Top 5 Essential Insights on Bookkeeping and Accounting in Vietnam

Navigating bookkeeping and accounting in Vietnam requires understanding local regulations and standards. This guide covers crucial aspects like Vietnamese Accounting Standards (VAS), essential compliance documents, and the upcoming transition to IFRS. You will also learn about managing travel expenses, the dual-record system for foreign companies, and audit requirements.

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Overview of Vietnamese Accounting Standards (VAS)

Vietnamese Accounting Standards (VAS) serve as the foundation of bookkeeping and accounting in Vietnam, guiding how businesses—especially foreign-owned enterprises—prepare and report their financials. Compliance with VAS is not only a legal requirement but a critical step in avoiding severe penalties from tax authorities. Developed by the Ministry of Finance, these standards are tailored to Vietnam’s local business environment and ensure transparent, accurate reporting practices essential to bookkeeping and accounting in Vietnam.

Unlike the principles-based structure of International Financial Reporting Standards (IFRS), VAS follows a rules-based approach. This difference is particularly important for international investors, as it underscores the complexities and localized nuances of bookkeeping and accounting in Vietnam. Rooted in older international frameworks, VAS has been adapted to suit Vietnam’s economic landscape and regulatory needs.

As Vietnam moves toward adopting IFRS by 2025, businesses must prepare for significant shifts in accounting methodology. The transition—starting with voluntary implementation and followed by mandatory adoption—aims to improve global comparability and financial transparency. Foreign companies operating in Vietnam should assess the practical differences between IFRS and VAS to ensure readiness for the upcoming transformation.

Essential Documents for Expense Recording and Tax Compliance

Meticulous documentation is a cornerstone of bookkeeping and accounting in Vietnam, especially when it comes to recording expenses and ensuring tax compliance. To translate expenses into deductible items, businesses must maintain valid VAT e-invoices, contracts, and proof of non-cash payments for significant transactions. For expenses exceeding USD 793.65, these supporting documents are mandatory under Vietnamese tax regulations. This level of rigor not only supports accurate financial reporting but also helps businesses avoid penalties during tax audits.

Business travel expenses, in particular, require careful documentation. Companies must retain VAT invoices for ticket purchases and, for costs over USD 793.65, provide additional supporting records. Invoices from international vendors may also need to be translated into Vietnamese for inspection. These practices reinforce transparency and verifiability, which are key components of effective bookkeeping and accounting in Vietnam.

Adhering to these standards not only keeps companies compliant but also improves financial visibility. Proper documentation supports the preparation of comprehensive financial statements, strengthens internal controls, and enhances strategic decision-making—contributing to a more resilient and efficient financial operation.

Business Travel Expenses: Documentation and Deductibility

Proper documentation is essential for businesses to reimburse employees for travel expenses—an important component of bookkeeping and accounting in Vietnam. To ensure transparency and tax compliance, companies must retain supporting documents such as airline tickets, boarding passes, and receipts. These records not only uphold internal accountability but also meet the requirements set by Vietnamese tax authorities.

Travel expenses paid via personal credit cards can still be reimbursed, provided the documentation meets regulatory standards. This level of flexibility enables companies to manage travel costs effectively while keeping them deductible. Expenses related to meals, lodging, and transportation can be tracked through either actual receipts or per-diem allowances, depending on company policy. Such dual methods are widely accepted within bookkeeping and accounting in Vietnam, offering operational flexibility without compromising compliance.

Ultimately, failure to meet documentation standards can result in rejected deductions and financial penalties. Establishing clear internal policies for managing and recording travel expenses is not just a best practice—it’s a necessity for maintaining accurate books and ensuring long-term financial health.

Language and Currency Requirements for Bookkeeping

All accounting records and financial statements under bookkeeping and accounting in Vietnam must be prepared in Vietnamese. However, businesses are permitted to include a widely used foreign language—such as English—in their records for international transactions. This bilingual approach is especially helpful for foreign companies, enabling them to meet local compliance requirements while maintaining alignment with overseas reporting standards. It reflects the practical flexibility within the regulatory framework of bookkeeping and accounting in Vietnam.

The official accounting currency in Vietnam is the Vietnamese Dong (VND). While foreign-invested enterprises may opt to use a foreign currency for internal accounting purposes, they must notify tax authorities in advance. Once selected, the accounting currency cannot be changed easily, except under specific conditions. This rule promotes consistency in financial reporting, a core principle of bookkeeping and accounting in Vietnam that helps ensure clarity and reliability in long-term financial planning.

Moreover, financial statements originally prepared in foreign currencies must be converted to VND before submission to local regulatory bodies. Currency changes are only permitted at the beginning of a new fiscal year, providing a defined point for financial system transitions. Understanding these language and currency requirements is essential for maintaining accurate, compliant, and transparent financial records in Vietnam.

Dual-Record System for Foreign Companies

Foreign companies operating in Vietnam often maintain two sets of financial records—one aligned with Vietnamese Accounting Standards (VAS) and another tailored to their parent company’s reporting framework. This dual-record system is a common practice in bookkeeping and accounting in Vietnam, helping businesses comply with local regulations while ensuring consistency with international reporting standards.

Effectively managing this system requires a high level of accuracy and coordination. Companies must ensure that their financial data is consistent across both sets of records, which is a core requirement in professional bookkeeping and accounting in Vietnam. Though complex, this approach is essential for maintaining transparency and avoiding discrepancies that could trigger audits or regulatory scrutiny.

Ultimately, the dual-record system highlights the need for structured and compliant financial reporting. It enables businesses to navigate Vietnam’s regulatory landscape while maintaining the confidence of overseas stakeholders. For foreign-invested enterprises, mastering bookkeeping and accounting in Vietnam is key to building long-term operational resilience and global trust.

Annual Financial Statements and Audits

Foreign-invested entities in Vietnam must have their annual financial statement audited by an independent firm within 90 days post-fiscal year. These audited statements must be submitted to the Provincial Department of Planning and Investment, the provincial tax department, and regional statistical offices within the same timeframe. This rigorous process ensures that foreign-invested companies’ financial statements are accurate, transparent, and compliant with Vietnamese regulations, making Vietnam an attractive destination for international investors.

Compliance with VAS is crucial for avoiding severe consequences, including criminal liability. Companies must ensure their accounting systems adhere to VAS to avoid discrepancies and penalties. This compliance is not just about adhering to regulations but also about maintaining the integrity and reliability of financial reports.

The significant risks of non-compliance make it imperative for businesses to prioritize accurate, timely financial reporting. Adhering to these requirements enhances financial reporting, improving stakeholder confidence and ensuring successful business operations.

Moving Towards IFRS by 2025

The Vietnamese government is preparing to adopt International Financial Reporting Standards (IFRS), which will gradually replace the current Vietnamese Accounting Standards (VAS) by 2025. This shift represents a major milestone in the evolution of bookkeeping and accounting in Vietnam, aligning the country’s financial reporting practices with global norms. The transition will unfold in three phases—preparation, voluntary adoption, and mandatory implementation—beginning in 2025.

Adopting IFRS is expected to deliver significant benefits, including enhanced corporate governance, better risk management, and more transparent, comparable financial statements. For stakeholders, this means clearer insights into a company’s financial performance. However, it also presents a major shift in bookkeeping and accounting in Vietnam, requiring technical upgrades, system overhauls, and extensive training for finance teams.

Despite the challenges, this transition marks a critical advancement in the modernization of bookkeeping and accounting in Vietnam. Embracing IFRS will not only improve the quality of financial reporting but also build investor confidence and strengthen Vietnam’s position in the global business environment.

Internal Audit Requirements Under Decree 05/2019/ND-CP

Decree 05/2019/ND-CP introduces internal audit regulations in Vietnam. It applies to state-owned authorities, public service organizations, and privately listed companies. The decree mandates these entities to implement and adopt internal audit (IA) practices to ensure transparency and accountability. The scope of the decree extends to state authorities, public service units, and enterprises with significant state ownership.

Specific duties for internal auditors emphasize the importance of maintaining independence and objectivity. Internal auditors must not audit areas for which they were previously responsible, ensuring an unbiased evaluation of the company’s operations. This requirement is crucial for maintaining the integrity of the audit process.

Compliance with this decree is crucial for both state-owned and private companies. Following these internal audit requirements enhances operational transparency and accountability, fostering greater stakeholder confidence.

Choosing Between In-House and Outsourced Accounting Services

Outsourcing accounting services has become a strategic and cost-effective choice for many small and medium-sized enterprises, particularly within the context of bookkeeping and accounting in Vietnam. The costs of outsourced services are typically lower than maintaining an in-house team, while also offering greater consistency and stability by minimizing disruptions caused by staff turnover.

One key advantage is accountability when outsourced professionals make errors, the service provider is responsible for rectifying them, reducing the risk of penalties due to non-compliance with Vietnam’s evolving regulations. This added layer of protection is particularly valuable in the complex landscape of bookkeeping and accounting in Vietnam, where regulatory updates can be frequent.

Moreover, outsourcing grants businesses immediate access to experienced professionals without the burden of recruitment or training. It allows companies to focus on core operations while meeting financial reporting deadlines with greater confidence and efficiency—ultimately strengthening both compliance and overall business performance.

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Selecting a Reliable Bookkeeping Service Provider

Engaging experienced professionals for outsourced bookkeeping and accounting in Vietnam significantly enhances service quality and compliance. A deep understanding of current tax regulations and accounting standards is essential for any provider offering bookkeeping and accounting in Vietnam. Moreover, service providers must hold a certificate of eligibility to ensure they are legally qualified to deliver reliable and compliant services, particularly regarding Vietnamese bookkeeping compliance requirements.

One of the key advantages of outsourcing is accountability—providers take full responsibility for errors, protecting businesses from financial penalties. Flexible pricing models also make bookkeeping and accounting in Vietnam more accessible, allowing companies of all sizes to choose service packages that align with their budget and needs.

When selecting a service provider, it’s important to evaluate their experience, certifications, service quality, and familiarity with your industry. A smooth transition to outsourced services ensures operational continuity, even during staff changes—delivering stability and long-term efficiency.

Frequently Asked Questions

What must be done with audited financial statements in Vietnam?

Audited financial statements in Vietnam must be filed along with the tax finalization within 90 days after the conclusion of each financial year. Compliance with this timeframe is essential for regulatory adherence.

What is the Vietnamese government’s plan regarding IFRS?

The Vietnamese government plans to adopt International Financial Reporting Standards (IFRS) to replace Vietnamese Accounting Standards (VAS), aiming for implementation by 2025.

What are the Vietnamese Accounting Standards (VAS)?

Vietnamese Accounting Standards (VAS) are established principles and procedures by the Ministry of Finance to assist businesses in accurately maintaining and presenting their financial records. This framework ensures consistency and transparency in financial reporting across Vietnam.

Is the implementation of VAS mandatory for all enterprises in Vietnam?

The implementation of Vietnamese Accounting Standards (VAS) is mandatory for all enterprises in Vietnam to ensure transparency, consistency, and comparability in financial reporting.

What dual-record system do foreign companies often maintain in Vietnam?

Foreign companies in Vietnam typically maintain a dual-record system consisting of one set of accounting records by Vietnamese Accounting Standards (VAS) for local compliance and another set for their overseas head office.

How InCorp Can Help?

Vietnam’s financial rules require careful attention. Incorp Vietnam helps businesses stay compliant with local standards and manage necessary paperwork, including changes to international reporting. Incorp Vietnam offers support in setting up accounting or handling it directly. The goal is to ensure finances are accurate and meet all requirements, allowing businesses to focus on growth. Contact Incorp Vietnam to learn how our services simplify accounting.

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