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Many FDI companies have a general director who also covers the region and spends only a few days a month in Vietnam. When the legal representative is based abroad, the practical questions are: who signs tax filings, who holds the digital signature, who approves payment orders, and how do you avoid one person holding all the power? This article explains how to design an authorization matrix and internal controls, based on the FDI accounting experience of ACCA Consulting Vietnam.
1. When the legal representative is abroad: key requirements
The Law on Enterprises requires a company to always have a legal representative residing in Vietnam; when the sole legal representative leaves the country, they must authorize another person in writing to exercise their rights and obligations during their absence. The specific conditions, scope and consequences should be checked against current regulations and the company charter.
Operationally, authorization is only the legal layer. The more important layer is who does what, up to what limit, with which tools: the digital signature for tax filing, bank tokens, the company seal and approval rights in the accounting software.
2. Designing a spending approval matrix
An approval matrix sets out who may propose, who checks and who approves each type of expense at each value threshold. The table below is an illustrative example for a small FDI company; specific thresholds are decided by management.
| Expense type / threshold | Proposed by | Checked by | Approved by |
|---|---|---|---|
| Under VND 5 million | Employee | Accountant | Department head in Vietnam |
| VND 5 million to under VND 50 million | Department head | Accountant | Authorized person in Vietnam |
| VND 50 million to under VND 500 million | Department head | Chief accountant / accounting service | General director (remote e-approval) |
| VND 500 million and above, borrowing, asset investment | General director | Accountant + regional finance | Members' council / parent company per the charter |
| Monthly payroll | HR | Accountant reconciles timesheets | General director |
| Tax payments per returns | Accountant | Authorized person | General director or authorized person |
Illustrative example; the VND 5 million threshold matches the invoice amount that must be paid by non-cash means for input VAT to be deductible.
View as table
| Department head | 5,000,000 VND |
| Authorized person | 50,000,000 VND |
| General director | 500,000,000 VND |
Why VND 5 million (≈ USD 196, approximate, at a reference rate of VND 25,500/USD) at the lowest level: purchase invoices of VND 5 million or more (VAT inclusive) must be paid by non-cash means for input value-added tax (VAT/GTGT) to be deductible. Aligning the approval threshold with this limit lets the accountant check the payment method at the time of approval.
3. Managing digital signatures and bank tokens
- The company digital signature used for tax returns and e-invoices: held by the accountant, with a handover log and password changes when staff change.
- Bank tokens/OTP: set up two levels, “maker” and “approver”; the approver can be the general director approving remotely.
- Never share one token or one e-banking account for both creating and approving payment orders.
- Transaction limits in e-banking should match the internal approval matrix.
- Revoke immediately digital signatures, tokens and access rights when staff leave or an authorization expires.
4. Authorization process when the director is absent
- 1Define the scope
List the delegated tasks: signing tax filings, signing contracts below a threshold, dealing with government authorities.
- 2Draft the authorization letter
State the authorized person, scope, term and value limits.
- 3Notify the parties
Send it to the bank, the accountant and key suppliers; keep the original at the company.
- 4Align the systems
Update rights in e-banking, the accounting software and the e-invoice system.
- 5Review regularly
Each quarter, compare approved transactions against the scope of authorization.
5. Internal control checklist against fraud
- Bank statements sent directly to the general director, not only via the person creating payment orders.
- New suppliers' tax codes and bank accounts verified before the first payment.
- Changes to beneficiary account details verified through a second channel (a phone call, not just email).
- Payroll reconciled against the social insurance contribution list (employer 21.5%, employee 10.5%).
- Tax paid on the tax portal reconciled with the books every month.
- Approval records kept with the bookkeeping documents for at least 10 years.
When the legal representative changes, the ERC change must be registered and the bank updated; see the IRC and ERC amendment reference table.
FAQ
Does a legal representative living abroad need to authorize someone?
Under the Law on Enterprises, a company must have a legal representative residing in Vietnam; when the sole legal representative leaves the country, a written authorization is required. Check the charter and current regulations for your specific case.
Who should hold the digital signature for tax filing?
It is usually held by the accountant or the accounting service provider under a handover record, since it is needed every month. Approval rights for transfers in e-banking should be kept separately with an authorized person.
Can the director approve payments remotely?
Yes, if the e-banking system and software allow separate maker and approver roles. What matters is that the system limits match the internal approval matrix.
Operate safely when your director is outside Vietnam
ACCA Consulting Vietnam is an accounting firm in Ho Chi Minh City supporting FDI companies: checking documents, reconciling bank accounts and reporting to general directors based abroad. Call or Zalo +84 938 847 699.
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