Establish a branch of a foreign auditing business in Vietnam

Vietnam has become an attractive destination for international businesses in recent years. In that context, setting up a branch of a foreign auditing business in Vietnam has become an attractive choice to take advantage of new markets and promote business cooperation of foreign investors. In the following article, Viet An Law would like to provide legal advice so that foreign investors can invest in establish a branch of a foreign auditing business in Vietnam.

Legal basis

• WTO, AFAS, CPTPP.
• Law on Investment 2020.
• Law on Enterprise 2020.
• Law on Independent Audit 2011.
• Decree 17/2012/ND-CP, amended and supplemented by Decree 151/2018/ND-CP guiding the Law on Independent Audit.
• Circular 203/2012/TT-BTC stipulating the order and procedures for granting, managing and using the Certificate of eligibility for providing audit services (amended and supplemented by Circular 39/2020/ TT-BTC and Circular 43/2023/TT-BTC).
• Circular 271/2016/TT-BTC stipulate the rate of collection, the mode of collection and payment of fees for appraisal and issuance of practice registration certificates, Certificate of eligibility for providing accounting and auditing services.

Investment conditions to establish a branch of a foreign auditing business in Vietnam

Committed to opening the market

According to WTO, AFAS

• Accounting, auditing and bookkeeping services (CPC 862): Non restricted. Foreign investors are allowed to establish branches.

According to CPTPP

• Auditing services (CPC 862): Foreign service providers are allowed to provide services when satisfying all requirements for presence in Vietnam. It is not allowed to provide audit services (including cross-border form) unless the above requirements are met.

Minimum capital conditions

• The legal capital for a branch of a foreign auditing business in Vietnam is 5 (five) billion Vietnamese dong.
• Enterprises wishing to establish an audit branch in Vietnam must have at least USD 500,000 in equity on the balance sheet at the end of the latest fiscal year.
• During its operation, the foreign auditing business must maintain its equity on the balance sheet not less than the minimum capital level.

Scope of operation of branches of foreign auditing businesss in Vietnam

• Auditing services, including: audit of financial statements, audit of operations, audit of compliance, audit of finalization reports of completed projects, audit of financial statements for tax purposes and audit work other.
• Financial statement review, financial information and other assurance services.
• Other services: Economic, financial and tax consulting; Consulting on management, transformation and restructuring of enterprises; Consulting on information technology application in the management of enterprises and organizations; Accounting services in accordance with the law on accounting; Valuation of assets and assessment of business risks; Services of fostering financial knowledge, accounting and auditing; Other related services on finance, accounting, tax in accordance with the law.

Procedures for establishing a branch of a foreign auditing business

The auditing business that registers for a branch entitled to provide audit services shall send 01 set of documents to approve the establishment of the branch. Dossier includes:

• Business registration of audit services for branches of auditing businesss (under the form specified in Appendix VII of Circular 203/2012/TT-BTC);
• A copy of the branch operation registration certificate issued by the business registration agency;
• Copies of the audit practice registration certificates of the practicing auditors working at the branch;
• Decision on appointment of branch director.

Receipt place: The Ministry of Finance

Duration: 30 days from the date of receipt of valid dossiers, the Ministry of Finance shall issue written approval for the establishment of branches of foreign auditing businesss.

Apply for a Certificate of eligibility for providing audit services to the branch

Since auditing is a conditional business line, the Certificate of eligibility for providing audit services for a branch is a sufficient condition for the branch of a foreign auditing business to officially come into operation legally in Vietnam.

The law also stipulates that, within six months from the date of registration of audit service business, if a branch of a foreign auditing business in Vietnam is not granted a Certificate of eligibility for provision of audit services, it must carry out procedures for deleting the line of business in audit services. Thus, this is a procedure to note for foreign auditing business after successfully carrying out procedures for establishing branches in Vietnam.

Conditions for issuance of the Certificate of eligibility for providing audit services

• Foreign auditing businesss are eligible to be allowed to provide independent audit services according to the provisions of the law of the host country where such enterprises are located.
• Branch personnel: at least two practicing auditors, including the branch’s director or general director. The director or general director of a branch may not hold a managerial or executive position in another enterprise in Vietnam.
• Guarantee of obligations: The foreign auditing business must send a document to the Ministry of Finance to ensure that it is responsible for all obligations and commitments of the branch of the foreign auditing business in Vietnam.
• Ensure the level of legal capital is maintained in accordance with regulations.

Procedures for registration granting Certificate of eligibility for providing audit services

Registration dossier include:

• An application form for the Certificate of eligibility for providing audit services, made according to the form specified in Appendix II of Circular 203/2012/TT-BTC ;
• A copy of the license to provide audit services of the foreign auditing business (or an equivalent document) in accordance with the law of the country where the foreign auditing business is headquartered;
• A copy of the license to establish a branch of the foreign auditing business in Vietnam of the foreign auditing business.
• The document of the foreign auditing business to the Ministry of Finance guaranteeing responsibility for all obligations and commitments of the branch of the foreign auditing business in Vietnam.
• List of practicing auditors with full-time employment contracts at branches of foreign auditing businesss in Vietnam.
• Copies of the audit practice registration certificates of the practicing auditors.
• Decision of the foreign auditing business on the appointment of the position of Director (General Director) of the branch.
• A written certification of another independent auditing business on the current level of capital owned by the foreign auditing business recorded in the enterprise’s financial statements at the latest time (the year of registration or the year preceding the previous year of registration).
• Documents proving that the foreign auditing business provides capital to the branch of the foreign auditing business in Vietnam.

Where to receive documents: Ministry of Finance

Duration:

• Within 30 days from the date of receipt of a valid dossier, the Ministry of Finance shall grant a Certificate of eligibility for providing audit services to a branch of a foreign auditing business in Vietnam.
• In case the application is not valid, within 10 working days from the date of receipt of the application, the Ministry of Finance shall notify the requesting organization of the complete application.
• In case of refusal, the Ministry of Finance must reply in writing and clearly state the reason.

Fees:

• Initial grant of 4,000,000 VND/time of appraisal;
• Grant adjustment, re-grant 2,000,000 VND/time of appraisal.

Notes in the operation process of branches of foreign auditing businesss in Vietnam

Branch name

Branches of foreign auditing businesss that are not eligible to apply for an audit service business license may not use the phrase “audit” in their name.

Cases that cannot be audited

• Performing internal audits or performing other services that affect the independence of the practicing and branch auditors for an entity for 2 consecutive years. Other services includes:

• Bookkeeping and financial statements preparation;
• Performing internal audit services;
• Design and implement internal control procedures;
  • The auditor or branch manager is a member who has a capital contribution relationship, or has a blood relationship with a member who has a different capital contribution or economic and financial relationship with the audited entity.
  • The audited entity has performed in the preceding year or is performing an audit of the financial statements for the branch itself.

Revocation of Business License

A branch of a foreign auditing business shall have its Certificate of eligibility for providing audit services revoked when:

• Making false declarations or fraudulently or falsifying dossiers of application for the Certificate of eligibility for providing audit services;
• Not doing business in auditing services for twelve consecutive months;
• Operating in contravention of scope, committing serious violations of professional and ethical standards, having been suspended but not remedied within sixty days from the date of suspension;
• A foreign auditing business with an audit branch in Vietnam is dissolved, goes bankrupt or has its license revoked or has been suspended by the competent authority of the country where its head office is located.

Termination of operations of branches of foreign auditing businesss

• According to the decision of the foreign auditing business that has established a branch;
• The auditing business that has established a branch terminates its operation;
• The Certificate of eligibility for providing audit services has been revoked.

If you wish to establish a branch of a foreign auditing business in Vietnam, kindly contact Viet An Law Firm for the most effective advice and support.