COUNTRY
Vietnam
VIETNAM ACCOUNTING AND AUDIT
Our guide below discusses all the important aspects of Vietnam Accounting and Audit. Accounting and audit are important for companies in Vietnam as they provide a clear financial picture of the company’s operations and financial position. This information is useful for making informed business decisions, such as investment and expansion plans.
Additionally, compliance with accounting and taxation laws and regulations is necessary for the company to operate legally and avoid penalties. Proper accounting and taxation can also help a company attract investors and secure loans. Overall, accounting and taxation can help to support the financial stability and growth of a company in Vietnam.
Local and foreign businesses are required to record financial transactions in accordance with the Vietnam Accounting Standards (VAS), which were created by the Vietnamese Ministry of Finance.
ACCOUNTING AND TAX COMPLIANCE FOR LLCS IN VIETNAM
Accounting and tax compliance for a Limited Liability Company (LLC) in Vietnam is crucial for the company to operate legally and avoid penalties. Proper compliance can also help to support the financial stability and growth of the LLC. Here are some key points to consider for accounting and tax compliance for a Vietnamese LLC.
Financial Statements
LLCs must comply with all relevant accounting and tax regulations and laws in Vietnam. This includes regulations related to accounting, financial reporting, and tax compliance.
LLCs should maintain accurate and up-to-date records of all financial transactions, including invoices, receipts, and other documents. This will help the LLC to comply with accounting and tax regulations and make it easier to prepare financial statements and file tax returns.
LLCs are required to prepare and submit annual financial statements that comply with Vietnam Accounting Standards (VAS). These financial statements include a balance sheet, income statement, and cash flow statement.
The financial statements must also be audited by an independent auditor and filed with the Department of Planning and Investment (DPI) and the State Securities Commission of Vietnam (SCC) – Practical Law (SSC) if the LLC is publicly listed.
Tax reporting
LLCs are required to file annual tax returns with the local tax department and pay any taxes owed. LLCs are also required to keep accurate records and submit other relevant tax documents, such as VAT invoices and declarations, on time.
VIETNAM LLC REPORTING REQUIREMENTS AND DEADLINES
In Vietnam, an accounting period is usually from January 1 to December 31 in accordance with the calendar year. However, companies can opt for a different year end after registering with the Tax Department. A 12-month term starting on the first day of each quarter, such as April 1 to March 31 of the next year, July 1 to June 30, or October 1 to September 30 of the following year, can also be used.
The annual reporting requirements for a Limited Liability Company (LLC) in Vietnam include the following.
Financial Statements
LLCs are required to prepare and submit annual financial statements, which must comply with Vietnam Accounting Standards (VAS). The financial statements include a balance sheet, income statement, and cash flow statement.
Auditing
LLCs are required to have their financial statements audited by an independent auditor. The auditor must be registered with the Ministry of Finance and must issue an audit report.
Filing with the Department of Planning and Investment (DPI)
LLCs are required to file their financial statements, including the audit report, with the DPI within 90 days of the end of their fiscal year.
Filing with the State Securities Commission (SSC)
If the LLC is publicly listed, it is also required to file its financial statements with the SSC.
Tax reporting
LLCs are required to file annual tax returns with the local tax department and pay any taxes owed.
It’s important to note that LLCs are also required to prepare and submit additional reports and documents in case of any events that occur during the year, such as changes in shareholders or management, or other significant events that may affect the company’s financial position or operations.
PENALTIES FOR NON-COMPLIANCE OF ACCOUNTING AND AUDITING REQUIREMENTS IN VIETNAM
In Vietnam, non-compliance with accounting and auditing filing requirements can result in penalties for a Limited Liability Company (LLC). Here are some examples of penalties that may be imposed for non-compliance.
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Financial penalties
LLCs that fail to file their financial statements and audit reports on time or fail to comply with other accounting and auditing regulations may be subject to financial penalties. The amount of the penalties will depend on the severity of the violation.
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Criminal charges
In some cases, non-compliance with accounting and auditing regulations may be considered a criminal offence. LLCs and their managers or directors may be subject to criminal charges and fines, or even imprisonment, if they are found guilty.
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Damage to reputation
Non-compliance with accounting and auditing regulations can also damage the reputation of an LLC. This can make it difficult for the LLC to attract investors or secure loans.
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Invalidation of financial statements
If financial statements are not prepared in accordance with VAS and audited by an independent auditor, the financial statements will be considered invalid. This could lead to legal disputes and financial losses for the LLC.
AUDIT REQUIREMENTS FOR COMPANIES IN VIETNAM
In Vietnam, companies are required to have their financial statements audited by an independent auditor. The purpose of the audit is to provide assurance that the financial statements are presented fairly, in all material respects, in accordance with Vietnam Accounting Standards (VAS). Here are some key audit requirements for companies in Vietnam.
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Appointment of an independent auditor
Companies are required to appoint an independent auditor who is registered with the Ministry of Finance. The auditor must be independent of the company and must not have any material financial interest in the company.
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Audit Report
The auditor must issue an audit report, which must be included with the financial statements when they are filed with the Department of Planning and Investment (DPI) and the State Securities Commission (SSC) if the company is publicly listed.
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Timing of the audit
The audit must be performed in accordance with the International Standards on Auditing (ISA) and must be completed within a reasonable time before the financial statements are filed.
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Compliance with Vietnam Auditing Standard “VAS”
The financial statements must be audited in accordance with VAS. The auditor must report any material misstatements or non-compliance with VAS.
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Communication with the management
The auditor must communicate with the management of the company to understand the company’s internal control and to identify any significant risks that may affect the financial statements.
Is It Mandatory For All Companies To Be Audited In Vietnam?
In Vietnam, all companies must have their financial statements audited by an independent auditor. The requirement applies to all types of organisations, including state-owned enterprises, joint stock companies, limited liability companies, partnerships, sole proprietorships, foreign-invested enterprises, and non-profit organisations.
The extent of compliance may depend on the type of organisation, its size, and whether it is publicly listed or not. Publicly listed companies, for example, are subject to more stringent reporting requirements than private companies.
However, there are some exemptions for small and micro-entities, which are allowed to use simplified accounting standards. These entities may be exempt from certain audit requirements, such as the appointment of an independent auditor, or may be required to have their financial statements reviewed rather than audited.
It’s important to note that even if the audit is not mandatory, the company may decide to have its financial statements audited for internal control and risk management purposes, or to comply with the requirements of its stakeholders.
CHOOSE RELIN CONSULTANTS FOR ACCOUNTING AND TAX MANAGEMENT OF YOUR COMPANY IN VIETNAM
Relin Consultants has a team of experienced professionals who are well-versed in the accounting and tax regulations in Vietnam. We provide a wide range of services, including accounting, tax compliance, financial reporting, and auditing.
Every company has different needs and requirements. Our team will provide customised solutions that are tailored to the specific needs and circumstances of your company. We help companies to ensure compliance with all relevant regulations and avoid penalties, enabling you to focus on your business operations without worrying about deadlines.
Reach out to us at Relin Consultants to know more about our Accounting and Tax Management services in Vietnam.
FAQs
What are the tax rates in Vietnam?
In Vietnam, the tax rates vary depending on the type of tax being imposed. The following are the common tax rates in Vietnam:
- Corporate Income Tax (CIT): The standard CIT rate is 20%. Preferential CIT rates may apply to enterprises entitled to certain CIT incentives.
- Value Added Tax (VAT): The standard VAT rate is 10%. Different rates apply to specific goods and services.
- Personal Income Tax (PIT): The PIT rate is progressive, with different tax brackets and tax rates depending on the amount of income earned.
- Special Sales Tax (SST): The SST rate varies depending on the type of good or service being taxed, but it is generally higher than the standard VAT rate.
It is important to note that tax laws and regulations in Vietnam are subject to change, and it is advisable to stay informed and seek professional advice to ensure compliance with the latest tax rules and regulations.
What are the accounting requirements in Vietnam?
Companies in Vietnam are required to maintain accounting records and books in accordance with Vietnamese Accounting Standards. These records must be kept for at least five years.
Are there any specific requirements for foreign companies doing business in Vietnam?
Foreign companies are required to register with the Vietnamese government and obtain a business licence. They are also subject to the same tax and accounting regulations as domestic companies.
Are there any tax incentives for foreign investors in Vietnam?
Yes, Vietnam offers various tax incentives for foreign investors, such as tax holidays and reduced tax rates. These incentives are typically based on factors such as the size of the investment and the location of the project and the industry the business operates.
How is income tax calculated in Vietnam?
Income tax is calculated based on a company’s net income. Deductions are allowed for certain expenses, such as employee salaries and rent.
Are there any penalties for non-compliance with tax and accounting regulations in Vietnam?
Yes, non-compliance with tax and accounting regulations in Vietnam can result in fines, penalties, and even criminal charges. Companies need to be aware of and comply with these regulations to avoid any potential legal issues.
What is the Framework for Vietnam Accounting Standards?
The framework for Vietnam Accounting Standards is based on the International Financial Reporting Standards (IFRS). In practice, many international businesses keep an accounting system in accordance with VAS and simply convert their financial accounts into IFRS quarterly for the convenience of their overseas parent firms.
The VAS demands accounting documents that are in Vietnamese or can be combined with a language that is widely spoken outside of Vietnam; use the Vietnamese Dong (VND) as the accounting currency.
However, foreign-invested companies (FIEs) may choose a different currency; and comply with the Vietnam chart of accounts; and contain a variety of reports required by VAS regulations, printed monthly, signed by the general director, and sealed with the business seal.
What are the Entities subject to Vietnam Accounting Standards?
Entities subject to Vietnam Accounting Standards include all organizations operating in Vietnam, including state-owned enterprises, private businesses, and non-profit organisations.
This includes companies of all sizes and types, such as sole proprietorships, partnerships, limited liability companies, and publicly traded companies. Additionally, foreign-owned companies that operate in Vietnam are also subject to these accounting standards.
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