolidation under VAS follows different thresholds and can produce results that diverge from IFRS-based group reporting. Financial instruments are treated more conservatively, influencing how intercompany loans, hedging activities, and impairment are recorded. Lease arrangements continue to be split into operating and finance leases instead of following IFRS’s single-model approach. Deferred tax is also recognized using narrower criteria, which can change the timing of future tax effects.
These differences mean foreign companies must maintain clear reconciliation schedules to translate VAS-based figures into the IFRS results required by their parent company.
Statutory recordkeeping, chart of accounts, and e-invoicing requirements
Vietnam ties VAS closely to statutory documentation obligations. Companies must use the Ministry of Finance’s prescribed chart of accounts and maintain records in formats that meet inspection and audit requirements. E-invoicing is mandatory and requires the use of government-approved platforms to issue, transmit, and store invoices electronically. Digital signatures, e-contracts, and electronic records must comply with Vietnam’s regulatory framework, and supporting documents must be available in Vietnamese or accompanied by certified translations.
These requirements influence how foreign companies design their document workflows, map their internal coding structures, and configure ERP systems to ensure full statutory compliance.
Year-end financial statements and audit obligations under VAS
VAS requires companies to prepare a full set of financial statements, including the balance sheet, income statement, cash flow statement, and explanatory notes. Foreign-invested enterprises must undergo mandatory annual audits, during which auditors review not only the reported figures but also the documentation supporting each accounting treatment. Year-end financial statements must be completed within regulatory deadlines and submitted to the tax authorities and other relevant government bodies.
Because auditors focus heavily on statutory evidence, companies must maintain documentation discipline throughout the year to avoid adjustments, delays, or disputes during the audit process.
Tax implications of VAS measurement and timing rules
Corporate income tax in Vietnam is closely tied to statutory accounting figures. The recognition of revenue and expenses under VAS directly influences taxable income, as deductions depend on classification and supporting documentation. Depreciation must follow statutory methods and useful-life rules, and inconsistencies between VAS timing and tax requirements may affect the finalization of tax liabilities. Related-party transactions, asset disposals, and loss carryforwards must be recorded in a manner that aligns with VAS to withstand tax scrutiny.
Because VAS forms the foundation of the tax reporting system, foreign investors must implement accounting policies that support both statutory compliance and tax efficiency.
Challenges foreign companies face when implementing VAS
Foreign companies often encounter challenges when adapting international accounting systems to Vietnam’s statutory framework. Global ERP structures may not align with the prescribed chart of accounts, requiring substantial customization. Workflows built for IFRS environments typically lack the documentation precision needed for VAS entries, and Vietnamese-language requirements add layer of operational complexity.
The statutory emphasis on original evidence, transaction-level coding, and local regulatory formats can strain internal finance teams, especially when companies must maintain both VAS books and IFRS reporting schedules.
Aligning VAS with group IFRS reporting
Once VAS is applied for statutory purposes, companies must ensure that their financial data can be translated into IFRS for group reporting. This requires a structured mapping between the VAS chart of accounts and the parent company’s IFRS chart, consistent monthly closing routines, and standardized reconciliation schedules. These processes capture timing and measurement differences and ensure that the statutory and group reporting frameworks remain aligned. When implemented effectively, dual reporting avoids duplication, preserves data integrity, and supports timely consolidation decisions at the group level.
Strategic accounting decisions under Vietnam’s VAS And IFRS roadmap
Vietnam’s Ministry of Finance has outlined an IFRS adoption roadmap that allows certain companies to apply IFRS voluntarily, while still requiring VAS for statutory financial statements. For most foreign-invested enterprises, this means VAS continues to govern tax filings, audits, and compliance, and IFRS is used only for group reporting. The result is a dual-reporting environment that companies must manage from the moment they set up operations.
To meet these requirements efficiently, foreign investors need accounting systems that can support both frameworks without creating parallel sets of books. This involves choosing whether to outsource accounting, designing a VAS-compliant chart of accounts that can be mapped cleanly to IFRS, configuring ERP systems to handle Vietnam’s statutory rules, and putting in place regular reconciliation routines. Making these decisions early avoids costly adjustments later and helps ensure that Vietnamese financial data can be integrated smoothly into the parent company’s consolidation process as the country gradually moves toward broader IFRS adoption.
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