By Joyce Roque
Mar. 30 – Local and foreign-invested companies doing business in the country are required by law to comply with Vietnam Accounting Standards (VAS).
The laws are based on International Accounting Standards, although not entirely since it is still being continually revised and changed. Fulfilling VAS requirements is a challenging task, more so for foreign small and medium-sized enterprises entering the country to save on manufacturing costs and working on limited resources.
Foreign companies may opt to change how they follow the VAS based on their own business needs but will need to get prior approval from the Ministry of Finance before doing so. Additionally, foreign companies may choose to manage two accounting records – one that is based on the VAS and another compiled specifically for the overseas head office.
Vietnam only began revising its accounting laws in 2000 and in 2006 launched its new accounting standards. In a nutshell, the VAS requires that accounting records include: the use of Vietnamese language; the use of Vietnamese dong as the accounting currency; compliance with the Vietnam chart of accounts; producing numerous reports as specified by VAS regulations; printing all reports on a monthly basis and having it signed by the General Director and affixed with the company seal.
According to a PWC Vietnam report, in practice Vietnamese authorities have been relatively relaxed in most instances with respect to enforcing full VAS compliance, but this has changed recently with reports that provincial tax authorities use VAS non-compliance as a reason to collect additional tax and even recover previously paid VAT refunds.
The report goes on to say that tax authorities can penalize for non-compliance through the disallowance of input VAT credits; the withdrawal of corporate income tax incentives and the change to the method for application of corporate income tax. Companies are then advised to double check their accounting system, taking care to spot possible VAS non-compliance issues.
