Which entities subject/not subject to annual financial statements in Vietnam?

Which entities subject/not subject to annual financial statements in Vietnam? (Internet image)

Regarding this issue, LawNet would like to as follows:

1. Which entities subject/not subject to annual financial statements in Vietnam?

According to Clause 1, Article 99, Circular 200/2014/TT-BTC, entities of annual financial statements include:

Annual financial statement system is applied to all types of enterprises in all sectors and economic sectors. Financial statements must be prepared fully.

Thus, all types of enterprises in all sectors and economic sectors must submit annual financial statements, except for the cases below.

The law also stipulates cases where financial statements are not required as follows:

(1) Extra-small enterprises paying CIT calculated according to the method of calculation of CIT based on the CIT-to-sales ratio

Pursuant to Clause 1, Article 18 of Circular 132/2018/TT-BTC, extra-small enterprises paying CIT calculated according to the method of calculation of CIT based on the CIT-to-sales ratio (%) shall not be required to submit financial reports to tax authorities.

Thus, extra-small enterprises paying CIT calculated according to the method of calculation of CIT based on the CIT-to-sales ratio shall not be required to submit financial reports to tax authorities.

(2) Enterprises are allowed to combine accounting periods

If the first or last annual accounting period is shorter than 90 days, it may be aggregated with the next or previous annual accounting period, respectively; the first or last annual accounting period must be shorter than 15 months.

Thus, if the first or last annual accounting period is shorter than 90 days, it may be aggregated with the next or previous annual accounting period, respectively; the first or last annual accounting period must be shorter than 15 months.

(Clause 4 of Article 12 of the Law on Accounting 2015)

(3) Enterprise that are suspending operations and business

The taxpayer is not required to submit tax declaration dossiers, unless the suspension begins in the middle of a monthly/quarterly/annual tax period, in which case the tax declaration dossier of that month/quarter/year must be submitted.

Thus, if an enterprise suspends operations for the entire calendar year, it does not need to submit a tax return. Therefore, this case does not require the enterprise to prepare a financial statement.

(Point a of Clause 2 of Article 4 of Decree 126/2020/ND-CP)

2. What are recipients of financial statements in Vietnam?

Pursuant to Article 110 of Circular 200/2014/TT-BTC, there are regulations on recipients of financial statements as follows:

- State-owned enterprises in central-affiliated cities and provinces must prepare and submit financial statement to the Service of Finance in central-affiliated cities and provinces. Central state-owned enterprises must submit financial statements to the Ministry of Finance (Department of Corporate Finance).

+ State-owned enterprises such as commercial banks, lottery companies, credit institutions, insurers, securities trading companies must submit financial statements to the Ministry of Finance (Department of Banking and Finance or Administration of Insurance Supervision).

+ Securities trading companies and public companies must submit financial statements to the State Securities Commission and the Stock Exchange.

- Enterprises must submit financial statements to supervisory tax authority in local. State-owned general companies must submit financial statements to the Ministry of Finance (General Department of Taxation).

- Enterprises having superior accounting units must submit financial statements to the superior accounting unit in accordance with the provisions of the superior accounting units.

- Enterprises required for financial audit by law must be audited prior to submission of financial statements in accordance with regulations. The financial statements of enterprises audited must be enclosed with the audit report when being submitted to State management agencies superior enterprises.

- The financial agency to which enterprises have foreign direct investment (FDI) must submit financial statements is the Service of Finance in central-affiliated cities and provinces where the enterprises register their main business office .

- State-owned enterprises owning 100% of the charter capital, in addition to the agencies where enterprises must submit financial statements as defined above, they must also submit financial statements to the agencies, organizations assigned, decentralized to exercise rights of owners under Decree 99/2012 / ND-CP and documents amending, supplementing, replacing.

- Enterprises (including domestic enterprises and foreign-invested enterprises ) whose headquarters are in processing and exporting zones, industrial zones, hi-tech zones must also submit annual financial statements to the management board of processing and exporting zones , industrial zones, hi-tech zones if required

Note: These regulations promulgate accounting policies applying to enterprises in every business lines and every economic sector.  Small and medium-sized enterprises applying the accounting policies for small and medium-sized enterprises may apply regulations in these regulations for accounting.

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