Vietnam Accounting Standards VAS vs IFRS Key Differences for FDI Enterprises in Vietnam (2026)

Vietnam’s accounting framework diverges from IFRS on three critical dimensions affecting your statutory reporting: revenue recognition timing, lease classification, and asset valuation. These differences create reconciliation complexity when your parent company consolidates IFRS financials while you maintain VAS books for Vietnam tax compliance under Circular 99/2025/TT-BTC (“The new VAS”) effective January 1, 2026.

This dual-reporting requirement is a foundational consideration during Vietnam Company Setup, as your chosen entity structure—such as a 100% foreign-owned LLC—directly dictates your mandatory accounting regime and future audit obligations.

100% foreign-owned enterprises face dual VAS-IFRS reporting until Vietnamese Financial Reporting Standards (VFRS) fully converge with IFRS—convergence timeline remains unannounced by the Ministry of Finance as of January 2026. Your company must reconcile timing differences between frameworks or risk tax authority scrutiny when reported income diverges between Vietnam statutory filings and parent consolidation.

Why VAS and IFRS Differences Matter for Your Bottom Line

The Ministry of Finance governs Vietnam Accounting Standards through 26 standards (VAS 01 to VAS 26), while the International Accounting Standards Board issues IFRS. Here’s the problem: IFRS allows professional judgment to achieve fair presentation, while VAS prescribes specific treatments with minimal interpretation room.

Because VAS serves as the official basis for tax calculations, any unreconciled gaps between your IFRS parent reports and your local statutory books can become primary targets during a Vietnam Tax Audit, leading to potential income reassessments and penalties

This fundamental difference shows up in three areas that directly affect your parent company’s IFRS 10 consolidated financials: revenue recognition timing, lease balance sheet presentation, and asset impairment calculations. When your Vietnam subsidiary books revenue under VAS delivery-based rules but your parent consolidates under IFRS performance obligation criteria, the timing gap creates reconciliation items auditors immediately flag.

Principles-Based vs. Rules-Based: What This Means in Practice

IFRS operates on principles—accountants apply judgment to reflect economic substance. VAS operates on rules—specific treatments prescribed, limited flexibility allowed. For 100% foreign-owned enterprises, this creates audit risk when you apply IFRS reasoning to VAS statutory filings.

Example: Software licensing revenue. Under IFRS 15, you recognize revenue when the customer obtains control of the license—often at contract signing if no customization work remains. VAS requires stricter delivery-based recognition—you wait until software delivery confirmation before booking revenue. Same transaction, different timing, reconciliation required.

The consequence? Unreconciled differences trigger tax authority inquiries and potential income reassessments under Law on Tax Administration 38/2019/QH14, Article 102. Proper Vietnam accounting compliance requires your chief accountant to document every timing difference between frameworks.

Because these reconciliations involve statutory signatures and legal liability, appointing a qualified Chief Accountant in Vietnam is not just an HR task but a mandatory compliance step to ensure your local VAS books withstand tax authority scrutiny.

Revenue Recognition: Where Timing Differences Emerge

IFRS 15 uses the five-step performance obligation model—you recognize revenue when each distinct obligation transfers control to the customer. VAS takes a simpler approach: revenue recognized when goods delivered, services rendered, and collection reasonably certain.

For long-term construction contracts, this difference matters significantly. IFRS allows percentage-of-completion recognition as work progresses. VAS requires completion-based recognition in many cases unless specific criteria under VAS 15 (Construction Contracts) are met. Your manufacturing subsidiary building a factory over 18 months shows zero revenue under conservative VAS application while IFRS books progressive recognition—creating massive reconciliation items.

Service contracts face similar issues. Management consulting revenue recognized under IFRS as each deliverable completes. VAS often delays recognition until the entire project finishes. For multi-year advisory engagements, timing gaps compound quarterly.

Lease Accounting: Balance Sheet Presentation Divergence

IFRS 16 requires all leases (except short-term and low-value) as right-of-use assets with corresponding lease liabilities on your balance sheet. Finance lease or operating lease—doesn’t matter under IFRS 16, both go on the books.

VAS maintains the old operating vs. finance lease split. Operating leases stay off-balance sheet, expensed straight-line over the lease term. Finance leases (where you acquire substantially all risks and rewards) capitalize as assets with corresponding liabilities.

For FDI enterprises with significant lease portfolios—factory buildings, warehouses, office spaces—this creates balance sheet presentation divergence between your VAS statutory reports and IFRS parent consolidation. Your Vietnam entity shows VND 50 billion in fixed assets while your parent’s consolidated position includes an additional VND 300 billion in right-of-use lease assets.

Investors analyzing your parent company’s financials see different leverage ratios and asset bases than what appears in your Vietnam statutory filings. Disclosure notes must explain these differences or risk confusing stakeholders about your actual capital structure.

Fair Value Measurement: The Valuation Gap

VAS limits fair value application to specific asset classes—investment property in some cases, financial instruments under certain conditions. IFRS mandates fair value measurement broadly: biological assets, investment property, financial instruments at fair value through profit or loss.

The new VAS introduces Account 215 (Biological Assets), bridging part of this gap starting January 1, 2026. But the measurement methodology remains VAS-prescribed rather than IFRS fair value hierarchy principles. If you operate in agriculture or real estate, asset values on your VAS books typically understate IFRS parent company consolidation.

Example: Agricultural FDI enterprise growing coffee in the Central Highlands. IFRS requires measuring coffee plants at fair value less costs to sell. VAS allows historical cost unless specific revaluation criteria apply. Your Vietnam books show VND 80 billion in biological assets at cost while IFRS consolidation values them at VND 120 billion fair value—a VND 40 billion gap requiring reconciliation and deferred tax calculations.

Compliance with OECD pillar two rules in Vietnam also affects your asset valuation strategies since effective tax rate calculations under Account 82112 (Pillar Two CIT) use book values differing between frameworks.

Revenue Recognition & Lease Accounting: Side-by-Side Comparison

Managing Dual VAS-IFRS Reporting: What Your Company Must Do

Until Vietnamese Financial Reporting Standards (VFRS) fully converge with IFRS, your company maintains both VAS statutory books for Vietnam tax compliance and IFRS-aligned reports for parent company consolidation under IFRS 10 (Consolidated Financial Statements).

Three factors generate most reconciliation items: revenue recognition timing differences, lease classification divergence, and fair value measurement gaps. These aren’t theoretical problems—auditors flag discrepancies between VAS taxable income and IFRS consolidated results, questioning transfer pricing or expense deductibility.

For multinational groups, this intersects with profit repatriation Vietnam calculations when your parent company consolidates different profit figures than what your Vietnam entity reports to the General Department of Taxation.

These accounting gaps are critical because profit repatriation from Vietnam is strictly governed by your audited VAS net profit; any over-estimation in your IFRS consolidated reports will not be available for legal remittance until the local statutory audit is finalized.

Practical Reconciliation Protocol

Establish documented procedures reconciling VAS statutory books with IFRS parent consolidation. 

Your protocol should cover:

• Revenue timing adjustments: Track each contract where VAS and IFRS recognition differs. Software licenses, construction contracts, and multi-deliverable arrangements require line-item reconciliation with supporting calculations.
• Lease reclassification: Maintain separate schedules showing operating leases under VAS that become right-of-use assets under IFRS 16. Calculate the off-balance sheet to on-balance sheet adjustment, including depreciation and interest expense differences.
• Fair value adjustments: Document VAS historical cost vs. IFRS fair value for biological assets, investment property, and financial instruments. Reconcile the valuation difference with supporting fair value calculations and deferred tax impacts.
• Deferred tax calculations: Reconcile temporary differences arising from book-tax gaps under each framework. VAS taxable income basis differs from IFRS consolidated income, affecting deferred tax asset/liability positions.

Exception cases exist where single-framework reporting receives advance Ministry of Finance approval, but most FDI enterprises continue dual reporting through the transition period until VFRS convergence completes.

Which Reporting Framework Applies to Your Company?

Decision 345/QĐ-BTC dated March 16, 2020 established Vietnam’s two-phase IFRS convergence roadmap. Phase I (2022-2025) allowed voluntary adoption. Phase II (financial years beginning on or after January 1, 2026) mandates compulsory IFRS for specific entity types.

Entity classification determines your mandatory framework. Misclassify your company, and you prepare for the wrong reporting standard—incurring unnecessary transition costs and facing audit non-compliance when authorities enforce Phase II requirements.

Detailed guidance on framework selection and transition requirements: Circular 99 Implementation Guide.

The New VAS (Circular 99/2025) Changes Effective January 1, 2026

The new VAS effective January 1, 2026 restructures Vietnam’s chart of accounts while maintaining VAS as the statutory reporting framework for most FDI enterprises. Two critical additions affect your company:

• Account 215 (Biological Assets): If you operate in agriculture, aquaculture, or forestry, this new account brings VAS closer to IFRS biological asset recognition. You classify living animals and plants separately from fixed assets starting 2026—though measurement methodology remains VAS-prescribed rather than IFRS fair value hierarchy.
• Account 82112 (Pillar Two CIT): For multinational FDI groups subject to OECD Pillar Two rules, this account tracks top-up tax obligations under the global minimum tax framework. Your company records qualified domestic minimum top-up tax (QDMTT) and income inclusion rule (IIR) amounts here, aligning Vietnam reporting with global tax frameworks.
• Statement of Financial Position terminology: “Balance Sheet” officially becomes “Statement of Financial Position” in all VAS statutory reports starting January 1, 2026—matching IFRS nomenclature. This terminology alignment represents one step in the broader VFRS convergence roadmap, though full convergence timeline remains unannounced by the Ministry of Finance.

Circular 99/2025 released October 2025 with only a two-month implementation window. FDI enterprises without completed chart of accounts mapping by December 2025 face high transition risk when statutory reporting requirements change January 1, 2026.

Additional compliance considerations during this transition: Vietnam FDI VAT refund 2025 for eligible export transactions, e-invoice registration requirements, and Vietnam VAT law 2025 changes.

What Auditors Flag: Common Reconciliation Mistakes

Three violations dominate accounting framework audits when FDI enterprises transition between VAS and IFRS:

• Revenue recognition timing unreconciled: Booking revenue under IFRS performance obligation criteria without documenting VAS timing adjustments creates taxable income calculation errors. Your Vietnam entity reports VND 500 million revenue in Q1 under VAS delivery-based rules while parent consolidation shows VND 750 million under IFRS 15 performance obligations—the VND 250 million gap requires documented reconciliation explaining why Vietnam taxable income differs from consolidated financials.
• Lease reclassification undocumented: Operating leases staying off-balance sheet under VAS while appearing as right-of-use assets in IFRS consolidation confuse investors analyzing your parent company’s leverage ratios. Without clear disclosure notes, stakeholders question why total assets differ by 15-20% between frameworks.
• Fair value adjustments missing deferred tax: Revaluing biological assets or investment property from VAS historical cost to IFRS fair value creates temporary differences requiring deferred tax calculations. Auditors flag missing deferred tax liabilities when your fair value writeup increases asset values without corresponding tax provision.

Next Steps for Your FDI Enterprise

VAS and IFRS differences aren’t going away until full VFRS convergence—timeline remains uncertain as of January 2026. Your company must establish robust reconciliation protocols now rather than waiting for convergence announcements.

Three immediate actions: First, verify your entity classification under Decision 345/QĐ-BTC to confirm whether you remain in dual reporting category or face compulsory IFRS adoption. Wrong classification means preparing for the wrong framework.

Second, document your reconciliation protocol covering revenue timing adjustments, lease reclassification, fair value measurement gaps, and deferred tax calculations. Auditors expect documented support for every material difference between VAS statutory books and IFRS parent consolidation.

Third, update your chart of accounts to Circular 99/2025 structure before January 1, 2026—Account 215 for biological assets if you operate in agriculture, Account 82112 for Pillar Two CIT if you’re part of a multinational group subject to global minimum tax, and Statement of Financial Position terminology replacing Balance Sheet across all statutory reports.

Questions about VAS-IFRS reconciliation requirements for your structure? Indochina Link Vietnam provides Ministry of Finance-licensed accounting, audit, and tax compliance services for foreign direct investment enterprises navigating Vietnam’s dual reporting requirements.

Legal Disclaimer

This article provides general information about Vietnam Accounting Standards and IFRS differences for referential purposes only. It should not be considered legal, tax, or accounting advice.

Regulations cited (including Circular 99/2025/TT-BTC and Decision 345/QĐ-BTC) are subject to amendments, implementing circulars, and official Ministry of Finance guidance. Verify current regulatory status and consult licensed accounting professionals and legal advisors regarding your specific circumstances before making framework adoption decisions.

Indochina Link Vietnam accepts no liability for actions taken or losses incurred based on information in this article without independent professional verification.