What every Foreign Company needs to know about the annual FDI Audit in Vietnam

This simple FDI audit is required of every foreign company doing business in Vietnam. The audit is due on March 31st of the calendar year. This is based on a new investment law introduced in 2021,  Law 61/2020/QH14 on Investment, Decree 31/2021/NĐ-CP, the investment law and the guideline for implementation Decree took effect on the 1st of January 2021 and 1st of April 2021, respectively.

Read About Cekindo’s Corporate Accounting & Tax Services in Vietnam

What is the audit?

To understand auditing, we should first talk about accounting, as the two fields are directly related. Basically, accountants will provide information about an organization’s finances regarding their operations in Vietnam through financial statements.

The job of an audit is to check and verify the truthfulness of those financial statements, thereby helping to provide the most accurate information about the financial position of that organization. In other words, auditing is the process of collecting and evaluating the evidence related to audited financial information (provided by accountants) in order to determine and report on the appropriateness of that information. with established standards

Based on the type of organization, an audit is divided into 3 types: independent audit, state audit, and internal audit.

For FDI companies, the type of audit applied will be an independent audit, performed by professional and independent auditors working in professional auditing organizations to meet the requirements. of businesses, units and organizations.

What does it consist of?

Corporate information

Board of General Directors’ report

Independent Auditor’s report

Audited Financial Statement, include:

– Balance sheet 

– Income Statement

– Cash flow Statement

– Notes to the Financial Statements

What is required in the FDI Report?

Pursuant to Article 102 of Decree 31/2021/ND-CP:

The quarterly reports must specify the following information: 

1. Investment capital; ………………(amount in VND)
2. Net profit; ………………(amount in VND)
3. Export; ………………(amount in VND)
4. Import; ………………(amount in VND)
5. Workers; ………………(number of staffs)
6. Taxes; ………………(amount in VND)
7. Amounts payable to the State budget; ………………(amount in VND)
8. Use of land and water surface.………………(metter in m2 or m3 )

The annual reports must specify the information of the quarterly reports and the following information:

1. Revenue Targets; ………………(amount in VND)
2. Income of Workers;………………(amount in VND)
3. Expenditures and investment costs for scientific research and technological development; ………………(amount in VND)
4. Environmental treatment and protection;………………(amount in VND)
5. Origin of technology used. ………………(amount in VND)

When is the deadline for FDI report?

For enterprises that are required by law to have their financial statements audited, they must be audited before submitting financial statements as prescribed. The financial statements of the enterprises that have been audited must attach the audit report to the financial statements when submitting them to the State management agencies and superior enterprises.

Therefore, the deadline for submission of audited financial statements of FDI enterprises is:

• The quarterly FDI report: the 10th day of the 1st month of each quarter.
• The annual FDI report: the 90th day from the end of the financial year which is the 31st of March of every calendar year.

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How much does it cost?

Depending on the business results of each company, each auditing company will have different audit fees. If you are a Cekindo Client, the fee depends on when you were incorporated in Vietnam.

Fees will be of two types:

– Fees for newly established companies, without revenue, usually range from 100 – 200 USD 

-Fees for companies established before 2022, the fees are $350

– If you have done incorporation with Cekindo and have been using our services for more than 3 years, additional discounts will be applied

– Fees for companies that have been operating and generating revenue for some time: fees will be calculated according to factors such as revenue ratio, total assets, type of business…

Why does the government require it?

This is based on a new investment law introduced in 2021,  Law 61/2020/QH14 on Investment, Decree 31/2021/NĐ-CP, the investment law and the guideline for implementation Decree took effect on the 1st of January 2021 and 1st of April 2021, respectively.

Annual financial statements of foreign-invested enterprises

Annual financial statements of credit institutions established and operating under the Law on Credit Institutions, including foreign bank branches in Vietnam. 

Annual financial statements of financial institutions, insurance enterprises, reinsurance enterprises, insurance brokerage enterprises, branches of foreign non-life insurance enterprises. 

What documentation is required from an FDI company?

Annual financial statements

Audit report

Labor report

Penalties for failing to submit audited reports to entities that are required to be audited

The fines range between 10 – 20 million VND for the following violations:

a) Disclosure of incomplete financial statements as prescribed;

b) Submit financial statements to competent state agencies without attached audit reports for cases where the financial statements must be audited by law;

c) Submit financial statements to competent state agencies 3 months or more behind the prescribed time limit;

d) Publicize financial statements without audit reports for cases where the audit of financial statements is required by law;

How can Cekindo Help?

Our team of experienced tax consultants is a leader in the APAC region in all market entry services including taxes and bookkeeping and we can help your company prepare all monthly, quarterly and annual tax reports as well as take care of the annual FDI Audit Report.