For FDI enterprises – where balancing domestic and foreign accounting regulations is essential – comparing VAS (Vietnamese Accounting Standards) and IFRS (International Financial Reporting Standards) to identify core differences is critical during the transition process. Notably, 2025 marks a major turning point for both Vietnamese and international financial reporting standards for FDI enterprises.
Legal Context: Why 2025 Is an Unavoidable Milestone
According to Decision No. 345/QĐ-BTC issued by the Ministry of Finance on March 16, 2020, Vietnam has outlined a clear roadmap for transitioning from Vietnamese Accounting Standards (VAS) to International Financial Reporting Standards (IFRS). The roadmap consists of three phases:
- Phase 1 (2020–2021): Preparation period, including publication of IFRS translations, training, and completion of the legal framework.
- Phase 2 (2022–2025): Voluntary adoption period, encouraging large enterprises—especially state-owned economic groups, listed companies, and FDI enterprises—to apply IFRS for consolidated financial statements.
- Post-2025: IFRS becomes mandatory for certain groups of enterprises, such as listed companies, state-owned economic groups, and large public companies.
This means that after 2025, many FDI enterprises will need to “play by the new rules” to ensure that their financial reporting meets international standards.
What Are IFRS and VAS?
IFRS and VAS are both sets of financial reporting standards, but they are designed to serve different purposes and audiences.
IFRS – International Financial Reporting Standards
IFRS is developed by the International Accounting Standards Board (IASB), an independent, non-profit organization. Often referred to as the “global accounting language,” IFRS provides general guidelines for companies to prepare and present financial statements within a framework rather than prescribing detailed rules for each industry. This allows for easier comparison and benchmarking of financial statements worldwide.
Currently, IFRS is applied in 166 countries, with 144 countries requiring publicly accountable enterprises to use these standards.
There is also a version of IFRS specifically for small and medium-sized enterprises (IFRS for SMEs), making it easier for smaller companies to adopt.
VAS – Vietnamese Accounting Standards
VAS is a set of financial reporting standards specifically for Vietnamese enterprises, issued by the Ministry of Finance of Vietnam. Although VAS is based on IFRS, it has been adapted through the Accounting Law and related circulars and decisions from the Ministry of Finance to suit Vietnam’s economic, cultural, and legal context. From 2000 to 2005, the Ministry issued 26 VAS standards aimed at improving the quality of accounting information and meeting domestic management and economic development needs.
In summary: IFRS is a global standard that helps FDI enterprises easily compare and consolidate financial statements across countries, whereas VAS is a “domestic” standard optimized for the Vietnamese context.
Comparison Table of VAS and IFRS: Key Differences
Below is a comparison table highlighting the core differences between Vietnamese Accounting Standards (VAS) and International Financial Reporting Standards (IFRS).
| Factor | VAS | IFRS | Implications for FDI Enterprises |
| Basic Principle | Rule-based, requiring compliance with specific regulations, less flexible. Example: unified chart of accounts and mandatory financial statement templates. | Principle-based, more flexible, allowing enterprises to design accounts and reports suited to business characteristics. | IFRS helps FDI enterprises adjust financial reporting according to international practices, increasing transparency and comparability. VAS can be rigid, making consolidated reporting challenging. |
| Asset and Liability Valuation | Primarily historical cost, rarely adjusting asset values unless specifically required. E.g., tangible and intangible fixed assets recorded at historical cost (VAS 03, VAS 04). | Fair value measurement reflecting market value at measurement date. Applied in IAS 16, IAS 38, IFRS 9 for more accurate asset and liability valuation. | IFRS provides more flexible inventory valuation methods, suitable for FDI enterprises in retail or manufacturing. Accounting systems need updates when switching to IFRS. |
| Financial Statement Presentation | Only requires Statement of Profit or Loss (VAS 21). No separate Other Comprehensive Income (OCI). Changes in equity presented in notes. | Requires Statement of Comprehensive Income with two parts: Profit or Loss (P/L) and Other Comprehensive Income (OCI) (IAS 1). | IFRS provides more detailed information on unusual gains/losses (e.g., asset revaluation), suitable for international shareholders. FDI enterprises must adjust when transitioning from VAS to IFRS. |
| Inventory | Allows FIFO, weighted average cost; previously allowed LIFO (VAS 02). LIFO removed under Circular 200/2014/TT-BTC. | LIFO not permitted. Modern methods like standard cost or retail method used (IAS 02). | IFRS provides more flexible inventory valuation methods, suitable for FDI enterprises in retail or manufacturing. Accounting systems need updates when switching to IFRS. |
| Fixed Assets (FA) | Minimum threshold of VND 30 million for tangible and intangible FA (VAS 03, VAS 04). Only historical cost model; revaluation allowed only in special cases. | No minimum threshold. Allows both historical cost and revaluation at fair value (IAS 16, IAS 38). | IFRS helps FDI enterprises value FA closer to market, especially for high-value assets. VAS may inflate book values, distorting financial statements. |
| Insurance Contracts | Lacks rules on catastrophe loss provisions, legal liability checks, and market value disclosures (VAS 19). Not aligned with IFRS 17. | IFRS 17 (replacing IFRS 4) requires detailed provisioning and liability checks, ensuring greater transparency. | FDI insurers must meet stricter IFRS 17 requirements for international compliance, especially for consolidated reporting. |
| Revenue | Recognized based on economic benefits and risk transfer (VAS 14). Simplified rules, lacking detail for complex contracts. | IFRS 15 uses a five-step model, allocating revenue according to performance obligations, suitable for complex contracts (e.g., goods with services). | IFRS 15 enables FDI enterprises to recognize revenue more accurately, especially for international contracts with multiple obligations. |
| Corporate Income Tax | Deferred tax assets only recognized for carry-forward tax losses (VAS 17). | Allows recognition of current tax assets from current-period losses to offset prior periods (IAS 12). | IFRS helps FDI enterprises optimize tax obligations through flexible loss offsetting, improving cash flow. |
| Asset Impairment | Losses not recognized unless prescribed by law. | Requires immediate recognition of impairment losses under IAS 36. | IFRS ensures financial statements reflect true asset values, crucial for FDI enterprises with large or volatile assets. |
| Leases | Differentiates finance and operating leases. Operating leases record only periodic lease expense (VAS 06). | No distinction; recognizes right-of-use asset and lease liability (IFRS 16). |
Notes for FDI Enterprises:
In Vietnam, VAS remains the mandatory standard for domestic financial reporting. FDI enterprises need to prepare parallel reports under IFRS for international purposes.
Comparing VAS and IFRS helps FDI enterprises navigate the mandatory transition after 2025 more smoothly. If you require professional accounting advisory services, you can choose KMC. We have a team of experts with over 25 years of experience and deep expertise in this field. Contact us now at +84 814 894 789 or +84 919 889 331 for consultation.
