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FDI companies keep their books under Vietnamese Accounting Standards, but the parent company reads the numbers under IFRS. Understanding how VAS and IFRS differ lets you anticipate which adjustments will arise when preparing group reporting, rather than waiting for the group auditor to ask. Below are the 12 differences the accounting team at ACCA Consulting Vietnam encounters most often.
1. Why VAS and IFRS take different approaches
Vietnamese Accounting Standards (VAS – Chuẩn mực kế toán Việt Nam) were largely built on international standards in the early 2000s and have rarely been updated; they come with an accounting regime that prescribes the chart of accounts and report templates in detail. IFRS, by contrast, is continuously updated, is principles-based, relies on fair value and requires more judgment. The differences therefore lie not only in the numbers but also in presentation and disclosures.
2. 12 key differences at a glance
| # | Area | Under VAS | Under IFRS |
|---|---|---|---|
| 1 | Leases (lessee) | Distinguishes operating and finance leases; operating leases are not recognized as assets or liabilities | Most leases recognized as a right-of-use asset and lease liability (IFRS 16) |
| 2 | Revenue | Recognized on transfer of risks and rewards | Five-step model, separating performance obligations (IFRS 15) |
| 3 | Financial instruments | Mainly at historical cost, lacking comprehensive guidance | Classified and measured by business model and cash flows (IFRS 9) |
| 4 | Allowance for receivables | Based on aging, under Ministry of Finance guidance | Expected credit loss (ECL) model |
| 5 | Asset impairment | No general standard for fixed assets | Impairment test when indicators exist (IAS 36) |
| 6 | Fair value | Limited, mainly historical cost | Widely applied, with a dedicated measurement standard (IFRS 13) |
| 7 | Revaluation of fixed assets | Only when required by State regulations | Revaluation model may be chosen |
| 8 | Goodwill | Amortized | Not amortized; tested for impairment annually |
| 9 | Deferred income tax | A standard exists but many companies do not apply it fully | Applied comprehensively to temporary differences |
| 10 | Employee benefits | Lacks guidance for defined benefit plans | Defined benefit obligations measured under IAS 19 |
| 11 | Pre-operating costs, prepaid expenses | May be deferred and amortized | Mostly expensed immediately unless they qualify as assets |
| 12 | Presentation | Fixed templates, mandatory chart of accounts | Flexible, materiality-based disclosures |
3. Example of the impact on the numbers: an office lease
Suppose a company leases an office for 5 years at VND 1 billion per year (approximately USD 39,000 at a reference rate of VND 25,500/USD), paid at year-end, with an assumed discount rate of 5% per year. Under VAS this is an operating lease: VND 1 billion is expensed each year and nothing appears on the balance sheet. Under IFRS 16, the company recognizes a right-of-use asset and a lease liability equal to the present value of the 5 payments, about VND 4.33 billion.
Illustrative example, assumed interest rate 5%. Year 1 expense under IFRS = depreciation of about VND 866 million + interest of about VND 217 million; total expense over 5 years is the same under both standards, only the timing differs.
View as table
| VAS | IFRS 16 | |
|---|---|---|
| Initial right-of-use asset | 0 tr | 4,330 tr |
| Initial lease liability | 0 tr | 4,330 tr |
| Year 1 expense | 1,000 tr | 1,083 tr |
The consequences: EBITDA is higher under IFRS (because rent becomes depreciation and interest), liabilities increase, and expenses are front-loaded into the early years. Groups with credit covenants tied to leverage ratios need to know this early.
4. What FDI accountants should track from the start
- Maintain a lease register: term, rent, renewal options.
- Track receivables aging in detail by customer to estimate credit losses.
- Flag sales contracts with multiple obligations (warranty, installation, bundled services).
- Prepare a schedule of temporary differences between carrying amounts and tax bases.
- Review prepaid expenses and pre-operating costs still deferred on the books.
- Accrue bonuses and unused leave each period.
5. The IFRS adoption roadmap in Vietnam
The Ministry of Finance has approved a scheme to apply International Financial Reporting Standards in two phases: voluntary adoption for certain groups of companies (including FDI companies whose parent requires it), followed by mandatory adoption for certain entities. The scope and timing of mandatory adoption should be checked against the latest regulations. For most FDI companies today, the common practice is still to keep the books under VAS and prepare a conversion schedule for the group; see preparing a reporting package for the parent company.
FAQ
Can an FDI company keep its books under IFRS instead of VAS?
Companies in Vietnam must still follow the Vietnamese accounting regime unless they are eligible for and register to apply IFRS under the Ministry of Finance roadmap. Check the latest regulations before deciding.
Which VAS–IFRS differences have the biggest impact on FDI companies?
Typically leases, allowances for receivables, deferred tax and prepaid expenses. The extent of the impact depends on each company's industry and asset structure.
Is corporate income tax calculated under VAS or IFRS?
Corporate income tax (CIT/TNDN) in Vietnam is determined from accounting data under the Vietnamese regime and the tax regulations. IFRS adjustments serve group reporting and do not change the tax payable.
Anticipate IFRS adjustments before the group asks
ACCA Consulting Vietnam reviews your VAS books and identifies your company's material IFRS adjustments.
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