Bookkeeping in Vietnam

Bookkeeping is an essential part of running a business, ensuring financial records are accurate, compliant, and useful for decision-making. In Vietnam, bookkeeping practices are governed by the Ministry of Finance and must adhere to Vietnamese Accounting Standards (VAS). Understanding bookkeeping in Vietnam is crucial for both local and foreign businesses operating in the country.

This guide provides a comprehensive overview of bookkeeping in Vietnam, including its regulatory framework, key requirements, best practices, and challenges.

Regulatory Framework for Bookkeeping in Vietnam

1. Vietnamese Accounting Standards (VAS)

Vietnamese Accounting Standards (VAS) are a set of guidelines issued by the Ministry of Finance, outlining the principles and requirements for financial reporting. Companies operating in Vietnam must comply with these standards unless they qualify to adopt International Financial Reporting Standards (IFRS), which is currently being implemented in phases.

2. Law on Accounting

The Law on Accounting in Vietnam (Law No. 88/2015/QH13) governs accounting activities, including bookkeeping, auditing, and financial reporting. It establishes the fundamental principles for maintaining financial records, ensuring transparency and accountability.

3. Tax Regulations

Vietnam’s tax authorities, primarily the General Department of Taxation (GDT), require businesses to maintain accurate books for tax reporting. Key taxes that affect bookkeeping include:

• Corporate Income Tax (CIT)

• Value Added Tax (VAT)

• Personal Income Tax (PIT)

• Foreign Contractor Tax (FCT)

• Special Consumption Tax (SCT) for certain goods and services

Proper bookkeeping ensures compliance with tax laws, minimizing the risk of penalties and audits.

Key Bookkeeping Requirements in Vietnam

1. Accounting Records

Businesses in Vietnam must maintain detailed accounting records, including:

• General Ledger: A summary of all financial transactions

• Sub-Ledgers: Detailed records of accounts payable, accounts receivable, fixed assets, and inventory

• Invoices and Vouchers: Proper documentation of business transactions, as required by tax authorities

• Financial Statements: Balance sheets, income statements, and cash flow statements prepared periodically

2. Electronic Invoicing (E-Invoices)

Since 2020, the Vietnamese government has mandated electronic invoices for most businesses. E-invoices help streamline tax compliance and reduce fraud. Companies must use government-approved e-invoicing systems and report transactions to the tax authorities in real-time.

3. Language and Currency

All accounting records in Vietnam must be prepared in Vietnamese. However, foreign-invested enterprises (FIEs) can maintain a secondary set of books in another language if approved by authorities. The Vietnamese Dong (VND) is the official reporting currency, though companies with significant foreign currency transactions may use a functional currency with approval.

4. Fiscal Year

The standard fiscal year in Vietnam runs from January 1 to December 31. Businesses may request a different fiscal year if needed, subject to approval by the tax authorities.

Best Practices for Effective Bookkeeping

1. Implement a Robust Accounting System

Using accounting software helps businesses maintain accurate records, streamline tax reporting, and improve financial management. Popular accounting software in Vietnam includes:

• MISA

• Fast Accounting

• Bravo

• QuickBooks (for foreign businesses)

2. Maintain Proper Documentation

Ensuring all transactions are properly documented with invoices, receipts, and vouchers helps businesses stay compliant and avoid disputes with tax authorities.

3. Regular Reconciliation

Regular reconciliation of bank statements, accounts payable, and accounts receivable ensures that financial records are accurate and up to date.

4. Hire Qualified Accountants

Hiring experienced accountants or outsourcing to a professional bookkeeping service ensures compliance with Vietnamese regulations and reduces financial risks.

5. Stay Updated on Regulatory Changes

Vietnam’s accounting and tax regulations are frequently updated. Businesses should monitor changes and consult professional advisors to remain compliant.

Challenges in Bookkeeping in Vietnam

1. Frequent Regulatory Changes

Vietnam’s accounting and tax regulations are dynamic, requiring businesses to stay informed and adapt quickly.

2. Language Barrier

Foreign businesses may find it challenging to comply with bookkeeping requirements due to the mandatory use of Vietnamese in financial records.

3. Complex Tax System

Vietnam’s tax system includes multiple taxes, deductions, and compliance requirements, making bookkeeping complex for businesses unfamiliar with local regulations.

4. Transition to IFRS

Vietnam is in the process of transitioning from VAS to IFRS, which may pose challenges for businesses unfamiliar with international accounting standards.

Bookkeeping in Vietnam is a critical function that requires adherence to local accounting standards, tax regulations, and compliance requirements. By implementing best practices, staying updated on regulatory changes, and leveraging professional expertise, businesses can maintain accurate financial records, ensure compliance, and support their long-term growth in the Vietnamese market.