Posted 21.01. 2019 by Cekindo / Last update on 28.11. 2019
Most entrepreneurs start their business in Vietnam because they were born business leaders in general or are passionate about certain sectors or markets. However financial statements are an absolute evil for many who eventually procrastinate until the very last minute.
Noticeably, when financial statements are made properly, they can provide insightful details of the operation and revenue of companies. Vital elements for evaluating the overall performance of your business are hiding just behind all those figures, numbers, formulas, and technical terms.
In this article, we present some important details every business owner in Vietnam should know about financial statements in the country — different types of reports, their deadlines, and general rules.
The financial statements in Vietnam, also known as financial reporting, are data provided by companies, reflecting their economic conditions and operations, including:
The financial statements are the main part of a financial report and do not include information on financial reports or annual reports, such as directors’ reports, management analysis, and financial fact sheets.
There are four basic types of financial statements in Vietnam, and each of them tells a distinct story about the business:
These four types of financial statement often make up the complete set of financial reporting. The different financial statements exist for a reason — they provide different and useful information that offer one-of-a-kind insights into a company.
A fiscal year of a company in Vietnam is often 12 months. These 12 months are used for companies to prepare accounts to report their activities and performance during the previous year.
A financial year starts on the day right after the last day of the previous financial year. In the case of a new company in Vietnam, the fiscal year is often on the day of company incorporation.
Financial years are determined based on the accounting reference period. This accounting reference ends on a particular date called Accounting Reference Date (ARD). Companies in Vietnam may choose to make up their accounts to the accounting reference date, or they can opt for a date up to 7 days either side of it.
In Vietnam, the deadline for the 2018 financial statement submission falls on April 2, 2019. However, this does not apply to every company if, as mentioned previously, the fiscal year of your company is not a calendar year.
In case you are not sure how to determine a deadline of your financial statement submission, contact an accounting agency in Vietnam to assist you.
One thing that is worth mentioning is that not every company incorporated in Vietnam in a particular year has to submit a financial report in the following year. If your company was registered in or after October, it is fine for you to provide your financial statement of that year, along with the financial report of the following year.
For example, if a company is established legally in October 2018 or after, you can submit your 2018 financial statement together with your 2019 financial statement in 2020. For all other companies that were incorporated before October 2018, they must submit a 2018 financial statement in 2019.
If you are a local company in Vietnam, it will be enough for you to submit your financial statement directly to the Department of Taxation, the General Statistics Office of Vietnam, the Department of Planning and Investment and to other authorities such as parent company.
However, if your company is a foreign-owned company in Vietnam, your financial statement is required to go through an audit performed by an independent auditing company in Vietnam. As a foreign-owned company, you will also need to submit an annual report to the departments mentioned above, as well as to a financial institution.
There are other compliance requirements that companies in Vietnam need to take into account as well for every beginning of a year.
Every year, companies are required to pay for their business license. The next deadline for business license tax for companies is on January 30, 2019. The business license tax can be categorized into three kinds:
Companies in Vietnam are required to declare and pay their taxes for the 4th quarter of the previous year of their business by January 30 annually. It concerns:
Companies need to take note that there are other annual reports need to be submitted by companies, in addition to the financial statement. These annual reports are:
These settlement declarations and payments are due on April 2.
You will have to pay penalties if you do not submit your financial reporting with the tax authorities by the deadline. The fine of late submission can range between 700,000 VND (US$30) and 25 million VND (US$1,100).
Penalties must be paid at the time you file your financial reporting, and it will more likely be doubled if you are late again in the subsequent year.
To make sure that your companies fulfill all annual compliance requirements involving prepared and audited financial statements and tax finalizing, and to avoid the hefty late fees, you should let Cekindo handle these compliances for you.
Contact us for more information about financial statements in Vietnam and other market-entry related services.