- Available Fiscal Periods in Vietnam
- Obligations to be Fulfilled by Foreign Companies and Representative Offices in Vietnam
- Accounting and Tax Obligations of Foreign Companies in Vietnam
- Accounting and Tax Compliances for Representative Offices in Vietnam
- Consequences of Non-compliance
- How Cekindo can Assist
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. This includes meeting federal tax deadlines, complying with new tax laws that affect foreign-owned companies and more.
Available Fiscal Periods in Vietnam
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:
- 1st of January to 31st of December of the same year
- 1st of April to 31st of March of the following year
- 1st of July to 30th of June of the next year
- 1st of October to 30th of September of the next year
Obligations to be Fulfilled by Foreign Companies and Representative Offices in Vietnam
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.
Accounting and Tax Obligations of Foreign Companies in Vietnam
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.
Accounting and Tax Compliances for Representative Offices in Vietnam
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.
Consequences of Non-compliance
- The companies are unable to comply with the country’s tax laws and accounting laws, then in the regulations indicated:
According to the 2018 Vietnam’s Penal Code the company’s failure to provide accurate and consistent financial reports will be a 20% fine of the under-declared tax amount.
- According to Clause 2, Article 59 of Law No. 38/2019/ QH14 dated 13/06/2019 of Law on Tax Administration – for late tax payments, the interest rate is 0.03% every day of the unpaid tax amount from the last day of Tax report submission deadline.
- According to Clause 4 and 5, Article 13 of Degree 125/2020/NĐ-CP – dated 19th Oct 2020 – the fines ranging can be up to VND 15,000,000 shall be imposed for filing tax returns at least 91 days after expiration of the prescribed time limits if none of the additional taxes is incurred and the fines ranging can be up to VND 25,000,000 shall be imposed for the act of filing tax returns more than 90 days after the prescribed deadline if such act results in additional taxes to be paid.
- Based on Article 12 – Degree 41/2018/NĐ-CP dated 12th March 2018, a fine ranging can be up to VND 50.000.000 shall be imposed for failure to submit a financial statement to the competent authorities; failure to disclose financial statements, and failure of a compulsory audit of financial statement for an entity that is required to audit financial statements
How Cekindo can Assist
Cekindo is the most professional accounting and bookkeeping outsourcing partner you can ever have in Vietnam to provide you with comprehensive business support. We enable you to focus on the workflow and grow your business without the fear of disarray.
Thousands of companies are already embracing Cekindo’s outsourcing services for their accounting in Vietnam, improving their business performance, and benefiting all stakeholders.
Cekindo’s accounting outsourcing in Vietnam effectively delivers compliance, saves costs, and expands your business capacity. Get a free quote today. Fill in the form below.