Vietnam Accounting Standards (VAS) diverge from IFRS on three critical dimensions: revenue recognition timing, lease classification, and asset valuation. These differences create reconciliation complexity for FDI enterprises maintaining VAS statutory books for Vietnam tax compliance while parent companies consolidate under IFRS. Circular 99/2025/TT-BTC (“The new VAS”), effective January 1, 2026, narrows some gaps but does not eliminate them.
This dual-reporting requirement is a foundational consideration during company registration in Vietnam—entity structure directly dictates 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. The Ministry of Finance has not announced a convergence timeline as of March 2026. Unreconciled income differences between Vietnam statutory filings and parent consolidation attract tax authority scrutiny.
⚠️ CRITICAL COMPLIANCE: VAS statutory reporting remains mandatory for 100% foreign-owned enterprises. IFRS adoption stays voluntary unless the entity qualifies as a state-owned enterprise, listed company, or unlisted public company (non-SME) under Decision 345/QĐ-BTC Phase II.
VAS vs IFRS: Where the Frameworks Diverge
The Ministry of Finance governs VAS through 26 standards (VAS 01–26). The International Accounting Standards Board issues IFRS. The fundamental difference: 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, unreconciled gaps between IFRS parent reports and local statutory books become primary targets during a Vietnam tax audit. Undocumented timing differences trigger income reassessments under Law on Tax Administration 38/2019/QH14, Article 102.
Appointing a qualified chief accountant is not just an HR task—it’s a mandatory compliance step ensuring VAS books withstand tax authority scrutiny. The chief accountant bears personal liability for every signed statutory filing.
Revenue Recognition
IFRS 15 uses the five-step performance obligation model—revenue recognized when control transfers to the customer. VAS takes a stricter approach: revenue recognized when goods are delivered, services rendered, and collection reasonably certain.
The gap hits hardest on software licenses and long-term contracts. Under IFRS 15, a software license with no remaining customization recognizes revenue at contract signing. VAS requires delivery confirmation before booking revenue.
A manufacturing subsidiary building a factory over 18 months shows zero revenue under conservative VAS while IFRS books progressive recognition. Same transaction, different timing — reconciliation required.
Lease Accounting
IFRS 16 puts all leases (except short-term and low-value) on the balance sheet as right-of-use assets with corresponding liabilities. Finance or operating—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.
For FDI enterprises with significant lease portfolios — factory buildings, warehouses, office spaces — this creates material balance sheet divergence. A Vietnam entity showing VND 50 billion (~USD 2 million) in fixed assets under VAS may carry an additional VND 300 billion (~USD 12 million) in right-of-use lease assets under IFRS consolidation.
Fair Value Measurement
VAS limits fair value to specific asset classes. IFRS mandates fair value broadly across biological assets, investment property, and financial instruments.
Circular 99/2025 introduces Account 215 (Biological Assets), bridging part of this gap. However, measurement methodology remains VAS-prescribed cost basis rather than IFRS fair value hierarchy.
Agricultural FDI enterprises illustrate the practical impact: coffee plants in the Central Highlands might show VND 80 billion (~USD 3.2 million) at VAS historical cost versus VND 120 billion (~USD 4.8 million) at IFRS fair value. That VND 40 billion gap requires reconciliation and deferred tax calculations.
Compliance with Global Minimum Tax rules in Vietnam adds another layer, since effective tax rate calculations under Account 82112 (Pillar Two CIT) use book values that differ between frameworks. The GMT filing process requires documented VAS-to-IFRS reconciliation on Form 01/TM — making this divergence a direct compliance obligation.
Dual VAS-IFRS Reporting: Reconciliation Requirements
Until VFRS fully converges with IFRS, FDI enterprises maintain both VAS statutory books for Vietnam tax compliance and IFRS-aligned reports for parent consolidation under IFRS 10. Auditors flag discrepancies between VAS taxable income and IFRS consolidated results, questioning transfer pricing or expense deductibility.
This directly affects dividend planning. Profit repatriation from Vietnam is governed by audited VAS net profit—any over-estimation in IFRS consolidated reports will not be available for legal remittance until the local statutory audit is finalized.
Which Reporting Framework Applies
Vietnam’s IFRS convergence follows a two-phase roadmap. Phase I (2022–2025) allowed voluntary adoption. Phase II (financial years beginning on or after January 1, 2026) makes IFRS compulsory for specific entity types under Decision 345/QĐ-BTC.
| Entity Type | Phase II Requirement | Practical Implication |
|---|---|---|
| State-Owned Enterprises | Compulsory IFRS | Full IFRS conversion—VAS no longer acceptable for statutory reporting |
| Listed Companies | Compulsory IFRS | Stock exchange reporting requires IFRS for foreign-invested listed entities |
| Unlisted Public Companies (non-SME) | Compulsory IFRS | Public accountability triggers IFRS requirement |
| 100% Foreign-Owned Enterprises | VAS mandatory; IFRS voluntary | Dual VAS-IFRS reporting continues—VAS for tax, IFRS for parent consolidation |
| SMEs | VFRS mandatory | Simplified IFRS-aligned framework |
Entity classification determines the mandatory framework. Misclassification means preparing under the wrong standard—incurring unnecessary transition costs and facing audit non-compliance when authorities enforce Phase II requirements.
Detailed guidance on framework selection: Circular 99 Implementation Guide.
Circular 99/2025 Changes Affecting Reconciliation
Three changes from Circular 99/2025 directly affect VAS-IFRS reconciliation:
- Account 215 (Biological Assets) — separates biological assets from PPE, moving VAS closer to IAS 41 (though measurement remains cost-based, not IFRS fair value)
- Account 82112 (Pillar Two CIT) — tracks QDMTT and IIR obligations for multinational FDI groups subject to Global Minimum Tax
- Statement of Financial Position — replaces “Balance Sheet” terminology, aligning VAS report names with IFRS nomenclature
For the full 25+ account-level comparison, see the detailed Circular 99 changes.
Common Audit Flags
Three issues dominate accounting framework audits:
- Revenue recognition timing unreconciled — IFRS performance obligation vs. VAS delivery-based timing. Undocumented gaps trigger taxable income recalculations.
- Lease reclassification undocumented — Off-balance sheet operating leases under VAS appearing as right-of-use assets in IFRS consolidation. Total assets can differ 15–20% between frameworks without disclosure.
- Fair value adjustments missing deferred tax — VAS historical cost to IFRS fair value revaluation creates temporary differences requiring deferred tax provisions. Auditors consistently flag this gap.
Next Steps
VAS-IFRS differences persist until full VFRS convergence—timeline uncertain as of 2026. Three immediate actions for FDI enterprises: verify entity classification under Decision 345/QĐ-BTC, document reconciliation protocols for revenue timing, lease reclassification, and fair value gaps, and update chart of accounts to Circular 99/2025 structure.
For a complete map of all accounting obligations—statutory audit, chief accountant requirements, and periodic government reports—see the Accounting & Reporting Compliance hub →.
Need VAS-IFRS reconciliation support? Indochina Link Vietnam’s IFRS compliance team provides Ministry of Finance-licensed accounting and reporting services for enterprises navigating dual reporting requirements across Vietnam.
Legal Disclaimer
This article provides general information about Vietnam Accounting Standards and IFRS differences. It does not constitute legal, tax, or accounting advice.
Regulations cited (including Circular 99/2025/TT-BTC and Decision 345/QĐ-BTC) are subject to amendments and official Ministry of Finance guidance. Readers should consult licensed accounting professionals regarding specific circumstances before making framework adoption decisions. Vietnam regulations change frequently—verify current requirements with qualified advisors.
