Posted 8.02. 2021 by Cekindo
Compliance in accounting and bookkeeping is essential when doing business in Vietnam. This is why companies, especially foreign establishments, must start prioritizing their accounting and bookkeeping compliance and corporate tax functions.
The tax year in Vietnam is 12 months, and there are four fiscal periods that foreign companies can select from. The first day of each quarter marks the beginning of a fiscal period. The four fiscal periods in Vietnam are listed below:
All companies in Vietnam, including foreign and local companies, must comply with Vietnam’s Accounting Law and the finance ministry’s Vietnamese Accounting Standards (VAS). By 2025, the Vietnamese government plans to replace the VAS with the International Financial Reporting Standards (IFRS).
VAS includes guidelines for financial reporting, bookkeeping, and financial statement preparations. There are also particular accounting guidelines for different industries, such as securities, insurance, and funds management.
Foreign companies need to fulfill their accounting and tax obligations in Vietnam per the mentioned laws and standards. They must report their company and personal income taxation and submit an annual audit report. Documents that need audits must include the balance sheets, income statement, profit and loss statement, and equity statement changes.
All foreign companies must submit their audited reports to three authorities in 90 days after the end of the fiscal year. The three governmental departments to submit the audited statements are the provincial Department of Planning and Investment or the local Department of Export Processing and Industrial Zone, the provincial tax department, and the regional statistical offices.
Many foreign investors also establish representative offices in Vietnam due to the ease of setting up and simplicity. As a result, their accounting and tax requirements are not as complex and straightforward as foreign-owned companies.
When submitting an annual tax report, a representative office must include the following details:
General information such as phone number, representative office address, and primary contact of their bank. The office address must be the same as the one stated in the representative office license.
Report of business activities of the previous year. The report shall consist of information on activities such as trade fairs, market research, advertising, service agreement promotions, and many others.
The human resource report comprises policies regarding salaries, insurance, benefits, bonuses, and other compensations. Each employee’s personal information and job roles must also be in writing.
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