A newly established foreign-invested enterprise (FDI) in Vietnam must operate two accounting “languages” simultaneously: the Vietnamese accounting regime (VAS) for all statutory reports filed with state authorities, and the parent group’s standards (usually IFRS) for consolidation purposes. The costliest mistake is not choosing the wrong software, but leaving the accounting officer position vacant, having no VAS books when the tax authority inspects, or recording the foreign investor’s capital contribution to the wrong account from the very first journal entry — errors whose remediation costs far exceed the cost of doing it right from the start.
Quick summary
| Topic | Setting up the VAS accounting system, accounting personnel and compliance calendar for newly established FDI companies |
|---|---|
| For whom | Foreign investors newly establishing a legal entity in Vietnam; CFOs of FDI companies; accounting service providers for FDI clients |
| Points to check | Registered accounting regime (Circular 99/2025 or 133/2016); chief accountant appointed or accounting service contracted; investment capital account opened correctly; first-year audit and tax declaration calendar |
| Desired outcome | A complete VAS book system from the first day of operation, reconcilable with the parent group’s IFRS reports, no accounting sanctions — audited and eligible for profit repatriation |
Key legal issues: the accounting system of a newly established FDI company
Principle 1 — VAS is mandatory for statutory reports. Under the Law on Accounting 2015, every enterprise operating in Vietnam, including 100% foreign-owned ones, must prepare and file financial statements under Vietnamese accounting standards and regime. The foreign parent may require additional IFRS reports for consolidation, but reports filed with the tax authority, statistics authority and investment registration authority must follow VAS. Inspection practice shows: enterprises with only parent-standard books and no VAS book system are deemed not to have organised accounting work as required.
Principle 2 — The accounting officer position must not be left vacant. The enterprise must appoint a qualified chief accountant, or sign an accounting/chief accountant service contract with a unit licensed to provide accounting services. This is what new FDI companies often miss: the foreign director signs accounting documents himself without a valid accounting-officer appointment decision, leaving financial statements without the officer’s signature and unqualified for audit.
Principle 3 — Annual audit of financial statements is mandatory. Foreign-invested enterprises are subject to annual financial statement audit by an independent audit organisation approved to operate in Vietnam (Law on Independent Audit 2011). The audited report serves more than shareholders: banks and the tax authority often require audited reports when the enterprise repatriates profits or finalises corporate income tax.
Principle 4 — The foreign investor’s capital flows must go through the right account. Contributions, loans and other cash flows of the foreign investor must be recorded through the investment capital account under foreign exchange management rules (Circular 38/2026/TT-NHNN). Recording contributions as ordinary payables/liabilities from the start skews tax obligations, is hard to explain during inspections, and obstructs the investor’s capital withdrawal or transfer.
Legal basis and verification sources
- Law on Accounting 2015 (88/2015/QH13): duty to organise accounting work, prepare financial statements, appoint a chief accountant
- Circular 99/2025/TT-BTC (effective 1 January 2026, replacing Circular 200/2014/TT-BTC): corporate accounting regime (general application, including large enterprises)
- Circular 133/2016/TT-BTC: accounting regime for small and medium enterprises
- Decree 41/2018/NĐ-CP: administrative sanctions in accounting and independent audit
- Law on Independent Audit 2011 (67/2011/QH12): entities subject to financial statement audit
- Circular 38/2026/TT-NHNN: foreign exchange management for foreign direct investment, investment capital accounts
- Decree 255/2026/ND-CP (effective 1 July 2026, replacing Decree 132/2020/ND-CP): tax administration for enterprises with related-party transactions
- Decree 125/2020/NĐ-CP: administrative sanctions on tax and invoices
Verification sources: the Ministry of Finance and General Department of Taxation (now under the Ministry of Finance) portals for checking instruments in force; the vbpl.vn legal document system for numbers and effective dates.
Accounting setup process for new FDI
Step 1 — Choose and register the accounting regime. Determine whether the enterprise applies Circular 99/2025/TT-BTC (effective 1 January 2026, replacing Circular 200/2014/TT-BTC) or Circular 133/2016/TT-BTC depending on size and management needs; register the applicable accounting regime, fiscal year, fixed-asset depreciation method and VAT calculation method with the directly managing tax authority in the initial tax dossier.
Step 2 — Arrange the accounting officer. Issue a chief accountant appointment decision (a person certified and qualified under the Law on Accounting) or sign an accounting service contract with a qualified service company. At the same time, issue the document-signing authority and spending approval delegation tied to the legal representative — avoiding the situation where the foreign director signs every document without written authorisation/delegation.
Step 3 — Open the capital account and standardise investment cash flows. Open the investment capital account at a licensed bank to receive the foreign investor’s contributions; all contributions, profit remittances and capital withdrawals go through this account and are recorded separately from ordinary business cash flows.
Step 4 — Set up the bilingual document — book system. Issue internal finance — accounting regulations; establish the document, detailed ledger and general ledger system under VAS. Foreign-language accounting documents (contracts with the parent, invoices from abroad) must be accompanied by Vietnamese translations of the key contents to be recorded.
Step 5 — Design the VAS — IFRS reconciliation mechanism. If the parent group requires IFRS reports, build the mapping table between the VAS chart of accounts and the consolidation report from the first period, instead of “translating” the report at year-end — this practice is the source of most unexplainable variances at audit.
Step 6 — Set the first-year compliance calendar. Declare VAT/CIT per the registered periods; track related-party transactions to prepare transfer pricing documentation under Decree 255/2026/ND-CP (effective 1 July 2026); sign the independent audit engagement early in the year; prepare and file the audited annual financial statements on time.
Common risks
Risk 1 — No VAS books. Recording only under the parent’s standards; when the tax authority or State Audit requests, no statutory reports can be produced — accounting sanctions and possible tax imposition.
Risk 2 — Vacant accounting officer position. Neither appointing a chief accountant nor hiring accounting services; financial statements lack the officer’s signature, auditors refuse the engagement or issue qualified opinions.
Risk 3 — Foreign-language documents without translations. Parent contracts and invoices in foreign languages without Vietnamese translations attached; the documents are disallowed from deductible expenses at CIT finalisation.
Risk 4 — Contributions recorded to the wrong account. Investor money not passing through the investment capital account, or wrongly recorded as loans/payables; skewed tax and foreign exchange obligations, obstacles to profit repatriation or investor exit.
Risk 5 — Missing related-party transaction obligations. FDI companies often have large transactions with the parent/affiliates (material purchases, management fees, royalties) but prepare no transfer pricing documentation under Decree 255/2026/ND-CP (effective 1 July 2026); at tax inspection, related costs are disallowed and taxable prices are re-imposed.
Risk 6 — Signing the audit too late. Finding an audit organisation only near the filing deadline; auditors lack time to review, the audit report comes late, delaying financial statement filing and affecting the profit repatriation procedure.
Competent authorities and filing points
Registration of the accounting regime, tax calculation method, tax declaration periods and initial tax dossiers is done with the tax authority directly managing the enterprise. The audited annual financial statements are filed with the tax authority, statistics authority and investment registration authority per each authority’s reporting regime; investment project implementation reports are filed on the National Investment Information System.
The financial statement audit organisation must be an independent audit enterprise approved to operate in Vietnam. The enterprise should sign the audit engagement in the first half of the fiscal year so auditors have enough review time, avoiding the filing-deadline rush.
When to contact a lawyer
A lawyer coordinated with the accountant/auditor should be involved from incorporation in three cases: (1) when designing the parallel VAS/IFRS accounting system and document-signing authority fitting the foreign investor’s governance structure; (2) when the enterprise has significant related-party transactions with the foreign parent, needing transfer pricing documentation prepared from the start of the year rather than at inspection; (3) before the first annual audit, to review accounting regime compliance and handle capital contribution entries, avoiding qualified audit opinions affecting profit repatriation.
What FLAT LAW FIRM does
FLAT LAW FIRM helps foreign investors review the accounting — audit model from the incorporation stage: choosing the suitable accounting regime, standardising the accounting officer appointment decision and accounting service contract, reviewing the legal representative’s document-signing authority, and coordinating with the audit unit in the first fiscal year. We work in Vietnamese, English and Chinese, translating the parent group’s reporting requirements into a Vietnamese-law compliance checklist.
See also related pages: E-invoices for new FDI companies | Post-licensing compliance for FDI companies | Common mistakes when setting up an FDI company
Talk to FLAT LAW FIRM
If your enterprise or foreign investor needs to set up an accounting system for a new FDI legal entity in Vietnam, or needs a review of the current system before the audit season, FLAT LAW FIRM can help assess and implement. Please contact us for advice.
FAQ
Must FDI companies audit annual financial statements?
Yes. Foreign-invested enterprises are subject to annual financial statement audit by an independent audit organisation approved to operate in Vietnam.
Can IFRS replace VAS?
No, for statutory reports. Reports filed with Vietnamese state authorities (tax, statistics, investment registration authority) must follow the Vietnamese accounting regime. The enterprise may prepare additional IFRS reports for the parent group, but must build a reconcilable mechanism between the two systems.
Is appointing a chief accountant mandatory?
Yes. The enterprise must appoint a qualified chief accountant or hire accounting/chief accountant services from a licensed provider; the accounting officer position must not be left vacant. Violations are sanctioned under Decree 41/2018/NĐ-CP.
Can foreign-language documents be recorded?
Yes, but accounting documents used for recording must be accompanied by Vietnamese translations of the key contents per the Law on Accounting 2015.
Which account must the foreign investor’s contributions go through?
The investment capital account opened at a licensed bank, under foreign exchange management rules for foreign direct investment (Circular 38/2026/TT-NHNN). All contribution, profit remittance and capital withdrawal flows go through this account.
When should transfer pricing documentation be prepared?
From the first fiscal year if the enterprise has transactions with the parent/affiliates (goods purchases, services, loans, management fees…). Transfer pricing documentation is prepared under Decree 255/2026/ND-CP (effective 1 July 2026) and must be ready when the tax authority inspects.
