In this article
Many FDI companies sell, buy materials and report to their parent in USD, so they would like to use a foreign currency as their accounting currency instead of VND. Vietnamese accounting law allows this when the conditions are met, but it brings some specific obligations. This article, compiled by the accounting team at ACCA Consulting Vietnam, helps you assess whether to make the switch.
1. What is a foreign accounting currency?
The accounting currency (đơn vị tiền tệ trong kế toán) is the currency used to record all transactions in the books and to prepare the financial statements. The default is the Vietnamese dong (VND). A company may use a foreign currency such as USD only when that currency is the primary currency of its business operations.
Two concepts are often confused: the accounting currency (used for day-to-day bookkeeping) and the presentation currency (used when filing reports with State authorities). Even when the books are kept in USD, financial statements filed in Vietnam must still be translated into VND under current regulations.
2. Conditions for choosing USD as the accounting currency
Current regulations do not allow a foreign currency to be chosen by preference. The company must demonstrate that USD is the currency that drives its cash flows and prices. You can self-assess using the questions in the table below. If most answers are "yes", USD is likely to be the primary currency.
| Criterion | Test question | Evidence to keep |
|---|---|---|
| Sales | Are most selling prices quoted and settled in USD? | Sales contracts, invoices, collection statements |
| Purchases and expenses | Are key materials and services priced and paid in USD? | Purchase contracts, customs declarations, payment documents |
| Price drivers | Are selling prices mainly driven by international markets priced in USD? | Price lists, group pricing policy |
| Financing | Are capital contributions and loans mainly in USD? | Capital contribution records via the DICA, loan agreements |
| Retained receipts | Are cash receipts usually held in USD? | Monthly foreign currency account balances |
Tip: prepare a spreadsheet showing the share of revenue and expenses by currency over the last 12 months, and keep it with the decision file on the accounting currency. It is useful evidence when the auditor or the tax authority asks.
- USD78%
- VND17%
- EUR5%
Illustrative example for a hypothetical export processing company; not statistical data.
View as table
| USD | 78% |
| VND | 17% |
| EUR | 5% |
3. Procedures for choosing or changing the accounting currency
Choosing USD is a significant decision that affects the entire bookkeeping system. In practice, the sequence is usually as follows:
- 1Assess
Analyze the share of receipts and payments by currency and document the conclusion on the primary currency.
- 2Internal decision
The legal representative or the Members' Council signs a decision on the accounting currency.
- 3Notify the tax authority
Notify the directly managing tax office following the procedures and deadlines under current regulations.
- 4Configure the software
Set up the bookkeeping currency, exchange rates and VND translation report templates.
- 5Lock conversion balances
Convert opening balances into USD and keep a signed reconciliation.
4. Translating financial statements into VND
A company keeping its books in USD must still file its annual financial statements (with the audit report, as FDI companies require an independent audit) and its tax returns in VND. The exchange rates used to translate each line item follow the current accounting regime; agree them with your auditor in advance.
In practice, three common errors are: using a single rate for all line items even though the regulations distinguish between them; not disclosing the rates used; and VND figures on the corporate income tax (CIT/TNDN) finalization return not matching the translated financial statements. See also how to handle exchange differences in FDI companies.
5. USD vs VND bookkeeping compared
| Aspect | USD bookkeeping | VND bookkeeping |
|---|---|---|
| Group reporting | Close to the parent's figures, fewer translation steps | Must translate into USD every reporting period |
| Exchange differences | Arise on VND transactions (payroll, taxes, local expenses) | Arise on USD transactions (sales, purchases, loans) |
| Tax returns | Must be translated into VND and carefully reconciled | Taken directly from the books |
| Software | Needs multi-currency software with translation reports | Most software is sufficient |
| Staffing | Accountants need to be familiar with translation | Common skills, easy to recruit |
Illustrative example for a hypothetical company with 80% of transactions in USD; entry counts are only for comparing trends.
View as table
| USD bookkeeping | VND bookkeeping | |
|---|---|---|
| Export sales | 0 bút toán | 40 bút toán |
| Imported materials | 0 bút toán | 25 bút toán |
| Payroll, social insurance | 12 bút toán | 0 bút toán |
| Local taxes and fees | 8 bút toán | 0 bút toán |
| Domestic service expenses | 15 bút toán | 0 bút toán |
The example shows that when most transactions are in USD, USD bookkeeping reduces the number of exchange difference entries. Conversely, if the company sells mainly in the domestic market, VND bookkeeping is much simpler.
6. Monthly operating checklist
- Update the exchange rates applied to each type of VND transaction
- Reconcile revenue and value-added tax (VAT/GTGT) on the returns (VND) with the books (USD)
- Check that issued e-invoices show the correct currency and exchange rate
- Track exchange differences from payroll and tax obligations separately
- Keep the translation schedule signed by the preparer and the approver
FAQ
Can a newly established company keep its books in USD from the start?
Yes, if it can show that USD is the primary currency of its expected operations. Keep the projected cash flow analysis and notify the tax authority under current regulations from the outset.
Can the VAT return be prepared in USD?
No. Tax returns and tax payable are determined in VND, so a company keeping its books in USD must translate and reconcile every period.
Does USD bookkeeping avoid exchange differences?
Not entirely. Exchange differences shift to VND transactions such as payroll, social insurance, taxes and domestic expenses.
Do auditors review the choice of accounting currency?
Yes. Auditors usually examine the evidence the company used to conclude on its primary currency, so the assessment file should be kept complete.
Need an accounting currency assessment for your FDI company?
ACCA Consulting Vietnam reviews your transaction mix and recommends the right bookkeeping approach. Our accounting team in Ho Chi Minh City supports you from setup through monthly reconciliation.
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