Conditions for establishing an accounting service company in Vietnam

Currently, the demand for accounting services is increasing, leading to the establishment of accounting service companies more and more, including foreign-invested companies. However, accounting services under Vietnamese law are conditional business lines. So what conditions should be met for establishing an accounting services company? Viet An Law Firm would like to summarize and send to Clients some relevant regulations as follows

Legal basis

• Vietnam’s schedule of commitments on services in the WTO;
• Investment Law 2020;
• Enterprise Law 2020;
• Accounting Law 2015;
• Decree 174/2016/ND-CP provides detailed guidance on the 2015 Accounting Law.

General overview of accounting

What does “accounting” mean?

Accounting is the collection, processing, examination, analysis and provision of economic and financial information in the form of value, in-kind and labor time.

What are the duties of an accountant?

According to Article 4 of the 2015 Accounting Law, it is clear that the tasks that accountants need to perform include:

• Collect and process accounting information and data according to objects and contents of accounting work, according to accounting standards and accounting regimes;
• Inspect and supervise financial revenues and expenditures, obligations to collect, pay and pay debts; inspect the management and use of assets and sources of asset formation; detect and prevent violations of financial and accounting laws;
• Analysis of accounting information and data; advise and propose solutions to serve management requirements and economic and financial decisions of accounting units;
• Provide accounting information and data in accordance with the provisions of law

Thus, the duties of accounting are associated with the cash flow and assets of the company. The work of the accountant is related to the circulation of cash flows in the enterprise, the accountant will record, monitor, reflect the movement of capital flows, assets, revenue, profits of the company.

Market access conditions for foreign investors in Vietnam

Vietnam has committed in the Schedule of specific commitments on services in the WTO with CPC code 862 (accounting, auditing and bookkeeping services). Concrete:

Vietnam commits to allow the establishment of 100% foreign-owned accounting, auditing and bookkeeping enterprises or joint ventures (ie without limiting the capital participation rate of foreign investors in joint ventures) right from the time of joining the WTO. Thus, basically, the investment and participation in the accounting, auditing and tax consulting market in Vietnam of foreign investors is not limited. Therefore, foreign investors are now equal in terms of market access with domestic investors of Vietnam.

According to the 2020 Investment Law, tax procedure services are conditional business lines, so they must meet the conditions prescribed by Vietnamese law.

Conditions for establishing an accounting service company in Vietnam

Conditions on the type of enterprise allowed to establish

According to the provisions of the Accounting Law, accounting service enterprises may only be established in the following types:

• Limited liability companies with two or more members;
• Partnerships;
• Private enterprise.

In addition to the above 3 types, enterprises can establish accounting service companies in the way of individual household business registration

Conditions on charter capital and contributed capital ratio

• The law does not require a minimum or maximum charter capital, therefore, enterprises can choose the charter capital level suitable to their financial capacity to ensure that they can contribute the full amount of registered charter capital within 90 days from the date of issuance of business registration.
• Particularly for limited liability companies with 2 or more members, the capital contribution ratio is specified in Articles 26 and 27 of Decree 174/2016/ND-CP. As follows:
• The capital contribution ratio of members being organizations can only account for a maximum total of 35% of the charter capital of the accounting service company. In case there are many organizations contributing capital, the total capital contribution ratio of the organizations must be equal to 35% of the charter capital of the accounting service limited liability company with two or more members;
• The capital contribution ratio of members who are accountants practicing at accounting service companies must account for more than 50% of the company’s charter capital.

Conditions for personnel and practicing certificates

• An accounting service company must ensure that at least two capital contributors are practicing accountants;
• The legal representative, director or general director of a limited liability company must be a practicing accountant;

Note: For limited liability companies with two or more members, practicing accountants are not allowed to simultaneously register accounting services business at two or more accounting service business units at the same time

• The law provides for the following cases in which accounting services are not provided:

Accounting service enterprises, accounting service business households may not provide accounting services to other accounting units when the person responsible for managing and operating the accounting service enterprise, the representative of the accounting service business household or the person directly performing accounting services of the enterprise,  Households providing accounting services fall into the following cases:

• Being a natural father, natural mother, adoptive father, adoptive mother, wife, husband, natural child, adopted child, brother, sister or sister of the person responsible for management, administration and chief accountant of the accounting unit, except for cases where the accounting unit is a private enterprise or limited liability company owned by an individual, Enterprises of other types without state capital are micro enterprises in accordance with the law on support for small and medium-sized enterprises.
• Having economic and financial relations with that accounting unit;
• Incompetent or unqualified to perform accounting services;
• Providing services as chief accountant to clients who are organizations having economic and financial relations with that accounting unit;
• The accounting unit requests to perform tasks that are not in accordance with professional ethical standards or in accordance with professional requirements, accounting and financial operations;
• Other cases as prescribed by professional ethical standards of accounting, auditing and the provisions of law.

Conditions for appropriate business registration

• Founders of accounting service enterprises can refer to the registration of business line 6920: Activities related to accounting, auditing and tax consulting;
• In addition, depending on other business activities, businesses can apply for additional business lines. Vietnamese law does not provide for a limit on the number of registered business lines.

Procedures for establishing a tax accounting service company in Vietnam

Step 1: Prepare and submit the business establishment dossier

The owner shall submit the application at the Department of Planning and Investment where the enterprise is headquartered. The set of business establishment dossiers includes:

• Application for business registration;
• The company’s charter;
• Legal documents of individuals, legal entities being members, legal representatives of the company: Certified copy of identity card or citizen identity card or passport (if an individual); establishment decision, enterprise registration certificate or equivalent document and citizen identity card or identity card or passport with written authorization for the capital manager in Vietnam (if it is an organization);
• An investment registration certificate has been issued.
• Power of attorney for Viet An Law (in case of choosing the company’s services).

Processing time: 03 working days, if the application is complete and valid, it will be issued an enterprise registration certificate according to regulations. In case of refusal, the business registration authority will clearly state the reason in a written reply sent to the tax service enterprise

Step 2: Disclosure of business information content

After being granted the Certificate of Business Registration, an enterprise must make a public announcement on the National Business Registration Portal within 30 days from the date of publication and must pay fees as prescribed by law.

Step 3: Engrave the seal of the business

• Seals include seals made at seal engraving establishments or seals in the form of digital signatures in accordance with the law on e-transactions;
• The enterprise shall decide on the type of seal, quantity, form and content of the seal of the enterprise, branches, representative offices and other units of the enterprise;
• The management and retention of the seal shall comply with the provisions of the company’s charter or regulations promulgated by the enterprise, branch, representative office or other unit of the enterprise bearing the seal. Enterprises use seals in transactions in accordance with the provisions of law.

Step 4: Apply for a certificate of eligibility for provision of accounting services

The owner proceeds to submit the application at the Ministry of Finance. Documents to be submitted include:

• An application for a Certificate of eligibility for provision of accounting services.
• A copy of the enterprise registration certificate, investment registration certificate or other document of equivalent value.
• Copies of the Certificate of registration to practice accounting services of practicing accountants.
• Labor contract with accounting service enterprises of practicing accountants.
• Documents proving capital contribution for limited liability companies.
• The company’s charter for partnerships, limited liability companies.
• Written commitment to take responsibility of the foreign enterprise, certificate of license to provide accounting services of the foreign enterprise, for branches of enterprises providing foreign accounting services in Vietnam.

Time limit for issuance of certificate of eligibility: 15 working days from the date of receipt of complete and valid documents. If the application is rejected, the owner receives a written statement stating the reason.

If you want to be consulted and find out more information about the conditions for establishing an accounting service company or any other type, please contact Viet An Law Firm for the best support!