Standard FDI enterprises keep their statutory books under Vietnamese Accounting Standards (VAS); IFRS serves the foreign parent’s group reporting. The VAS framework, comprising 26 active standards, remains the mandatory legal regime for accounting books and statutory financial statements of every legal entity established in Vietnam, within the wider rules on accounting and reporting framework. Foreign parents want consolidated reporting under IFRS to reflect fair market values, while Vietnamese law requires local subsidiaries to file statutory statements under domestic accounting principles. The result is a standing dual-reporting task.
Under Circular 99/2025/TT-BTC (replacing Circular 200/2014/TT-BTC for financial years beginning on or after January 1, 2026), some technical gaps narrow, and the Ministry of Finance has also issued Circular 118/2026/TT-BTC on IFRS for International Financial Centre members. For standard FDI enterprises, though, VAS reliance on historical cost and strict tax documentation still governs domestic filings. A documented reconciliation bridge limits tax reassessment exposure and protects the foreign investor’s right to remit profit.
1. Regulatory Framework and Mandatory VAS Obligations for FDI Enterprises
The statutory accounting framework in Vietnam is established by the Law on Accounting No. 88/2015/QH13 (as amended by Law No. 56/2024/QH15) and guiding Decree No. 174/2016/ND-CP. They apply to every FDI enterprise, whatever its capital, foreign ownership or parent structure.
Vietnam’s roadmap toward international accounting standards is defined by foundational statutory milestones:
- Decision No. 345/QD-BTC Scheme: Set out a phased roadmap toward IFRS: preparation in 2020-2021, voluntary application in 2022-2025, and mandatory application after 2025, with the Ministry of Finance to set scope and timing.
- Circular No. 118/2026/TT-BTC (Issued August 18, 2026, Effective January 1, 2027): Members of the International Financial Centre (IFC) under Resolution No. 222/2025/QH15 may choose to apply IFRS in its original form from FY2027. They apply IFRS 1 on first-time adoption and notify the Ministry of Finance in writing at least 30 days before starting.
- Standard FDI Enterprise Requirements: Outside the IFC, Vietnamese law does not require statutory IFRS. Statutory financial statements follow VAS and the enterprise accounting regime (Circular 99 from FY2026). They are filed with the authorities set by the relevant laws (tax and statistics, and the Department of Finance where required), with the audit report attached where an audit is mandatory (Article 26 of Circular 99).
For standard FDI enterprises, an IFRS package serves group consolidation only. Filing IFRS reports in place of statutory VAS statements violates Vietnamese accounting regulations, attracting administrative sanctions under Decree No. 41/2018/ND-CP (amended by Decree 132/2026/ND-CP) and heightening tax assessment risks under Law 108/2025/QH15. Every FDI enterprise must assign a chief accountant in Vietnam (or a person in charge of accounting) who meets Article 54 of the Law on Accounting, including a chief accountant training certificate, to take responsibility for statutory submissions.
2. VAS to IFRS Mapping by Standard
Most VAS were drafted between 2001 and 2005 from the IAS version in force at the time, so they have a clear international counterpart. Several of those IAS have since been replaced (IAS 18 by IFRS 15, IAS 17 by IFRS 16), and those replacements explain many reconciliation gaps for FDI subsidiaries.
| VAS | IAS/IFRS counterpart | Where they differ and what it means for FDI |
|---|---|---|
| VAS 14 Revenue and Other Income | IAS 18, now IFRS 15 | VAS recognizes revenue when risks and rewards pass; IFRS 15 uses a five-step control model, so bundled contracts can fall in different periods in the parent’s package. |
| VAS 15 Construction Contracts | IAS 11, now IFRS 15 | Stage-of-completion rules stay close to IAS 11, but contractors must still map each contract to the IFRS 15 model for group reporting. |
| VAS 21 Presentation of Financial Statements | IAS 1 (2003 version) | VAS has no statement of other comprehensive income (OCI), so items the parent reports in OCI need a reconciling line. IFRS 18 replaces the IAS 1 presentation rules from January 1, 2027. |
| VAS 06 Leases | IAS 17, now IFRS 16 | VAS keeps operating leases off the lessee’s balance sheet; IFRS 16 capitalizes most leases, so office and factory leases need right-of-use entries. |
| VAS 03 Tangible Fixed Assets | IAS 16 | VAS allows only the cost model, so a parent using IAS 16 revaluation books the uplift outside the statutory ledger. |
| VAS 11 Business Combinations | IFRS 3 | VAS amortizes goodwill over a period of up to 10 years; IFRS tests goodwill for impairment every year instead, so post-acquisition profit differs each year. |
| VAS 17 Corporate Income Tax | IAS 12 | Both use the temporary-difference method, so IFRS-only adjustments in the bridge (leases, revenue timing, fair value) create deferred tax items the VAS books don’t carry. |
| VAS 18 Provisions, Contingent Assets and Liabilities | IAS 37 | The accounting is close. The gap is tax: an IFRS provision based on estimates is not CIT-deductible when it isn’t an actual expense backed by valid documents. |
| VAS 25 Consolidated Financial Statements | IAS 27 (2003 version); no IFRS 10 equivalent | VAS defines control as the power to govern financial and operating policies; IFRS 10 adds exposure to variable returns, so the group perimeter can differ. |
| VAS 10 Effects of Changes in Foreign Exchange Rates | IAS 21 (1993 version) | VAS has no functional-currency analysis and treats VND as the default accounting currency, so a parent that views the subsidiary as USD-functional remeasures it. |
| VAS 23 Events after the Balance Sheet Date | IAS 10 | Both split events into adjusting and non-adjusting; align the VAS issue date with the group sign-off so both packages capture the same events. |
| VAS 27 Interim Financial Reporting | IAS 34 | Same framework; VAS 27 applies to entities that must publish interim statements by law or choose to. |
| VAS 29 Changes in Accounting Policies, Estimates and Errors | IAS 8 | Close match, but VAS 29 does not require disclosure of new standards issued and not yet effective. |
Searching for “IFRS 10 vs VAS 23”? Those numbers don’t pair. VAS 23 corresponds to IAS 10, while IFRS 10 (consolidation) covers the subject of VAS 25 without being its equivalent. Likewise, “IFRS 1 vs VAS 21” usually means IAS 1: IFRS 1 covers first-time adoption and has no VAS equivalent.
3. Four Core Technical Differences Between VAS and IFRS
Four gaps need the closest attention: revenue timing, leases, fair value, and impairment. IFRS 13 and IAS 36 have no VAS equivalent.
Revenue Recognition: VAS 14 vs. IFRS 15
VAS 14 (Revenue and Other Income) restricts revenue recognition on the sale of goods until five cumulative criteria are met: transfer of significant risks and ownership rewards, surrender of managerial involvement, reliable revenue measurement, probable economic benefit inflows, and determinable associated costs. For CIT, taxable revenue is recognized when ownership of goods transfers or services are completed (Decree 320/2025/ND-CP); the e-invoice is the supporting document tax auditors reconcile against.
IFRS 15 instead applies a five-step model built on performance obligations satisfied over time or at a point in time. Bundled contracts supplying equipment alongside two-year technical support require unbundling under IFRS 15 to recognize service revenue ratably, so recognition timing can differ from the VAS books.
Lease Accounting: VAS 06 vs. IFRS 16
VAS 06 keeps the split between operating and finance leases, and most office, factory, and industrial land leases are operating leases. Rental payments are expensed straight-line over the lease term, leaving tenant balance sheets unencumbered by lease assets or liabilities.
In contrast, IFRS 16 eliminates the operating lease category for lessees, except for short-term leases under 12 months or low-value assets. Lessees must capitalize the present value of future lease commitments into a Right-of-Use (ROU) asset alongside a corresponding lease liability. Group reports then show higher assets and liabilities, with ROU depreciation and lease interest in place of rent.
Fair Value Measurement and Asset Impairment
VAS adheres strictly to historical cost accounting. Property, plant, equipment, and investment properties are recorded at acquisition cost less accumulated depreciation. Upward revaluations are prohibited unless a State decision requires them or assets are contributed as capital.
Regarding asset impairment, VAS lacks an equivalent standard to IAS 36 (Impairment of Assets). Allowance provisions for inventory write-downs, bad debts, and financial investment losses are circumscribed by the Ministry of Finance’s quantitative provisioning criteria. Provisions under Account 229 of Circular 99 cover trading securities, investments, receivables, inventories and biological assets, not fixed assets, so an obsolete but still operating machine is generally not written down under VAS.
4. Circular 99/2025/TT-BTC Updates and Impact on the VAS - IFRS Gap
Circular No. 99/2025/TT-BTC (issued October 27, 2025) applies to financial years beginning on or after January 1, 2026 and replaces Circular 200/2014/TT-BTC, moving statutory reporting closer to international norms. The account-by-account comparison lists every change.
Key structural reforms introduced by Circular 99 include:
- Renaming the Balance Sheet: The “Balance Sheet” becomes the “Statement of Financial Position,” matching IAS 1 terminology.
- Introducing Account 215 (Biological Assets): Segregates agricultural biological assets from standard property, plant, and equipment, aligning more closely with IAS 41 concepts, though historical cost measurement remains mandatory.
- Introducing Account 82112 (Pillar Two CIT Expense): Establishes a dedicated sub-account to record supplementary corporate income tax liabilities under Global Minimum Tax (QDMTT and IIR) mechanisms pursuant to Resolution No. 107/2023/QH15.
- Foreign-Currency Accounting: Sets rules for the exchange-rate revaluation of foreign-currency balances and the exchange-rate difference account (Account 413).
Despite these advancements, Circular 99 maintains the historical cost paradigm, meaning it does not remove the necessity of year-end IFRS consolidation adjustments for multinational groups.
5. Dual Reporting Challenges and Reconciliation Bridge Architecture
FDI subsidiaries keep VAS books for the authorities and send IFRS packages to the group. Enterprises build an audited Reconciliation Bridge that starts from the VAS general ledger, identifies classification and timing differences, books IFRS adjusting entries off-ledger, and produces the IFRS consolidated reporting package.
The bridge makes four core adjustments:
- Lease Capitalization Adjustments (IFRS 16): Reverse operating lease expenses booked in VAS administrative accounts (Account 642, Account 641). Simultaneously recognize ROU assets, lease liabilities, ROU depreciation expense, and lease financing interest.
- Revenue Deferral and Accrual Entries (IFRS 15): Examine unsatisfied performance obligations at year-end. Invoiced revenue recognized in VAS Account 511 that fails IFRS 15 criteria is shifted to Unearned Revenue.
- Fair Value Revaluations (IFRS 9, IAS 40): Record differences between fair market valuations and VAS historical costs directly into profit and loss or Other Comprehensive Income (OCI).
- Deferred Tax Accounting (IAS 12 / VAS 17): Every temporary divergence arising from revenue timing, lease modifications, and fair value adjustments alters the local tax base, requiring corresponding recognition of Deferred Tax Assets or Deferred Tax Liabilities.
6. Tax Audit Risks and Implications for Cross-Border Profit Repatriation
Tax authorities check returns against VAS books and invoices (Law on Tax Administration No. 108/2025/QH15, effective July 1, 2026), so large gaps between IFRS group figures and VAS returns draw scrutiny:
- Transfer Pricing Scrutiny: When group IFRS reports show a much higher margin for the Vietnamese entity than the CIT finalization return (Form 03/TNDN), tax authorities can treat the gap as a risk signal for related-party pricing under Decree No. 255/2026/ND-CP. Prepare the explanation in advance.
- Disallowance of Accrued Economic Costs: Expenses recognized under IFRS based on economic estimates (such as environmental dismantling provisions or IAS 36 asset impairments) are disallowed for CIT deduction under Decree No. 320/2025/ND-CP when they are not actual expenses or lack valid invoices and documents.
- Provisioning Penalties: Provisions made under group guidelines rather than the Ministry of Finance’s provisioning rules are non-deductible under Decree No. 320/2025/ND-CP; the added taxable income is taxed at the standard 20% CIT rate, plus late payment interest of 0.03% per day.
Accounting divergence also controls profit repatriation from Vietnam. Under Article 27.6 of Decree 252/2026/ND-CP (effective 1 July 2026):
- Annual profit transfers require that the enterprise has filed its audited annual financial statements and the CIT finalization return for the financial year.
- IFRS fair value uplifts cannot be remitted through the foreign investment capital account (formerly DICA). Banks commonly ask for documents and may query transfers above the profit in the audited statutory statements; this is bank practice, not a rule of Decree 252.
7. Action Plan for FDI Management
To satisfy international group reporting standards while safeguarding statutory compliance in Vietnam, FDI leadership should take five actions:
- Confirm Corporate Classification under Circular 118: Confirm whether the Vietnamese entity is a member of the International Financial Centre (eligible to apply IFRS under that Circular). If not, it keeps VAS statutory books, with IFRS reporting for group needs only.
- Upgrade Chart of Accounts to Circular 99: Configure domestic ERP software to adopt the accounts revised by that Circular, which already applies to financial years starting on or after January 1, 2026 (small and medium-sized enterprises may choose whether to apply it), specifically Account 215, Account 82112, and the Statement of Financial Position format.
- Formalize a Documented VAS-IFRS Reconciliation Manual: Write down the conversion rules for revenue, leases, and provisions, with an audit trail both group auditors and tax examiners can follow.
- Track Deferred Tax Balances Systematically: Maintain reconciliations between VAS accounting profit and CIT taxable income, tracking temporary differences via deferred tax accounts (Account 243 and Account 347) and adjustment section B of Form 03/TNDN.
- Engage Dual-Qualified Statutory Auditors: Choose an audit firm that works in both VAS and IFRS for statutory audits under FDI audit rules.
Keeping the statutory books and the parent’s reporting package consistent takes technical care. FDI enterprises that need help with statutory reporting and bookkeeping can use ICLV’s FDI reporting services.
