The Ministry of Finance has released Circular No. 118/2026/TT-BTC, which outlines how enterprises in Vietnam may apply International Accounting Standards. The document specifies which entities can choose this system and the rules they must follow. It also details the responsibilities of those companies and the procedures for reporting.
Who Can Apply the Standards?
Under Articles 1, 2, and 3 of the new regulation, only enterprises and economic organizations that are members of the International Financial Center in Vietnam may choose to apply International Accounting Standards. The source notes that this right is not extended to all businesses in the country.
For these members, the decision to apply the standards depends on their specific size, business direction, and needs.
There are three core principles for application. International Accounting Standards must be used in their original form and without modification. They must also be applied consistently throughout the financial year. If a company decides to stop using them, the change can only take effect on the first day of the next annual accounting period. Financial statements must also ensure the full, timely, faithful, and transparent presentation of information.
Timing and Notifications
Consistency is a strict requirement. The law does not allow enterprises to start or stop applying the standards at their own discretion during a financial year.
Before making such a change, enterprises must notify the Ministry of Finance in writing. This notice must be provided within a 30-day period preceding the date on which the application commences or ceases.
Submission and Responsibilities
Financial statements prepared under International Accounting Standards must be submitted to the Executive Body, the Supervisory Body, and competent agencies in Vietnam. The reporting periods and deadlines for these submissions must still comply with Vietnam’s general accounting law, rather than being set by the enterprise itself.
Article 5 of the circular outlines the specific responsibilities of these enterprises. They must take legal responsibility for their choice to apply the standards. They are also required to provide sufficient information and clear explanations to tax offices and supervision agencies. Furthermore, they must declare their compliance in the Notes to the financial statements.
New Adopters and Effective Date
The circular is set to take effect on January 1, 2027, and applies to financial years beginning on or after that date. The Ministry of Finance, specifically the Department of Accounting and Audit Management and Supervision, is responsible for regularly updating and publishing on the Ministry of Finance’s portal the list of enterprises and economic organizations choosing to apply International Accounting Standards.