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Vietnamese laws require Vietnamese companies to appoint a certified/registered Chief Accountant, except for those such as "extra-small" enterprises as defined by the law. However, given the significant registration requirements a company faces following incorporation or establishment in Vietnam, new companies are encouraged to appoint an experienced Chief Accountant to ensure the legal registrations and operation of the company are undertaken in accordance with relevant laws, and to avoid risks and penalties from non-compliance.

Why appointing an experienced Chief Accountant matters for newly established Vietnamese enterprises.

 

What is the role of the Chief Accountant

The Chief Accountant has numerous roles under Vietnamese laws, and in many cases also undertakes elements the Company Secretarial role that exists in other jurisdictions. We have detailed many of these roles and obligations below, and the risks that exist with them, starting with those tasks arising once a company is established, and then looking at the ongoing obligations.

 

Taxation Registration and Compliance

Tasks Problems & Risks
Tax Token Registration and Purchase

There are many suppliers that provide the electric tax token service. However, due to the linkage between accounting software and the tax system, it is important to choose a supplier which aligns appropriately. 

If a company does not buy the electric tax token promptly, the company can miss deadlines for submitting reports and likely to face fines or penalties.

Selecting and registering supplier to provide electronic invoices.

Electronic invoices (e-invoices for VAT) are issued to customers where the Company sells goods or provides services.

Although it is not necessarily difficult to register and buy electronic invoice services from suppliers, it does take time to choose appropriate templates for the electronic invoice. Problems can occur when a company cannot issue invoices to customers on time, as this leads to commercial dissatisfaction from customers and potential penalties from authorities.

Preparation of the Notice of Invoice Issuance in the online tax system

A company cannot issue invoices to customers until receiving an acceptance to issue invoices from the supervisory tax authority. A notice of sales invoice issuance and sample sales invoices are required to be submitted to the supervisory tax authority at least two days before commencement of use.

Penalties arise when a company issues invoices which have not yet been registered by the supervisory tax authority.

Preparation of the Business License Fee declaration online, and paying the Business License Fee

A new company needs to submit its Business License Fee declaration online and pay the (annual) business license fee before the last day of month in which the company is established, or face penalties. The Business License Fee is then due on an annual basis each January. 

Application of VAT method

Depending on a company’s business, a company can apply the VAT direct method or VAT deduction method (credit-invoice method). The VAT method is important as it can impact a company's cash flow and expenses.The VAT method follows the first VAT declaration submitted online by a company through the tax system, and is applied for the full financial year.

Where a company chooses the VAT direct method, the company is not able to claim credits or refunds for VAT. 

Preparation and submission of monthly, quarterly and yearly tax declarations Fines are applied where companies do not submit monthly, quarterly and yearly tax declarations on time. View the ongoing tax lodgements of a company here: Compliance Calendar
Discussions and explanations to the supervisory tax authority whenever issues arise. Companies can meet difficulties when questions arise and explanations are required to the supervisory tax authorities. 
Advice regarding tax issues that arise. Companies can face risks regarding tax (including calculating tax incorrectly and applying regulations inappropriately) if they do not have a specialist or experienced Chief Accountant to give advice. 

 

Compliance with Banking Regulations

Tasks Problems & Risks
Opening of Current and Capital Bank Accounts

The process for opening domestic bank accounts need to be applied at the chosen bank. The Direct Investment Capital Account is importantly required, as the Charter Capital of the investors needs to be contributed in full within 90 days from the date of company establishment (ERC date).

Signing of bank documents, including withdrawing or foreign transfers

Bank requirements are that a company's Chief Accountant must sign bank documents (ie, withdrawal request) when a company wishes to withdraw cash or transfer funds offshore. Incorrectly completed documentation (including narrations) may result in bank errors or future unintended tax implications. 

Preparation of online payments, and ensuring documents comply with tax implications.

Where a company does not have appropriate accounting documents to support processed banking transactions, denial of deductions for CIT and VAT can arise.

 

Compliance with Other Government Regulations

Tasks Problems & Risks
Preparation and lodgement of monthly, quarterly and yearly Statistics Reports

Statistics Reports are due for lodgement throughout the year, and failure to lodge or comply can result in penalties

Preparation and lodgement of monthly, quarterly and yearly Labour Reports

Labour Reports are due for lodgement throughout the year, and failure to lodge or comply can result in penalties

Preparation and lodgement of monthly, quarterly and yearly DPI Reports

Department of Planning and Investment ("DPI") Reports are due for lodgement periodically through a year, and failure to lodge or comply can result in penalties

 

Complying with, and Applying, Accounting Regulations

Tasks Problems & Risks
Choosing method for recording accounting transactions.

Should the company choose to use VAS compliant accounting software, but which does no match the size/scale of the business, then compliance and commercial issues can arise.

Establishing and formalising the Chart of Accounts

The Chart of Accounts ("COA") must be in compliance with Government regulations, be tax compliant, yet still be appropriate for management reporting needs. Penalties exist where the COA does not comply with regulations. 

Preparation of monthly financial reports

Ensuring that monthly financial reports prepared by the company accurately represent the true results of the company, yet follow Vietnamese Accounting Standards and other compliance requirements. Non compliance, or inaccurate reports, both represent significant risks for penalties or the use of company financial resources.

Managing cash and ensuring revenue and expenses are legally compliant

Important to ensure that revenue is earned and recorded in compliance with licensed (permitted) activities and regulations. Expenses that have sufficient documentation are recorded appropriate, and those without appropriate documentation are treated as non-deductible for CIT and VAT.

 

Financial Statements Being Prepared In Accordance with Accounting Standards and Regime 

Tasks Problems & Risks
Preparation of Annual Financial Statements, and submission to authorities.

Annual Financial Statements are required to be lodged by no later that 90 days after year end with appropriate authorities, which can include tax agencies, statistics authorities, business registration authorities and Provincial financial agencies. Penalties arise for late submission

Review and signing of Accounting Vouchers

All entries in a company's accounting system need to be supported by appropriate and signed accounting vouchers. Expenses become non-deductible for taxation if a company does not have appropriate supporting accounting vouchers. 

Review of commercial and service contracts

Where information in commercial and service contracts are incorrect or not compliance with tax or other regulations, there can be significant tax or other compliance issues for a company.

Review of import and export documentation

Where documents are not in line with regulations, it may be possible that payments cannot be completed, or incorrect tax rates are applied. Significant penalties can arise where customs documentation does not align with tax documentation and records.

Arrangement and co-ordination for the Annual Audit of the company's Financial Statements

The Annual Audit of the company's Financial Statement is required to be undertaken within 90 days from the end of the company's financial year. Late completion of the audit and lodgement can result in significant penalties.

 

Should you wish to discuss how Domicile Corporate Services can assist with your Chief Accountant, financial compliance, taxation compliance and ongoing accounting needs, contact us at This email address is being protected from spambots. You need JavaScript enabled to view it.

 

 

For further information, contact:

Matthew Lourey, Managing Partner, email: This email address is being protected from spambots. You need JavaScript enabled to view it.

Jason Turnbull, Partner, email: This email address is being protected from spambots. You need JavaScript enabled to view it.

Phuong Vo, Head of Licensing, email: This email address is being protected from spambots. You need JavaScript enabled to view it.

 

This publication is general in nature, and is not intended to be relied upon as professional advice.

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