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Members of the International Financial Centre (VIFC) may apply IFRS to prepare financial statements - Circular 118/2026/TT-BTC

8/22/2026
Members of the International Financial Centre (VIFC) may apply IFRS to prepare financial statements - Circular 118/2026/TT-BTC
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On 18 August 2026, the Ministry of Finance issued Circular 118/2026/TT-BTC guiding the scope, eligible entities and method of applying International Accounting Standards in Vietnam. The Circular gives effect to Clause 5, Article 3 of Decree 324/2025/ND-CP on financial policies within the International Financial Centre, allowing enterprises and economic organisations that are members of the Centre to elect to apply international standards in preparing and presenting their financial statements and consolidated financial statements. The Circular takes effect on 1 January 2027.

The Circular arrives just as the Vietnam International Financial Centre (VIFC) begins operating: the VIFC Executive Authorities in Ho Chi Minh City and Da Nang launched the 2026–2027 Member Registration and Recognition System on the official portal vifc.gov.vn (17 August 2026), together with Decision 01/QD-CQDH dated 11 August 2026 setting out the procedures and standard forms for member registration. Enterprises that join VIFC in 2026 can therefore be ready to apply International Accounting Standards from the 2027 financial year.

1. Scope and eligible entities

The Circular governs only the preparation and presentation of financial statements and consolidated financial statements under International Accounting Standards. An enterprise's tax obligations continue to be determined under tax law, regardless of the accounting standards elected (Article 1, Circular 118/2026/TT-BTC).

Eligible entities are enterprises and economic organisations that are members of the International Financial Centre in Vietnam under Resolution 222/2025/QH15 and its guiding, amending or replacing instruments, and that have the need, capability and resources to apply the standards (Article 2, Circular 118/2026/TT-BTC). The mechanism is voluntary, not mandatory.

2. Three principles of application (Article 3, Circular 118/2026/TT-BTC)

  • Apply as issued: the provisions of International Accounting Standards in force must be applied in full, without any modification (Clause 1, Article 3).
  • Consistency within a financial year: adoption or discontinuation may only take effect on the first day of the following annual accounting period; no mid-year switching (Clause 2, Article 3).
  • Quality of reporting: financial statements and consolidated financial statements must be complete, timely, truthful, transparent and readily verifiable and controllable (Clause 3, Article 3).

3. Recipients, reporting period and filing deadline (Article 4, Circular 118/2026/TT-BTC)

  • Financial statements and consolidated financial statements must be prepared and submitted to the Executive Authority, the Supervisory Authority of the International Financial Centre and the competent Vietnamese authorities (Clause 1, Article 4).
  • The reporting period and filing deadline remain those prescribed by Vietnamese accounting law — adopting IFRS does not change the filing calendar (Clause 2, Article 4).
  • Financial statements prepared under international standards are used for submission to the competent authorities and for public disclosure as required by law (Clause 3, Article 4).

4. Responsibilities of enterprises electing to apply (Article 5, Circular 118/2026/TT-BTC)

  • Bear legal responsibility for the election (Clause 1, Article 5).
  • Provide full information and clear, transparent explanations to the tax authority and to regulatory and supervisory authorities (Clause 2, Article 5).
  • Declare compliance with International Accounting Standards in the notes to the financial statements and consolidated financial statements (Clause 3, Article 5).
  • Notify the Ministry of Finance in writing at least 30 days before the date of adoption or discontinuation (Clause 4, Article 5).

5. Transitional provisions (Article 6, Circular 118/2026/TT-BTC)

  • An enterprise switching from its current accounting regime or set of standards to international standards must present comparative information and full disclosures in accordance with IFRS 1 — First-time Adoption of International Financial Reporting Standards (Clause 1, Article 6).
  • Enterprises already applying international standards under Resolution 222/2025/QH15 and Decree 324/2025/ND-CP continue to do so under this Circular (Clause 2, Article 6).

6. Effective date and implementation (Article 7, Circular 118/2026/TT-BTC)

  • The Circular takes effect on 1 January 2027 and applies to financial years beginning on or after 1 January 2027 (Clause 1, Article 7).
  • The Ministry of Finance (Department of Accounting and Auditing Regulation and Supervision) publishes and regularly updates on the Ministry's e-portal the list of enterprises electing to apply international standards; the list is updated within 15 days of receiving an enterprise's notice of adoption or discontinuation (Clause 2, Article 7).

💡 Recommendations for businesses

For businesses considering joining VIFC

  1. Build the accounting-standards decision into the membership decision from the outset. The right to apply international standards arises only once an entity is a VIFC member (Article 2, Circular 118/2026/TT-BTC); businesses should review membership conditions and application requirements on vifc.gov.vn in parallel with assessing whether IFRS adoption is right for them.
  2. Determine the adoption date based on your own financial year. The Circular applies to financial years beginning on or after 1 January 2027 (Clause 1, Article 7), and adoption must take effect on the first day of an annual accounting period (Clause 2, Article 3). In all cases, written notice must reach the Ministry of Finance 30 days before the adoption date (Clause 4, Article 5).

For businesses that are, or are about to become, VIFC members

  1. Assess "capability and resources" realistically — IFRS-competent staff, systems, conversion and audit costs. The mechanism is voluntary and the enterprise bears legal responsibility for its election (Clause 1, Article 5), so adoption should not be rushed simply because it is a VIFC benefit.
  2. Prepare IFRS 1 transition data early, since the first year of adoption requires comparative information and full disclosures (Clause 1, Article 6). For businesses currently under the Vietnamese accounting regime, building the IFRS opening balance sheet is typically more work than anticipated.
  3. Set up an accounting–tax reconciliation process. IFRS financial statements do not change how tax obligations are determined (Article 1), and the enterprise must provide transparent explanations to the tax authority (Clause 2, Article 5), so a reconciliation of differences between IFRS figures and tax figures should be in place.
  4. Monitor the Ministry of Finance's published list on the Ministry's e-portal (Clause 2, Article 7) to confirm the enterprise has been correctly recorded after submitting its notice.

>>> Download Circular 118/2026/TT-BTC

 

This newsletter is compiled by Crowe Vietnam for general information purposes only and does not constitute advice for any specific case. Businesses should refer to the original legal instruments and consult professional advisers before applying this information to their circumstances.