Every foreign-invested enterprise in Vietnam is required to maintain its books of account under Vietnamese Accounting Standards (VAS). At the same time, most FDI companies are also required to report to their parent groups using International Financial Reporting Standards (IFRS). Running two parallel accounting systems is costly and complex — and the differences between VAS and IFRS are significant enough that financial results reported under each framework can look materially different. This guide explains the key divergences and what they mean for FDI financial management.
Background: VAS and IFRS at a Glance
Vietnamese Accounting Standards (VAS)
Vietnam has 26 accounting standards, issued in five batches between 2001 and 2005, modelled on older versions of IFRS. They have not been substantially updated since issuance. VAS is governed by the Ministry of Finance and is mandatory for all enterprises operating in Vietnam, including FDI companies. Financial statements prepared under VAS are used for tax filing, regulatory reporting, and statutory audit purposes in Vietnam.
International Financial Reporting Standards (IFRS)
IFRS is issued by the International Accounting Standards Board (IASB) and is used in over 140 countries. It is principles-based, continuously updated, and aimed at providing high-quality, globally comparable financial information. Vietnam’s Ministry of Finance published an IFRS adoption roadmap (Decision 345/QĐ-BTC) establishing a phased transition. Under the 2022–2030 roadmap, Phase 1 (2022–2025) allows large listed companies, FDI enterprises, and public-interest entities to voluntarily apply full IFRS or IFRS for SMEs. Phase 2 (2025–2030) broadens voluntary adoption further. Full mandatory IFRS adoption for FDI companies has not yet been set, but FDI groups increasingly prepare consolidated IFRS accounts alongside VAS statutory accounts — creating a dual-reporting obligation that requires reconciliation.
Key Differences Between VAS and IFRS
1. Revenue Recognition
VAS: Follows percentage-of-completion for long-term construction contracts (VAS 15) and a transfer-of-risk model for goods (VAS 14). No comprehensive standard equivalent to IFRS 15.
IFRS 15: Provides a detailed five-step model based on performance obligations and transaction prices. Revenue recognition can differ significantly for multi-element contracts, licensing arrangements, and long-term service contracts.
Impact for FDI: Software companies, real estate developers, and companies with complex service contracts will often recognise revenue at different times and amounts under VAS versus IFRS 15.
2. Financial Instruments
VAS: Vietnam does not have a comprehensive equivalent to IFRS 9. Financial assets are generally carried at cost or historical amortised cost with limited fair value measurement.
IFRS 9: Requires classification of financial assets into three categories (amortised cost, fair value through other comprehensive income, fair value through profit or loss) and the Expected Credit Loss (ECL) model for impairment.
Impact for FDI: Companies with significant intercompany loans, trade receivables, or debt instruments will find that IFRS 9 requires earlier recognition of credit losses compared to VAS.
3. Fixed Assets and Depreciation
VAS 03: Requires historical cost. Revaluation of fixed assets is not permitted under VAS except in specific Ministry of Finance-mandated revaluation exercises. Depreciation rates must follow the ranges prescribed by Circular 45/2013/TT-BTC for tax purposes.
IAS 16: Allows either the cost model or the revaluation model. Useful lives and depreciation methods are based on management’s assessment, not prescribed tax rates.
Impact for FDI: Asset-heavy manufacturers and real estate companies often have materially different net book values and depreciation charges under VAS versus IFRS.
4. Leases
VAS: Follows the older operating/finance lease distinction similar to IAS 17. Operating lease payments are expensed as incurred with no on-balance-sheet recognition.
IFRS 16: Requires lessees to recognise a right-of-use (ROU) asset and lease liability for virtually all leases with a term over 12 months. This significantly increases both assets and liabilities on the balance sheet.
Impact for FDI: Companies with significant operating leases (office space, factory premises, equipment) will see a large gross-up of their balance sheet under IFRS 16 that does not exist under VAS.
5. Consolidation
VAS 25: Based on an older version of IAS 27. Does not fully address variable interest entities, structured entities, or the detailed control assessment framework of IFRS 10.
IFRS 10: Uses a comprehensive control-based consolidation model. Entities that appear not to be subsidiaries under VAS may need to be consolidated under IFRS 10.
6. Employee Benefits
VAS: Limited guidance on post-employment benefits. No equivalent to IAS 19 for defined benefit pension obligations.
IAS 19: Requires actuarial valuation of defined benefit obligations, recognition of remeasurements in OCI, and net interest cost calculation.
Dual Reporting in Practice
Most FDI companies manage their dual reporting obligations through one of these approaches:
- VAS primary books with IFRS adjustments: The Vietnamese accounting team maintains VAS records for statutory purposes; the regional finance team applies IFRS conversion adjustments in the group reporting system.
- Parallel ledgers in ERP: Larger companies configure their ERP (SAP, Oracle) to post transactions simultaneously to VAS and IFRS ledgers, reducing manual reconciliation.
- Quarterly IFRS packs: The Vietnamese entity provides a VAS trial balance to the group, which then applies standard journal adjustments centrally.
Related reading: Vietnam Annual Compliance Calendar 2026 — including the annual financial statement and audit submission deadlines. For the tax side of your VAS accounts, see Vietnam VAT Rate and Refund Rules 2026.
How TrustlineAX Can Help
TrustlineAX helps FDI companies manage both VAS statutory accounts and IFRS group reporting efficiently. Our accounting team prepares VAS financial statements and IFRS conversion packs, advises on the key accounting policy choices that affect both frameworks, and ensures your Vietnam entity’s numbers are defensible under both sets of standards.