Circular 118/2026/TT-BTC: International Accounting Standards in Vietnam

1. Overview of Circular No. 118/2026/TT-BTC

On 18 August 2026, the Ministry of Finance issued Circular No. 118/2026/TT-BTC providing guidance on the eligible entities, scope and method of applying international accounting standards in Vietnam.

The Circular implements the accounting framework contemplated under Clause 5, Article 3 of Decree No. 324/2025/ND-CP on financial policies applicable within Vietnam’s International Financial Centre (VIFC). It creates a formal basis for qualifying VIFC members to choose international accounting standards for the preparation and presentation of their financial statements and consolidated financial statements.

2. Scope and eligible entities

2.1 Scope of application

The Circular governs the application of international accounting standards for the preparation and presentation of:

• Financial statements; and
• Consolidated financial statements.

The determination of tax obligations remains outside this accounting framework and continues to follow the applicable Vietnamese tax regulations.

2.2 Who may elect to apply the standards?

The option is available to enterprises and economic organisations that:

• Are members of Vietnam’s International Financial Centre;
• Fall within the scope of Resolution No. 222/2025/QH15 and its guiding, amending, supplementing or replacement instruments;
• Have a genuine need to apply international accounting standards; and
• Possess sufficient capability and resources to implement the standards.

Accordingly, the Circular does not introduce mandatory international-standard reporting for all enterprises in Vietnam. It establishes an elective regime for qualifying VIFC members.

3. Core principles for applying international accounting standards

An eligible enterprise or economic organisation that elects to apply international accounting standards must comply with the following principles.

3.1 Application in original form

The international accounting standards currently in force must be applied in their original form, without modification. An entity may not selectively amend the standards or create a locally adjusted version for its reporting purposes.

3.2 Consistent application throughout the financial year

Once an entity prepares financial statements or consolidated financial statements under international accounting standards, the selected framework must be applied consistently throughout the relevant financial year.

3.3 Adoption or discontinuation only at the beginning of an annual accounting period

An entity may begin or discontinue applying international accounting standards only at the start of the next annual accounting period. A change should therefore not be made during an ongoing financial year.

3.4 Quality and transparency of financial information

Financial statements and consolidated financial statements prepared under the selected standards must provide information that is complete, timely, truthful and transparent, and capable of being inspected and controlled.

4. Reporting recipients, reporting periods and tax treatment

4.1 Recipients of financial statements

Enterprises and economic organisations applying international accounting standards must prepare and submit their financial statements and consolidated financial statements to:

• The Executive Body of the VIFC;
• The Supervisory Body of the VIFC; and
• Other competent Vietnamese authorities.

4.2 Reporting periods and filing deadlines

The applicable reporting periods and statutory filing deadlines continue to be determined under Vietnamese accounting law. Electing international accounting standards does not, by itself, replace or modify the filing timetable prescribed under Vietnamese law.

Financial statements and consolidated financial statements prepared under international accounting standards may be used for submission to competent authorities and for statutory public disclosure in accordance with applicable regulations.

4.3 Tax obligations remain subject to Vietnamese tax law

The Circular expressly provides that tax obligations must be determined in accordance with Vietnamese tax legislation. Accounting recognition and measurement under international standards may therefore differ from the rules used to determine taxable income, deductible expenses or other tax bases.

5. Responsibilities of electing enterprises and organisations

An entity electing to apply international accounting standards assumes responsibility for its decision and the resulting financial reporting. Key obligations include the following:

1. Legal responsibility: The enterprise or economic organisation is legally responsible for its election to apply international accounting standards in preparing and presenting financial statements and consolidated financial statements.
2. Information and explanations: The entity must provide complete information and clear, transparent explanations to tax authorities and other management or supervisory authorities.
3. Statement of compliance: Compliance with international accounting standards must be declared in the notes to the financial statements or consolidated financial statements.
4. Prior notification: A written notice must be submitted to the Ministry of Finance within the 30-day period preceding the date on which the entity begins or discontinues applying international accounting standards.

6. Transition requirements and IFRS 1

Enterprises and economic organisations changing from their existing accounting regime or accounting standards to international accounting standards must present comparative information and provide full disclosures in accordance with IFRS 1 – First-time Adoption of International Financial Reporting Standards.

In practice, first-time adoption may require the entity to:

• Determine the transition date and prepare an opening statement of financial position under the applicable international standards;
• Identify differences between the existing accounting framework and the new reporting framework;
• Evaluate the mandatory exceptions and optional exemptions available under IFRS 1;
• Prepare comparative information using consistent accounting policies;
• Reconcile equity and financial performance between the former accounting framework and the new framework; and
• Prepare the disclosures required to explain the effect of the transition.

The above implementation activities reflect the practical requirements commonly associated with IFRS 1. The precise work required will depend on the entity’s transactions, group structure, existing accounting policies, systems and data availability.

Continuity for existing adopters

Enterprises and economic organisations already applying international accounting standards under Resolution No. 222/2025/QH15 and Decree No. 324/2025/ND-CP must continue to comply with Circular No. 118/2026/TT-BTC.

7. Effective date, implementation and public disclosure

Circular No. 118/2026/TT-BTC takes effect on 1 January 2027 and applies to financial years beginning on or after that date.

The Ministry of Finance, through the Accounting and Auditing Management and Supervision Department, will regularly update and publish on its official portal a list of enterprises and economic organisations that elect to apply international accounting standards.

Within 15 days after receiving an entity’s written notice of adoption or discontinuation, the Ministry of Finance will update the published list accordingly.

8. What businesses should consider doing now

For eligible VIFC members considering adoption from the 2027 financial year, preparation should extend beyond accounting-policy selection. A structured readiness programme can help management understand the operational, financial, tax and governance implications before making the election.