The Vietnamese Law on Accounting governs the principles for accounting, audits, and organizational structure, for businesses to stay compliant in Vietnam.
The tax year in Vietnam is determined according to the calendar year, and a Vietnamese-based auditing company must conduct the audit. The financial reports should then be submitted to the local tax authority, Ministry of Finance, and the statistics office before the end of the fiscal year.
WHAT IS A BUSINESS AUDIT?
A business audit is a documented evaluation of whether or not a company’s financial statements are materially correct along with the standards, evidence, and assumptions used to conduct the audit.
WHO MUST DO ANNUAL BUSINESS AUDIT?
According to the Dispatch No. 17/2012/NĐ-CP dated 13/3/2012 of the Ministry of Finance, the companies below must have their annual financial statements audited:
• Foreign-invested companies;
• The credit institutions established and operated within the Law on credit institutions, including branches of foreign banks;
• Financial institutions, insurers, reinsurers, insurance brokers, branches of foreign non-life insurers;
• Public companies, the organizations that issue and trade in securities;
• Other companies and organizations that must be audited according to relevant laws; the companies and organizations that must be audited by foreign auditors or their branches in Vietnam.
ANNUAL COMPLIANCE FOR FOREIGN-OWNED COMPANIES
Foreign-owned companies are obligated to provide an annual audit report and the finalization of corporate and personal income taxation. The statutory audit requirements are as follows:
• Statement of income;
• Statement of financial position (profit and loss);
• Statement of changes in equity, if any; and
• Balance sheets.
PENALTIES FOR NON-COMPLIANCE
Under the government’s new Penal Code, businesses that fail to comply with the law can now be held criminally responsible. If the tax authorities find inconsistencies in the financial reports, after an audit, a 20 percent tax will be imposed on the amount that is under-declared. There is also a 0.03 percent daily interest rate for the late payment of tax.
COST AND PROCESSING TIME
According to our research and our experience on the field, the price observed on the market for small company starts roughly from 10,000,000 VND. The annual audit is usually provided from the audit company after 7 working days.