Vietnam’s import and export industry is a dynamic and growing sector, offering significant opportunities for both local and foreign investors. The country has established itself as a global manufacturing hub, increasingly seen as an effective alternative to China, often referred to as the “China+1” strategy. Here are key insights and opportunities in Vietnam’s import and export industry:
Entities Subject to VAS:
All enterprises, including foreign-owned enterprises, branches and representative offices of foreign companies, individual business households, cooperation groups, and non-business organizations (with and without state budget funding) must comply with the VAS. The government specifies accounting content for representative offices of foreign enterprises, individual business households, and cooperation groups based on basic principles in the Law of Accounting.
Accounting Period Timeline:
The accounting period in Vietnam usually aligns with the calendar year (January 1 to December 31). However, enterprises can adopt a 12-month period starting on the first day of each quarter after registering with the Tax Department. The deadlines for quarterly and annual tax declarations vary based on the end of the calendar or fiscal year.
Language and Currency Requirements:
Accounting records should be maintained in Vietnamese or combined with a commonly used foreign language, such as English. The Vietnamese Dong (VND) is the standard accounting currency, although foreign-invested enterprises (FIEs) are allowed to select a foreign currency. For statutory reporting, foreign currency must be converted to VND.
Presentation of Financial Statements:
The VAS requires specific financial statements, including the statement of financial position, income statement, cash flow statement, and notes to financial statements summarizing key accounting policies and other notes. An analysis of changes in equity is required as part of the notes to financial statements rather than as a separate report.
Cash Flow Statements (CFS):
VAS specifies two methods for reporting CFS for operating activities: direct and indirect. There are separate rules governing cash flow activities of dividends and interests paid/received, particularly for banking institutions and insurance companies.
Inventories:
Both IFRS and VAS use the normal costing method to calculate production costs for inventories. VAS differs by not using the standard cost method or retail cost method and records biological assets and agricultural products at original costs or prime costs.
Uniform Chart of Accounts:
A uniform chart of accounts issued by the Vietnam Ministry of Finance (MOF) is mandatory for all accounting units. Circular No. 200/2014/TT-BTC is the latest legal document regulating the national chart of accounts, including a standardized form for financial statement reporting.
Adopting IFRS by 2025:
Vietnam plans to adopt the International Financial Reporting Standards (IFRS) by 2025 to enhance comparability and transparency of corporate financial statements. The transition is divided into two phases: a voluntary application period from 2022 to 2025 and compulsory implementation after 2025.
These standards ensure uniformity and clarity in financial reporting, aiding both local and international stakeholders in understanding and assessing the financial health and practices of Vietnamese enterprises.
