A Comprehensive Comparison Between Circular 99/2025/TT-BTC and IFRS

Introduction

As Vietnam continues its journey toward international financial reporting convergence, the Ministry of Finance has introduced Circular 99/2025/TT-BTC ("Circular 99") to modernize financial reporting requirements and align Vietnamese accounting practices more closely with global standards. Although Circular 99 represents a significant improvement in financial reporting transparency, it is not equivalent to International Financial Reporting Standards (IFRS).

Many Vietnamese companies—particularly listed entities, foreign-invested enterprises (FDIs), multinational subsidiaries, and businesses preparing for overseas fundraising or IPOs—need to understand the differences between Circular 99 and IFRS.

This article provides an in-depth comparison covering:

• Objectives

• Financial statement presentation

• Recognition and measurement

• Revenue

• Financial instruments

• Leases

• Fair value

• Consolidation

• Foreign currency

• Disclosures

• Transition challenges

• Practical implications

1. Overview

Item	Circular 99/2025/TT-BTC	IFRS
Issuer	Ministry of Finance of Vietnam	International Accounting Standards Board (IASB)
Scope	Vietnamese enterprises	Global companies
Purpose	Standardized statutory reporting	Investor-focused financial reporting
Legal status	Mandatory under Vietnamese regulations	Mandatory or permitted depending on jurisdiction
Philosophy	Rule-based	Principle-based

2. Primary Objective

Circular 99

The primary objective is:

• Compliance with Vietnamese law

• Tax administration

• Government supervision

• Consistent reporting format

Financial statements primarily support:

• Tax authorities

• State agencies

• Local regulators

IFRS

IFRS aims to provide useful information to:

• Investors

• Creditors

• Analysts

• Capital markets

Its emphasis is:

• Economic substance

• Fair presentation

• Decision usefulness

3. Financial Statement Components

Financial Statement	Circular 99	IFRS
Statement of Financial Position	Yes	Yes
Income Statement	Yes	Yes
Cash Flow Statement	Yes	Yes
Statement of Changes in Equity	Yes	Yes
Notes	Yes	Yes

Although both require similar statements, presentation differs significantly.

4. Presentation Philosophy

Aspect	Circular 99/2025/TT-BTC	IFRS
Presentation approach	Financial statement formats are largely prescribed by regulation.	No mandatory financial statement templates are prescribed.
Flexibility	Limited flexibility in presentation. Companies are expected to follow standardized reporting formats.	High flexibility. Management may present financial statements in the format that best reflects the entity's operations and financial position.
Basis for presentation	Compliance with statutory reporting requirements.	Presentation is driven by the principles of materiality, relevance, faithful representation, and comparability.
Management judgment	Minimal discretion in reorganizing line items.	Significant professional judgment is permitted to improve the usefulness of financial information.
Example	Current assets are typically presented in a prescribed order (e.g., Cash → Receivables → Inventory).	Assets and liabilities may be reorganized or classified differently if doing so provides more relevant and reliable information to users of the financial statements.

5. Basis of Measurement

Measurement Basis	Circular 99/2025/TT-BTC	IFRS
Overall measurement approach	Primarily based on the historical cost model, with limited use of alternative measurement bases.	Uses multiple measurement bases depending on the applicable IFRS standard and the nature of the asset or liability.
Historical Cost	The primary measurement basis for most assets and liabilities.	Commonly used as the initial measurement basis and, in many cases, as a subsequent measurement basis.
Fair Value	Applied only in limited circumstances prescribed by Vietnamese accounting regulations.	Widely applied under various IFRS standards, including IFRS 9, IFRS 13, IAS 40, IAS 41, and IFRS 3.
Amortized Cost	Limited application.	Extensively used for financial assets and financial liabilities under IFRS 9 using the effective interest method.
Present Value	Rarely used as a measurement basis.	Frequently used to measure long-term assets and liabilities, including lease liabilities, provisions, employee benefit obligations, impairment testing, and discounted cash flows.
Current Value Measurement	Limited application.	May include fair value, value in use, fulfillment value, or current cost depending on the applicable IFRS standard.
Professional Judgment	Relatively limited due to standardized regulatory guidance.	Significant judgment is required in selecting the appropriate measurement basis and estimating fair values, discount rates, expected cash flows, and other valuation assumptions.
Disclosure Requirements	Standard disclosures regarding measurement methods.	Extensive disclosures regarding measurement bases, valuation techniques, key assumptions, estimation uncertainty, and fair value hierarchy where applicable.

Practical Example: Measurement of an Investment Property

Scenario	Circular 99/2025/TT-BTC	IFRS
Investment property acquired	Company purchases an office building for long-term rental income.	Same transaction.
Initial measurement	Recognized at historical cost.	Initially recognized at historical cost.
Subsequent measurement	Generally continues to be measured using the cost model.	Entity may choose either the Cost Model or the Fair Value Model under IAS 40.
Changes in market value	Increases or decreases in market value are generally not recognized unless specifically required by regulations.	Under the Fair Value Model, changes in fair value are recognized immediately in Profit or Loss.
Overall effect	Financial statements remain relatively stable due to the use of historical cost.	Financial statements more closely reflect current market conditions but may exhibit greater volatility due to fair value remeasurement.

6. Fair Value

Aspect	Circular 99/2025/TT-BTC	IFRS
Overall approach	Fair value is applied only in limited circumstances specifically prescribed by regulations.	Fair value is a fundamental measurement basis and is applied extensively across many accounting standards.
Primary measurement basis	Historical cost remains the predominant measurement basis for most assets and liabilities.	Assets and liabilities may be measured at historical cost, amortized cost, or fair value depending on the applicable IFRS standard.
Investment Property	Generally carried at historical cost (less accumulated depreciation and impairment, where applicable).	May be measured using either the Fair Value Model or the Cost Model under IAS 40.
Financial Instruments	Limited use of fair value; most financial assets are measured at historical cost.	Many financial assets and liabilities are measured at fair value under IFRS 9 (FVTPL or FVOCI).
Biological Assets	No comprehensive fair value model.	Measured at fair value less costs to sell under IAS 41, unless an exception applies.
Business Combinations	Fair value adjustments are limited.	Identifiable assets acquired and liabilities assumed are measured at fair value on the acquisition date under IFRS 3.
Share-based Payments	Very limited guidance on fair value measurement.	Equity-settled share-based payments are measured at the fair value of the equity instruments granted under IFRS 2.
Fair Value Hierarchy	No formal fair value hierarchy is prescribed.	IFRS 13 establishes a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs other than quoted prices), and Level 3 (unobservable inputs based on valuation techniques).
Disclosure Requirements	Relatively limited disclosure regarding fair value measurements.	Extensive disclosures are required, including valuation techniques, assumptions, sensitivity analyses, and fair value hierarchy classifications.
Professional Judgment	Limited reliance on valuation judgments due to historical cost emphasis.	Significant professional judgment is often required to determine fair values, especially for Level 2 and Level 3 measurements.

7. Revenue Recognition

Aspect	Circular 99/2025/TT-BTC	IFRS (IFRS 15)
Recognition principle	Revenue is generally recognized based on legal documentation and fulfillment of contractual conditions.	Revenue is recognized when control of goods or services is transferred to the customer.
Primary basis	Invoice issuance, delivery of goods, customer acceptance, and contractual completion.	Economic substance of the transaction and satisfaction of performance obligations.
Recognition trigger	Often linked to invoicing, delivery, or formal acceptance by the customer.	Triggered when each performance obligation is satisfied, either at a point in time or over time.
Accounting approach	Relatively straightforward, with limited guidance on complex contracts.	Uses a comprehensive principles-based framework to account for various types of customer contracts.
Multiple-element contracts	Generally treated as a single contract unless regulations specify otherwise.	Contracts are analyzed to identify separate performance obligations, each accounted for individually.
Revenue allocation	Limited guidance on allocating consideration among multiple goods or services.	Transaction price must be allocated to each performance obligation based on relative standalone selling prices.
Revenue over time	Less commonly applied; recognition often occurs upon completion or acceptance.	Revenue is recognized over time if one of the IFRS 15 criteria is met; otherwise, it is recognized at a point in time.
Professional judgment	Relatively limited.	Significant judgment may be required to determine performance obligations, variable consideration, timing of transfer of control, and standalone selling prices.
Disclosure requirements	Standard revenue disclosures.	Extensive disclosures on revenue disaggregation, contract balances, remaining performance obligations, significant judgments, and contract assets/liabilities.

Practical Example: Software License with Technical Support

Scenario	Circular 99/2025/TT-BTC	IFRS (IFRS 15)
Contract	Customer purchases software with one year of technical support.	Same contract.
Revenue recognition	Revenue is often recognized when the invoice is issued or the software is delivered and accepted by the customer.	The contract is separated into two performance obligations: (1) software license and (2) technical support service.
Software license	Usually recognized together with the entire contract revenue.	Revenue is recognized when control of the software license transfers to the customer.
Technical support	Often included in the initial revenue recognition.	Revenue is recognized over the one-year support period as the service is provided.
Result	Revenue may be recognized earlier, resulting in higher initial revenue.	Revenue is matched more closely with the actual delivery of goods and services, providing a more faithful representation of economic performance.

8. Financial Instruments

Aspect	Circular 99/2025/TT-BTC	IFRS (IFRS 9)
Overall guidance	Limited guidance on the recognition, classification, and measurement of financial instruments.	Comprehensive accounting framework covering recognition, classification, measurement, impairment, derecognition, and hedge accounting.
Measurement basis	Primarily historical cost.	Financial instruments are measured at amortized cost, fair value through other comprehensive income (FVOCI), or fair value through profit or loss (FVTPL), depending on business model and cash flow characteristics.
Classification of financial assets	Limited classification categories.	Financial assets are classified into three categories: Amortized Cost, FVOCI, and FVTPL.
Fair value measurement	Applied only in limited situations.	Fair value is widely used for many financial assets and liabilities.
Impairment model	Loss provisions are generally recognized only when there is objective evidence of impairment (incurred loss model).	Uses the Expected Credit Loss (ECL) model, requiring recognition of expected losses from the date the financial asset is initially recognized.
Hedge accounting	Very limited or no comprehensive guidance.	Comprehensive hedge accounting framework that better aligns accounting treatment with an entity's risk management activities.
Derivatives	Limited guidance on accounting for derivative instruments.	Detailed accounting requirements for derivatives, including recognition at fair value and subsequent measurement.
Embedded derivatives	No comprehensive accounting framework.	Embedded derivatives are assessed and, where required, separated from host contracts and accounted for independently.
Professional judgment	Relatively limited.	Significant judgment is required in areas such as business model assessment, cash flow characteristics (SPPI test), expected credit losses, and hedge effectiveness.
Disclosure requirements	Basic financial instrument disclosures.	Extensive disclosures covering credit risk, liquidity risk, market risk, fair value measurements, impairment methodology, and risk management policies.

Practical Example: Trade Receivables

Scenario	Circular 99/2025/TT-BTC	IFRS (IFRS 9)
Initial recognition	Trade receivables are recognized at the invoiced amount.	Trade receivables are recognized in accordance with IFRS 9 and IFRS 15.
Impairment approach	A provision is recognized only when there is objective evidence that the customer may not be able to pay (e.g., bankruptcy, significant overdue balances, legal disputes).	An Expected Credit Loss (ECL) allowance is recognized immediately upon initial recognition, even if no default event has occurred.
Timing of loss recognition	Losses are recognized after impairment indicators arise (incurred loss model).	Expected losses are recognized from Day 1, resulting in earlier recognition of potential credit losses.
Financial statement impact	Higher receivable balances and lower impairment expense in the early stages of a receivable's life.	Lower net receivable balances and earlier recognition of impairment expense, providing a more forward-looking assessment of credit risk.
Objective	Reflect realized or observable losses.	Reflect expected future credit losses and improve the timeliness of loss recognition.

9. Lease Accounting

Aspect	Circular 99/2025/TT-BTC	IFRS (IFRS 16)
Lease classification	Leases are generally classified as Operating Leases or Finance Leases.	For lessees, nearly all leases are recognized on the balance sheet, with limited exceptions (e.g., short-term leases and low-value assets).
Accounting model	Different accounting treatments apply depending on lease classification.	A single lessee accounting model is applied to most leases.
Operating leases	Lease payments are recognized as Rent Expense on a straight-line basis over the lease term.	Operating lease accounting is largely eliminated for lessees. Lease payments are replaced by depreciation and interest expense.
Finance leases	Recognized as leased assets and lease liabilities, with depreciation and finance costs recognized over the lease term.	Similar concept, but applied to nearly all leases under the right-of-use model.
Balance sheet impact	Operating leases generally remain off the balance sheet.	Most leases result in recognition of both a Right-of-Use (ROU) Asset and a Lease Liability on the balance sheet.
Income statement impact	Operating lease payments are recognized as a single rental expense.	Lease costs are split into Depreciation Expense (ROU Asset) and Interest Expense (Lease Liability).
Cash flow statement impact	Lease payments are generally presented as operating cash outflows.	Principal repayments are generally classified as financing activities, while interest payments are classified according to the applicable accounting policy under IAS 7.
EBITDA impact	Operating lease expense reduces EBITDA.	EBITDA generally increases because rent expense is replaced by depreciation and interest, which are excluded from EBITDA.
Financial ratios	Lower reported assets and liabilities; lower leverage ratios.	Higher reported assets and liabilities, increasing leverage while often improving EBITDA and operating profit.
Disclosure requirements	Basic lease disclosures.	Extensive disclosures regarding lease terms, maturity analysis, variable lease payments, extension options, discount rates, and right-of-use assets.

Practical Example: Five-Year Office Lease

Scenario	Circular 99/2025/TT-BTC	IFRS (IFRS 16)
Lease arrangement	Company signs a five-year office lease.	Same lease arrangement.
Initial recognition	No asset or liability is recognized if classified as an operating lease.	Recognize a Right-of-Use (ROU) Asset and a corresponding Lease Liability at the commencement date.
Subsequent accounting	Monthly lease payments are recognized as Rent Expense.	The ROU Asset is depreciated, while the Lease Liability accrues interest and is reduced as lease payments are made.
Balance sheet impact	Minimal impact for operating leases.	Both assets and liabilities increase throughout the lease term.
Income statement impact	A single, straight-line rent expense is recognized each period.	Lease expense consists of Depreciation Expense and Interest Expense, resulting in a higher total expense in the early years of the lease (front-loaded expense pattern).
Overall effect	Simpler accounting with fewer balance sheet impacts.	Provides a more complete representation of the company's lease obligations and the economic resources controlled through leasing.

10. Property, Plant and Equipment (PPE)

Aspect	Circular 99/2025/TT-BTC	IFRS (IAS 16)
Initial measurement	Property, plant, and equipment (PPE) are initially recognized at historical cost.	PPE is initially recognized at historical cost, including purchase price and directly attributable costs.
Subsequent measurement	Generally continues to be measured using the cost model.	Entities may choose either the Cost Model or the Revaluation Model for each class of PPE.
Historical cost model	Primary measurement basis for all PPE.	Permitted and commonly used.
Revaluation model	Generally not permitted except where specifically required by regulations.	Permitted under IAS 16, provided that fair value can be measured reliably and revaluations are performed regularly.
Component accounting	Component accounting is rarely applied. Major assets are typically depreciated as a single unit.	Significant components with different useful lives must be identified and depreciated separately.
Depreciation method	Depreciation is generally calculated for the entire asset based on its overall useful life.	Each significant component is depreciated over its own estimated useful life.
Major inspections and overhauls	Major inspection costs are usually recognized as expenses when incurred.	Costs of major inspections are capitalized if the recognition criteria are met and depreciated until the next scheduled inspection.
Replacement of components	Replacement costs are often treated as repair or maintenance expenses unless regulations permit capitalization.	Replacement of significant components is capitalized, while the carrying amount of the replaced component is derecognized.
Professional judgment	Limited judgment due to standardized accounting guidance.	Significant judgment is required in identifying components, estimating useful lives, residual values, and determining fair value under the revaluation model.
Disclosure requirements	Standard disclosures regarding cost, accumulated depreciation, and carrying amounts.	Extensive disclosures including depreciation methods, useful lives, reconciliation of carrying amounts, revaluation information, restrictions on title, and contractual commitments.

Practical Example: Aircraft Accounting

Scenario	Circular 99/2025/TT-BTC	IFRS (IAS 16)
Asset acquired	Company purchases an aircraft.	Same transaction.
Asset structure	The aircraft is generally treated as a single asset.	The aircraft is divided into significant components such as Engine, Fuselage (Body), Landing Gear, and Cabin Interior, if they have different useful lives.
Depreciation	One depreciation schedule is applied to the entire aircraft.	Each component is depreciated separately based on its individual useful life.
Engine replacement	Replacement costs may be recognized as repair expenses or capitalized depending on local guidance.	The cost of the new engine is capitalized, and the carrying amount of the old engine is derecognized.
Major inspection	Heavy maintenance or major inspections are generally expensed when incurred.	Major inspection costs are capitalized and depreciated over the period until the next inspection.
Financial statement impact	Simpler accounting but may not accurately reflect the consumption of different aircraft components.	More accurate allocation of depreciation and asset values, resulting in financial statements that better reflect the economic consumption of the aircraft's significant components.

11. Impairment

Aspect	Circular 99/2025/TT-BTC	IFRS (IAS 36)
Overall approach	Impairment is primarily based on observable evidence of loss or impairment indicators.	Uses a comprehensive impairment model based on whether an asset's carrying amount exceeds its recoverable amount.
Recognition principle	Losses are generally recognized after impairment indicators become evident.	An impairment loss is recognized whenever the carrying amount of an asset or Cash-Generating Unit (CGU) exceeds its recoverable amount.
Impairment trigger	Observable events such as physical damage, significant decline in value, or other evidence of impairment.	Both external and internal indicators of impairment must be assessed at each reporting date. Certain assets require annual impairment testing regardless of indicators.
Annual impairment testing	Generally not required unless impairment indicators exist.	Mandatory annual impairment testing for Goodwill and Intangible Assets with Indefinite Useful Lives, even if no impairment indicators are present.
Recoverable amount	No comprehensive framework for determining recoverable amount.	Recoverable amount is the higher of: • Fair Value Less Costs of Disposal (FVLCD) • Value in Use (VIU).
Value in Use (VIU)	Limited guidance.	Calculated as the present value of estimated future cash flows expected to be generated from the asset or Cash-Generating Unit (CGU).
Cash-Generating Unit (CGU)	Limited or no specific guidance.	Assets are tested individually unless they do not generate independent cash flows, in which case impairment is assessed at the CGU level.
Goodwill	Limited impairment guidance.	Goodwill is not amortized but must be tested annually for impairment.
Reversal of impairment	Limited guidance.	Impairment losses may be reversed when circumstances improve, except for goodwill, whose impairment losses cannot be reversed.
Professional judgment	Relatively limited.	Significant judgment is required in estimating future cash flows, discount rates, growth assumptions, and identifying CGUs.
Disclosure requirements	Standard impairment disclosures.	Extensive disclosures regarding assumptions, discount rates, CGUs, impairment losses, reversals, and sensitivity analyses.

Practical Example: Goodwill Impairment

Scenario	Circular 99/2025/TT-BTC	IFRS (IAS 36)
Business acquisition	Company acquires another business and recognizes goodwill (where applicable).	Same transaction.
Annual testing	Generally no mandatory annual impairment test unless impairment indicators exist.	Goodwill must be tested at least annually, regardless of whether impairment indicators exist.
Recoverable amount assessment	Limited guidance on valuation methodology.	Recoverable amount is determined as the higher of Fair Value Less Costs of Disposal (FVLCD) and Value in Use (VIU).
Impairment recognition	Losses are recognized when observable impairment evidence exists.	If the recoverable amount is lower than the carrying amount, an impairment loss is recognized immediately in profit or loss.
Reversal	Limited guidance.	Impairment losses recognized on goodwill cannot be reversed, even if the business subsequently recovers.
Overall effect	Simpler impairment assessment with fewer valuation requirements.	More robust and forward-looking impairment testing that better reflects the recoverable value of assets and business acquisitions.

12. Inventory

Aspect	Circular 99/2025/TT-BTC	IFRS (IAS 2)
Measurement basis	Inventory is generally measured at the lower of cost and net realizable value (NRV), with cost being the primary measurement basis.	Inventory is measured at the lower of cost and net realizable value (NRV).
Cost formulas permitted	Permits commonly accepted cost formulas in accordance with Vietnamese accounting regulations (e.g., FIFO and Weighted Average).	Permits FIFO and Weighted Average Cost methods.
LIFO method	Not permitted under Circular 99.	Prohibited under IAS 2.
Net Realizable Value (NRV)	NRV is assessed when there is evidence that inventory may be obsolete, damaged, or selling below cost.	Requires inventory to be written down whenever NRV falls below cost, with detailed guidance on estimating selling price and completion costs.
Inventory write-downs	Write-downs are recognized when required under Vietnamese accounting regulations.	Inventory is written down to NRV immediately when cost exceeds NRV.
Reversal of write-downs	Reversals are permitted when the reasons for the write-down no longer exist, subject to applicable regulations.	Previous inventory write-downs must be reversed (up to the amount of the original write-down) when NRV subsequently increases.
Cost components	Includes purchase costs, conversion costs, and other directly attributable costs.	Includes purchase costs, conversion costs, and other costs incurred to bring inventory to its present location and condition.
Professional judgment	Limited judgment due to more prescriptive guidance.	Greater judgment is required in estimating NRV, identifying obsolete inventory, and allocating production overheads.
Disclosure requirements	Standard disclosures regarding inventory balances and valuation methods.	Extensive disclosures, including accounting policies, carrying amounts by inventory category, write-downs, reversals, and inventory recognized as an expense.

Practical Example: Inventory Valuation

Scenario	Circular 99/2025/TT-BTC	IFRS (IAS 2)
Inventory purchased	Company purchases 1,000 units at USD 100 each.	Same transaction.
Market conditions	Selling price declines, reducing the estimated NRV to USD 90 per unit.	Same market conditions.
Valuation	Inventory is written down from cost to NRV if required by accounting regulations.	Inventory must be written down to USD 90 per unit because NRV is lower than cost.
Subsequent recovery	If market conditions improve, reversal of the write-down may be recognized in accordance with Vietnamese regulations.	If NRV later increases (e.g., to USD 98), the previous write-down is reversed, but only up to the amount of the original write-down.
Overall effect	Applies the lower of cost and NRV principle with relatively prescriptive guidance.	Applies a more principle-based approach with detailed guidance on NRV estimation and mandatory reversal of write-downs when appropriate.

13. Borrowing Costs

Aspect	Circular 99/2025/TT-BTC	IFRS (IAS 23)
Overall approach	Borrowing costs may be capitalized when specific conditions prescribed by Vietnamese accounting regulations are met.	Borrowing costs that are directly attributable to the acquisition, construction, or production of a qualifying asset must be capitalized.
Recognition principle	Capitalization is permitted under certain circumstances; otherwise, borrowing costs are recognized as finance expenses.	Capitalization is mandatory for borrowing costs directly attributable to qualifying assets; all other borrowing costs are recognized as an expense when incurred.
Qualifying asset	Recognized based on Vietnamese accounting guidance.	A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale (e.g., manufacturing facilities, large construction projects, certain intangible assets).
Commencement of capitalization	Begins when the conditions specified in local regulations are satisfied.	Capitalization begins when the entity: (1) incurs expenditures for the asset, (2) incurs borrowing costs, and (3) undertakes activities necessary to prepare the asset for its intended use or sale.
Suspension of capitalization	Governed by Vietnamese accounting guidance.	Capitalization is suspended during extended periods in which active development is interrupted.
Cessation of capitalization	Ends according to local accounting regulations.	Capitalization ceases when substantially all activities necessary to prepare the qualifying asset for its intended use or sale are complete.
Specific borrowings	May be capitalized if directly related to qualifying investments or assets.	Actual borrowing costs incurred on specific borrowings are capitalized, less any investment income earned on temporary investment of those borrowings.
General borrowings	Limited guidance on allocation methods.	Borrowing costs are capitalized using a capitalization rate applied to expenditures on qualifying assets financed by general borrowings.
Professional judgment	Relatively limited due to more prescriptive guidance.	Significant judgment is required in determining qualifying assets, capitalization periods, capitalization rates, and temporary suspensions.
Disclosure requirements	Standard disclosures regarding borrowing costs.	Requires disclosure of the amount of borrowing costs capitalized during the period and the capitalization rate used for general borrowings.

Practical Example: Construction of a Manufacturing Plant

Scenario	Circular 99/2025/TT-BTC	IFRS (IAS 23)
Project	Company constructs a manufacturing plant over a two-year period using bank loans.	Same project.
Borrowing costs incurred	Interest incurred during construction may be capitalized if the conditions under Circular 99 are satisfied.	Interest directly attributable to constructing the plant must be capitalized as part of the cost of the qualifying asset.
Construction interruption	Treatment follows Vietnamese accounting regulations.	Capitalization is suspended during any prolonged interruption in active construction.
Completion of construction	Capitalization ends when permitted under local regulations.	Capitalization stops when the plant is substantially ready for its intended use.
Financial statement impact	Borrowing costs may increase the carrying amount of the asset if capitalization criteria are met.	Borrowing costs become part of the asset's carrying amount and are subsequently recognized through depreciation over the asset's useful life rather than immediately as finance expense.

14. Foreign Currency

Aspect	Circular 99/2025/TT-BTC	IFRS (IAS 21)
Overall approach	Foreign currency transactions are accounted for using exchange rates prescribed by Vietnamese regulations.	Foreign currency accounting is based on the concepts of functional currency and presentation currency.
Exchange rates	Uses official exchange rates in accordance with regulations issued by Vietnamese authorities.	Uses the spot exchange rate at the transaction date and closing exchange rates at the reporting date, depending on the nature of the item.
Functional currency	Not a fundamental accounting concept. Financial statements are generally prepared in Vietnamese Dong (VND) in accordance with statutory requirements.	Every entity must determine its functional currency, which is the currency of the primary economic environment in which it operates.
Presentation currency	Financial statements are typically presented in the currency prescribed by Vietnamese regulations.	Entities may present financial statements in any presentation currency, which may differ from the functional currency.
Functional vs. presentation currency	Generally no distinction.	Functional currency and presentation currency may be different, requiring translation procedures under IAS 21.
Translation of foreign operations	Limited guidance on translating foreign subsidiaries.	Comprehensive requirements for translating foreign operations, including recognition of translation differences in Other Comprehensive Income (OCI) until disposal of the foreign operation.
Exchange differences	Foreign exchange gains and losses are recognized in accordance with Vietnamese accounting regulations.	Exchange differences are generally recognized in profit or loss, except for certain items such as foreign operations and qualifying net investments, where differences may be recognized in OCI.
Professional judgment	Limited due to prescribed exchange rate rules.	Significant judgment is required in determining the functional currency and assessing changes in the primary economic environment.
Disclosure requirements	Standard disclosures regarding foreign currency transactions and exchange differences.	Extensive disclosures regarding functional currency, presentation currency, exchange differences, and foreign currency translation methods.

Practical Example: Foreign-Invested Company

Scenario	Circular 99/2025/TT-BTC	IFRS (IAS 21)
Business operations	A foreign-invested company operates in Vietnam but conducts most of its transactions in USD.	Same business scenario.
Functional currency determination	Financial reporting generally follows Vietnamese statutory requirements, typically using VND.	The company assesses its primary economic environment and may determine that USD is its functional currency if it primarily generates and spends cash in USD.
Presentation currency	Financial statements are generally presented in VND in accordance with Vietnamese regulations.	The company may prepare its accounting records in USD (functional currency) and present its financial statements in either USD or VND (presentation currency).
Translation process	Limited translation requirements beyond statutory reporting rules.	If the presentation currency differs from the functional currency, assets and liabilities are translated at the closing rate, income and expenses are translated at transaction or average rates, and translation differences are recognized in OCI.
Overall effect	Simpler statutory reporting focused on regulatory compliance.	More accurately reflects the economic substance of international operations and improves comparability across multinational groups.

15. Consolidation

Aspect	Circular 99/2025/TT-BTC	IFRS (IFRS 10)
Overall approach	Consolidation is primarily based on ownership interest and legal ownership structure.	Consolidation is based on the control principle, regardless of legal ownership percentage.
Primary criterion	Ownership percentage is the key determinant for consolidation.	An investor consolidates an investee when it controls the investee.
Definition of control	Focuses mainly on majority ownership and statutory requirements.	Control exists when the investor has: (1) power over the investee, (2) exposure or rights to variable returns, and (3) the ability to use its power to affect those returns.
Voting rights	Majority voting rights generally determine consolidation.	Voting rights are considered, but they are only one factor in assessing control.
Potential voting rights	Generally not considered in consolidation assessments.	Potential voting rights (e.g., options, convertible instruments) are considered if they are substantive.
Power over relevant activities	Limited consideration beyond legal ownership.	Assessment focuses on which party has the power to direct the activities that most significantly affect the investee's returns.
Variable returns	Limited emphasis on economic exposure.	The investor must be exposed, or have rights, to variable returns from its involvement with the investee.
De facto control	Generally not addressed in detail.	An investor may control an investee even without majority ownership if it has practical ability to direct relevant activities (de facto control).
Structured entities	Limited guidance.	Specific guidance exists for evaluating control over structured entities where voting rights are not the dominant factor.
Professional judgment	Relatively limited due to more rules-based guidance.	Significant professional judgment is required to evaluate complex ownership structures, contractual arrangements, and control relationships.
Disclosure requirements	Standard disclosures regarding subsidiaries and consolidated financial statements.	Extensive disclosures are required regarding subsidiaries, significant judgments in determining control, non-controlling interests, and unconsolidated structured entities (IFRS 12).

Practical Example: Assessing Control

Scenario	Circular 99/2025/TT-BTC	IFRS (IFRS 10)
Ownership structure	Company A owns 45% of Company B.	Same ownership structure.
Other shareholders	Consolidation may not be required because Company A does not own more than 50% of the voting shares.	Ownership percentage alone is not determinative.
Decision-making power	Primary focus remains on legal ownership.	If Company A has the contractual right to direct the relevant activities and the remaining shareholders are widely dispersed and passive, Company A may still control Company B.
Consolidation conclusion	Company B may not be consolidated.	Company B must be consolidated if Company A meets all three elements of control: power, exposure to variable returns, and the ability to use its power to affect those returns.
Overall effect	Simpler ownership-based consolidation model.	A more substance-over-form approach that better reflects the true economic relationship between the investor and the investee.

16. Investments

Aspect	Circular 99/2025/TT-BTC	IFRS
Overall approach	Investments are primarily measured using the cost model, with limited use of fair value.	Measurement depends on the nature of the investment and the applicable IFRS standard (e.g., IFRS 9, IAS 28, IFRS 10, IAS 27).
Initial recognition	Investments are initially recognized at acquisition cost.	Investments are generally initially recognized at fair value plus transaction costs (except certain financial assets measured at FVTPL).
Cost model	The most common measurement basis for many investments.	Permitted in certain circumstances, particularly for separate financial statements under IAS 27 and for some investments not measured under IFRS 9.
Equity method	Applied for investments in associates and certain long-term investments where significant influence exists, in accordance with Vietnamese accounting regulations.	Required for investments in associates and joint ventures under IAS 28, unless an exemption applies.
Fair value measurement	Fair value is used only in limited situations prescribed by regulations.	Fair value is widely applied for many financial assets under IFRS 9 (FVTPL or FVOCI).
Classification of investments	Classification is relatively straightforward and based primarily on the legal form of the investment.	Investments are classified based on the nature of the investment and the applicable IFRS requirements (subsidiary, associate, joint venture, equity investment, debt instrument, etc.).
Unrealized gains and losses	Generally not recognized unless specifically required by regulations.	Depending on classification, unrealized gains and losses are recognized either in Profit or Loss (FVTPL) or Other Comprehensive Income (FVOCI).
Impairment	Impairment is recognized when objective evidence of loss exists.	Impairment follows the applicable IFRS model, including the Expected Credit Loss (ECL) model for many financial assets under IFRS 9.
Professional judgment	Limited due to more rules-based guidance.	Significant judgment is required in determining classification, measurement category, business model, and fair value.
Disclosure requirements	Standard disclosures regarding investment balances and accounting policies.	Extensive disclosures covering classification, fair values, investment risks, valuation techniques, impairment, and significant judgments.

Practical Example: Investment in Another Company

Scenario	Circular 99/2025/TT-BTC	IFRS
Investment acquired	Company A acquires 30% of the shares of Company B.	Same transaction.
Significant influence	If significant influence exists, the investment is generally accounted for using the equity method.	IAS 28 requires the equity method because Company A has significant influence over Company B.
Fair value option	Fair value measurement is generally not available for this investment.	Certain investments that are not associates or joint ventures may instead be measured at FVTPL or FVOCI under IFRS 9, depending on their classification.
Recognition of investment income	Share of profits is recognized under the applicable accounting regulations when using the equity method.	The investor recognizes its share of the associate's profit or loss and adjusts the carrying amount of the investment accordingly.
Overall effect	Investment accounting is primarily cost-based with limited use of fair value.	Investment accounting is more comprehensive and reflects the economic substance of the investment through the appropriate measurement model (cost, equity method, amortized cost, FVOCI, or FVTPL).

17. Business Combinations

Aspect	Circular 99/2025/TT-BTC	IFRS (IFRS 3)
Overall approach	Business combination accounting is relatively simple and primarily follows statutory accounting guidance.	Business combinations are accounted for using the Acquisition Method, providing a comprehensive framework for recognizing and measuring acquired businesses.
Accounting method	Simplified acquisition accounting with limited guidance on complex transactions.	The Acquisition Method is mandatory for all business combinations within the scope of IFRS 3.
Identification of acquirer	Generally based on legal ownership and transaction structure.	Requires identifying the accounting acquirer based on which entity obtains control of the acquiree.
Purchase Price Allocation (PPA)	Limited or simplified allocation of acquisition cost.	Requires a detailed Purchase Price Allocation (PPA), allocating the purchase consideration to identifiable assets acquired and liabilities assumed at fair value.
Measurement of acquired assets and liabilities	Generally recorded based on carrying amounts or limited fair value adjustments.	Identifiable assets acquired and liabilities assumed are measured at fair value on the acquisition date.
Goodwill recognition	Limited guidance on calculating and recognizing goodwill.	Goodwill is recognized as the excess of consideration transferred over the fair value of identifiable net assets acquired.
Bargain purchase gain	Limited guidance.	If the fair value of net identifiable assets exceeds the consideration transferred, the resulting bargain purchase gain is recognized immediately in profit or loss after reassessment.
Contingent consideration	Limited or no comprehensive guidance.	Contingent consideration is recognized at fair value on the acquisition date and subsequently remeasured depending on its classification.
Acquisition-related costs	Often capitalized as part of the acquisition cost, depending on local regulations.	Acquisition-related costs (e.g., legal, advisory, valuation fees) are expensed as incurred and are not included in the purchase consideration.
Non-controlling interests (NCI)	Limited guidance.	NCI is recognized at either fair value or the proportionate share of identifiable net assets, depending on the accounting policy elected for each business combination.
Professional judgment	Relatively limited due to more rules-based guidance.	Significant professional judgment is required in determining fair values, identifying intangible assets, measuring contingent consideration, and allocating purchase price.
Disclosure requirements	Standard disclosures regarding acquisitions.	Extensive disclosures regarding the acquisition, purchase consideration, fair value measurements, goodwill, acquisition-date assets and liabilities, and the financial impact of the acquisition.

Practical Example: Acquisition of a Company

Scenario	Circular 99/2025/TT-BTC	IFRS (IFRS 3)
Transaction	Company A acquires 100% of Company B for USD 100 million.	Same transaction.
Asset measurement	Assets and liabilities are generally recorded using simplified valuation methods with limited fair value adjustments.	All identifiable assets and liabilities are measured at fair value on the acquisition date through a Purchase Price Allocation (PPA).
Goodwill	Goodwill recognition follows simplified guidance where applicable.	Goodwill is calculated as the excess of the purchase consideration over the fair value of identifiable net assets acquired.
Contingent consideration	Future earn-out payments may receive limited accounting treatment.	Earn-out or contingent payments are recognized at fair value on the acquisition date and subsequently remeasured if required.
Acquisition costs	Legal, consulting, and due diligence costs may be capitalized depending on local accounting requirements.	Acquisition-related costs are recognized immediately as expenses in profit or loss.
Overall effect	Simpler acquisition accounting with fewer valuation requirements.	Provides a comprehensive and transparent representation of the acquisition by measuring acquired assets and liabilities at fair value and recognizing goodwill and other acquisition-related items separately.

18. Deferred Tax

Aspect	Circular 99/2025/TT-BTC	IFRS (IAS 12)
Overall approach	Deferred tax guidance is relatively limited and less comprehensive.	Uses a comprehensive temporary difference approach to account for deferred taxes.
Recognition principle	Deferred tax accounting is applied in accordance with Vietnamese accounting regulations, with a narrower scope than IFRS.	Deferred tax is recognized for nearly all taxable and deductible temporary differences between the carrying amount of assets and liabilities and their tax bases, subject to limited exceptions.
Underlying concept	Focuses primarily on compliance with local tax regulations.	Focuses on the future tax consequences of recovering assets and settling liabilities.
Deferred Tax Assets (DTA)	Recognition is more limited and follows statutory guidance.	Deferred tax assets are recognized for deductible temporary differences, unused tax losses, and unused tax credits to the extent that it is probable that future taxable profits will be available.
Deferred Tax Liabilities (DTL)	Limited recognition requirements.	Deferred tax liabilities are recognized for almost all taxable temporary differences, except for specific exemptions under IAS 12.
Temporary differences	Limited application and guidance.	Temporary differences are the primary basis for calculating deferred taxes.
Tax loss carryforwards	Recognition depends on local tax regulations.	Deferred tax assets may be recognized for unused tax losses and tax credits when future utilization is probable.
Initial recognition exemption	Limited guidance.	Certain temporary differences arising from the initial recognition of assets or liabilities may qualify for exemptions under IAS 12.
Measurement	Measured in accordance with applicable Vietnamese tax regulations.	Measured using enacted or substantively enacted tax rates expected to apply when the temporary differences reverse.
Professional judgment	Relatively limited.	Significant judgment is required in forecasting future taxable profits, assessing recoverability of deferred tax assets, and identifying temporary differences.
Disclosure requirements	Standard disclosures regarding income tax expense.	Extensive disclosures covering deferred tax assets and liabilities, temporary differences, tax loss carryforwards, effective tax rate reconciliation, and unrecognized deferred tax assets.

Practical Example: Depreciation Difference

Scenario	Circular 99/2025/TT-BTC	IFRS (IAS 12)
Transaction	A company uses different depreciation methods for accounting and tax purposes.	Same transaction.
Accounting treatment	Deferred tax treatment follows Vietnamese accounting and tax regulations, with more limited recognition requirements.	The difference between the accounting carrying amount and the tax base creates a temporary difference.
Deferred tax recognition	Deferred tax may not be recognized for all timing differences.	A Deferred Tax Liability (DTL) or Deferred Tax Asset (DTA) is recognized depending on whether the temporary difference is taxable or deductible.
Subsequent periods	Treatment follows local regulations as differences reverse.	Deferred tax balances are adjusted as temporary differences reverse over the asset's useful life.
Overall effect	Simpler accounting focused on statutory compliance.	Provides a more complete reflection of the future tax consequences of current transactions, improving the comparability and accuracy of financial statements.

19. Employee Benefits

Aspect	Circular 99/2025/TT-BTC	IFRS (IAS 19)
Overall approach	Primarily focuses on statutory employee compensation and benefits required under Vietnamese labor and social insurance regulations.	Provides a comprehensive framework for accounting for all forms of employee benefits throughout the employee's service period and after employment ends.
Scope of employee benefits	Mainly covers salaries, wages, social insurance contributions, bonuses, and other statutory employee benefits.	Covers short-term employee benefits, post-employment benefits, other long-term employee benefits, termination benefits, and share-based compensation (the latter under IFRS 2).
Short-term employee benefits	Includes salaries, wages, overtime, bonuses, and employer contributions to mandatory social insurance schemes.	Includes salaries, wages, paid annual leave, profit-sharing, bonuses, non-monetary benefits, and other benefits expected to be settled within 12 months.
Post-employment benefits	Limited guidance beyond statutory retirement and social insurance obligations.	Includes defined contribution plans and defined benefit plans, with detailed accounting requirements for each.
Defined contribution plans	Employer contributions are generally recognized as expenses when incurred.	Contributions are recognized as expenses in the period in which employees render services.
Defined benefit plans	Limited or no comprehensive guidance.	Requires recognition of defined benefit obligations using actuarial valuation techniques.
Actuarial valuation	Generally not required.	Required to measure defined benefit obligations using actuarial assumptions such as discount rates, salary growth, employee turnover, mortality, and retirement age.
Long-service benefits	Limited guidance.	Includes long-service awards, long-term disability benefits, jubilee awards, and other long-term employee benefits measured using actuarial techniques where applicable.
Termination benefits	Recognized in accordance with Vietnamese labor regulations.	Recognized when the entity can no longer withdraw the offer of termination benefits or when restructuring costs are recognized under IAS 37.
Professional judgment	Relatively limited due to standardized statutory requirements.	Significant professional judgment is required in estimating actuarial assumptions, discount rates, future salary increases, employee turnover, and life expectancy.
Disclosure requirements	Standard disclosures relating to employee compensation and statutory obligations.	Extensive disclosures regarding defined benefit obligations, plan assets, actuarial assumptions, sensitivity analyses, pension expenses, and risks associated with employee benefit plans.

Practical Example: Employee Pension Plan

Scenario	Circular 99/2025/TT-BTC	IFRS (IAS 19)
Employee benefit arrangement	Company contributes to Vietnam's mandatory social insurance and retirement schemes.	Company provides both a mandatory retirement plan and an additional defined benefit pension plan.
Recognition of expense	Employer contributions are recognized as employee benefit expenses when incurred.	Contributions to defined contribution plans are expensed as incurred, while defined benefit obligations are measured and recognized based on actuarial valuations.
Defined benefit obligation	Generally not recognized beyond statutory obligations.	A pension liability (or asset) is recognized based on the present value of future pension obligations less the fair value of plan assets.
Actuarial gains and losses	No specific accounting treatment.	Remeasurements arising from actuarial gains and losses are recognized in Other Comprehensive Income (OCI) and are not subsequently reclassified to profit or loss.
Overall effect	Simpler accounting focused on statutory employment obligations.	Provides a more comprehensive reflection of the company's long-term obligations to employees, particularly for pension and retirement benefit plans.

20. Share-Based Payments

Aspect	Circular 99/2025/TT-BTC	IFRS (IFRS 2)
Overall approach	Very limited guidance on accounting for share-based payment transactions.	Provides a comprehensive framework for accounting for all share-based payment arrangements.
Scope	No detailed accounting requirements for equity-settled or cash-settled share-based payments.	Applies to equity-settled, cash-settled, and share-based payment transactions with cash alternatives.
Employee Stock Ownership Plan (ESOP)	Limited guidance on recognition and measurement.	ESOP transactions must be recognized as employee compensation expense over the vesting period.
Stock options	No comprehensive accounting model.	Stock options granted to employees are recognized at the grant-date fair value and expensed over the vesting period.
Restricted shares (Restricted Stock Awards)	Limited guidance.	Restricted shares are recognized based on their grant-date fair value and recognized as compensation expense over the vesting period.
Measurement basis	Generally follows statutory accounting guidance where applicable.	Equity-settled share-based payments are measured at the grant-date fair value of the equity instruments granted. Cash-settled awards are measured at fair value and remeasured at each reporting date until settlement.
Valuation methods	No prescribed valuation methodology.	Fair value is commonly determined using option pricing models such as Black-Scholes, Binomial, or Monte Carlo models, depending on the award's characteristics.
Recognition of expense	Limited or no explicit requirement to recognize compensation expense over the vesting period.	Compensation expense is recognized systematically over the vesting period, with a corresponding increase in equity (for equity-settled awards) or liability (for cash-settled awards).
Vesting conditions	Limited guidance.	Both service conditions and performance conditions are considered when recognizing compensation expense.
Forfeitures	Limited guidance.	Entities estimate expected forfeitures (or account for actual forfeitures, depending on the applicable policy) when recognizing compensation expense.
Professional judgment	Relatively limited.	Significant judgment is required in estimating fair value, expected volatility, expected term, dividend yield, risk-free interest rate, and employee forfeiture rates.
Disclosure requirements	Basic disclosures, if any, depending on local regulations.	Extensive disclosures regarding the nature of share-based payment arrangements, valuation assumptions, fair value methodology, expense recognized, vesting conditions, and movements in outstanding awards.

Practical Example: Employee Stock Option Plan (ESOP)

Scenario	Circular 99/2025/TT-BTC	IFRS (IFRS 2)
Transaction	Company grants stock options to employees as part of its compensation package.	Same transaction.
Initial recognition	Limited accounting guidance; treatment may vary depending on local regulations.	The grant-date fair value of the stock options is determined using an appropriate option pricing model.
Expense recognition	Compensation expense may not be systematically recognized over the vesting period.	The grant-date fair value is recognized as employee compensation expense over the vesting period, with a corresponding increase in equity.
Measurement	No standardized valuation model is prescribed.	Fair value is typically calculated using models such as Black-Scholes or Binomial, incorporating assumptions about volatility, expected life, dividends, and risk-free interest rates.
Financial statement impact	Limited impact on reported employee compensation and equity.	Employee compensation expense increases over the vesting period, while shareholders' equity increases, providing a more faithful representation of the economic cost of equity-based compensation.

21. Disclosure Requirements

Aspect	Circular 99/2025/TT-BTC	IFRS
Overall disclosure philosophy	Disclosure requirements are relatively concise and primarily designed to satisfy statutory and regulatory reporting requirements.	Disclosure requirements are extensive and designed to provide transparent, decision-useful information for investors, creditors, and other stakeholders.
Level of detail	Moderate level of disclosure with standardized reporting formats.	Highly detailed disclosures tailored to the entity's transactions, risks, and financial position.
Primary objective	Compliance with Vietnamese accounting regulations and legal reporting obligations.	Enhance transparency, comparability, and users' understanding of the entity's financial performance, position, and risks.
Accounting policies	Disclosure of significant accounting policies is required but generally follows standardized guidance.	Comprehensive disclosure of significant accounting policies, including entity-specific judgments and policy choices.
Management judgments	Limited disclosure requirements.	Requires disclosure of significant judgments made by management in applying accounting policies that have the most significant effect on the financial statements.
Accounting estimates	Basic disclosure of significant estimates where applicable.	Extensive disclosure of key sources of estimation uncertainty, assumptions, and potential impacts on future financial statements.
Risk management	Limited disclosure requirements.	Comprehensive disclosures on financial risk management objectives, policies, and procedures.
Sensitivity analysis	Generally not required.	Required for certain financial risks (e.g., interest rate risk, foreign exchange risk, market risk) to demonstrate how changes in assumptions affect financial performance and position.
Fair value hierarchy	No formal disclosure requirement for fair value hierarchy.	Requires disclosure of Level 1, Level 2, and Level 3 fair value measurements, including valuation techniques and significant inputs under IFRS 13.
Capital management	Limited disclosure.	Requires disclosure of capital management objectives, policies, and compliance with externally imposed capital requirements.
Liquidity risk	Basic disclosures where applicable.	Detailed maturity analyses of financial liabilities and disclosures regarding liquidity risk management.
Market risk	Limited disclosure requirements.	Comprehensive disclosures covering interest rate risk, foreign currency risk, commodity price risk, and other market risks.
Credit risk	Basic disclosures regarding receivables and provisions.	Extensive disclosures regarding credit risk exposures, expected credit losses (ECL), collateral, credit quality, and concentration of risk under IFRS 7 and IFRS 9.
Professional judgment	Limited reliance on management judgment in preparing disclosures.	Significant professional judgment is required to determine material information, entity-specific risks, and meaningful disclosures.
Overall transparency	Focused primarily on regulatory compliance.	Provides significantly greater transparency into the entity's financial position, performance, risks, estimates, and management decisions, supporting informed decision-making by investors and other users.

22. Professional Judgment

Aspect	Circular 99/2025/TT-BTC	IFRS
Overall approach	More rules-based, with detailed regulatory guidance and prescribed accounting treatments.	Principle-based, requiring significant professional judgment in applying accounting standards.
Role of professional judgment	Limited. Accountants primarily follow prescribed rules and standardized reporting requirements.	Fundamental to financial reporting. Management must exercise judgment to ensure financial statements faithfully represent the economic substance of transactions.
Interpretation flexibility	Less room for interpretation, resulting in greater consistency but reduced flexibility.	Greater flexibility allows entities to apply accounting treatments that best reflect the underlying economics of transactions.
Focus of assessment	Emphasis on compliance with statutory accounting regulations.	Emphasis on the economic substance of transactions rather than merely their legal form.
Key areas requiring judgment	Generally limited to situations specifically addressed by Vietnamese accounting regulations.	Professional judgment is commonly required when assessing: • Control (IFRS 10) • Substance over form  • Materiality (IAS 1) • Significant accounting estimates and assumptions  • Fair value measurement • Impairment testing • Revenue recognition • Lease classification and measurement
Management responsibility	Primarily responsible for ensuring compliance with statutory reporting requirements.	Responsible for selecting appropriate accounting policies, making reasonable judgments and estimates, and providing transparent disclosures about those judgments.
Disclosure of judgments	Limited disclosure requirements regarding significant judgments.	Requires disclosure of significant judgments and key estimation uncertainties that could materially affect the financial statements.
Overall impact	Produces standardized and consistent financial reporting with relatively limited management discretion.	Produces financial statements that more accurately reflect the economic reality of transactions but requires greater expertise, documentation, and auditor scrutiny.

23. Digital Reporting

Aspect	Circular 99/2025/TT-BTC	IFRS
Overall approach	Focuses on standardized statutory reporting formats required by Vietnamese regulatory authorities.	Focuses on digital, investor-oriented financial reporting with increasing adoption of international reporting technologies and sustainability disclosures.
Primary objective	Facilitate regulatory compliance, tax administration, and government oversight.	Improve transparency, comparability, accessibility, and usability of financial information for global investors and stakeholders.
Reporting format	Standardized financial statement templates prescribed by Vietnamese regulations.	Flexible reporting formats supported by internationally recognized digital reporting standards.
Digital reporting standards	Primarily follows domestic electronic reporting requirements.	Increasing adoption of XBRL (eXtensible Business Reporting Language) for digital financial reporting in many jurisdictions.
Annual reporting	Primarily focuses on statutory financial statements submitted to regulatory authorities.	Encourages comprehensive digital annual reports that integrate financial and non-financial information for investors.
ESG integration	Limited requirements for environmental, social, and governance (ESG) disclosures.	Increasing integration of ESG and sustainability-related disclosures alongside financial reporting.
Sustainability reporting	Sustainability reporting is generally outside the scope of Circular 99.	Increasing adoption of sustainability reporting frameworks, including the ISSB (International Sustainability Standards Board) standards (IFRS S1 and IFRS S2), to complement IFRS financial statements.
Technology adoption	Designed primarily to support statutory electronic submissions to Vietnamese authorities.	Supports digital reporting ecosystems that enable automated data extraction, analytics, regulatory filing, and cross-border comparability.
Global comparability	Primarily intended for domestic regulatory reporting.	Designed to facilitate global comparability and interoperability of financial information across capital markets.
Future direction	Continued enhancement of electronic statutory reporting and regulatory compliance.	Ongoing expansion of digital reporting, machine-readable financial statements, ESG reporting, and sustainability disclosures to meet evolving investor and regulatory expectations.

24. Transition Challenges

Transition Area	Challenge When Moving from Circular 99/2025/TT-BTC to IFRS	Potential Impact
Revenue Recognition	IFRS 15 requires identification of performance obligations, allocation of transaction prices, and recognition based on the transfer of control rather than invoicing or legal completion.	Changes in the timing of revenue recognition, contract accounting, and financial performance reporting.
Lease Accounting	IFRS 16 requires most leases to be recognized on the balance sheet as Right-of-Use (ROU) Assets and Lease Liabilities.	Increased reported assets and liabilities, changes to EBITDA, leverage ratios, and key financial metrics.
Financial Instrument Valuation	IFRS 9 introduces classification based on business models and cash flow characteristics, along with fair value measurement for many financial assets.	Additional valuation processes, greater volatility in reported earnings, and more complex accounting.
Fair Value Measurement	IFRS requires fair value measurement for many assets and liabilities, supported by IFRS 13 valuation principles and hierarchy.	Need for valuation specialists, market data, and robust valuation methodologies.
Deferred Tax Calculations	IAS 12 requires recognition of deferred tax assets and liabilities for most temporary differences.	More complex tax accounting and additional reconciliation between accounting and tax records.
Component Depreciation	IAS 16 requires significant components of an asset with different useful lives to be depreciated separately.	More detailed fixed asset registers, depreciation calculations, and asset management processes.
Disclosure Requirements	IFRS requires substantially more detailed disclosures, including judgments, estimates, financial risks, fair value information, and sensitivity analyses.	Longer financial statements, increased reporting workload, and greater transparency for investors.
Internal Control Enhancements	Existing internal controls may not adequately support IFRS recognition, measurement, valuation, and disclosure requirements.	Need to redesign accounting policies, review controls, and strengthen governance processes.
ERP System Modifications	Existing accounting and ERP systems may not capture all data required for IFRS reporting, such as lease data, fair value information, and Expected Credit Loss (ECL) calculations.	System upgrades, process redesign, additional automation, and potential implementation costs.
Staff Training and Competency	Finance teams, management, auditors, and operational departments must understand IFRS concepts and their practical application.	Investment in IFRS training, recruitment of experienced professionals, and continuous knowledge development.

Summary of Key Transition Challenges

Category	Typical Actions Required
Accounting Policies	Develop IFRS-compliant accounting policies and perform gap analysis against Circular 99.
Financial Reporting	Redesign financial statement formats, disclosures, and reporting processes.
Systems & Technology	Upgrade ERP systems, chart of accounts, reporting tools, and data collection processes.
Internal Controls	Strengthen governance, documentation, and internal control procedures to support IFRS reporting.
Tax & Compliance	Assess the impact on deferred taxes, tax reconciliations, and statutory reporting requirements.
People & Training	Train finance teams, management, auditors, and business units on IFRS requirements and implementation.
Project Management	Establish an IFRS implementation roadmap with timelines, milestones, governance, and cross-functional coordination.
External Support	Engage external advisors, auditors, valuation specialists, and IT consultants where specialized expertise is required.

25. Practical Example

A manufacturing company signs a five-year equipment service contract.

Under Circular 99

Revenue recognized according to invoicing schedule.

Lease treated as operating lease.

Receivables impaired only after evidence of default.

Equipment measured at historical cost.

Under IFRS

Revenue allocated across multiple performance obligations.

Lease recognized as:

• Right-of-use asset

• Lease liability

Expected credit losses recognized immediately.

Equipment impairment tested annually if indicators exist.

Fair value disclosures expanded significantly.

26. Summary Comparison

Area	Circular 99	IFRS
Accounting philosophy	Rule-based	Principle-based
Financial statement format	Standardized	Flexible
Fair value	Limited	Extensive
Revenue	Invoice/contract focus	Transfer of control
Financial instruments	Basic	Comprehensive
Lease accounting	Operating vs Finance	Right-of-use model
Consolidation	Ownership emphasis	Control model
Deferred tax	Simplified	Comprehensive
Professional judgment	Limited	Extensive
Disclosure	Moderate	Highly detailed
Investor focus	Lower	High
Global comparability	Limited	Excellent

Advantages of Circular 99

• Easier compliance for domestic businesses

• Standardized reporting formats

• Lower implementation costs

• Familiar to Vietnamese accountants

• Well aligned with statutory reporting and tax administration

Advantages of IFRS

• Higher-quality financial reporting

• Better reflects economic substance

• Greater transparency for investors

• Enhanced comparability across jurisdictions

• Facilitates access to international capital markets

• Supports cross-border mergers, acquisitions, and listings

Which Framework Should a Company Use?

The appropriate framework depends on the company's objectives:

Company Type	Recommended Framework
Small domestic enterprise	Circular 99 is generally sufficient for statutory reporting.
Large Vietnamese corporation	Circular 99 for compliance, with consideration of IFRS for strategic reporting.
Foreign-invested enterprise (FDI)	Circular 99 for statutory filings and IFRS for group reporting, if required by the parent company.
Listed company	Circular 99 for local requirements, with IFRS increasingly beneficial as Vietnam's IFRS adoption progresses.
Multinational corporation	IFRS is generally preferred for consistency across jurisdictions.
Company preparing for an IPO or international fundraising	IFRS is strongly recommended to meet investor expectations and improve comparability.

Conclusion

Circular 99/2025/TT-BTC is an important step in modernizing Vietnam's financial reporting framework, improving consistency, transparency, and alignment with international practices. However, it remains primarily a statutory reporting framework designed to satisfy domestic legal and regulatory requirements.

IFRS, by contrast, is a globally recognized, principles-based framework focused on faithfully representing the economic substance of transactions and providing decision-useful information to investors and other capital market participants. It incorporates advanced concepts such as fair value measurement, expected credit losses, right-of-use accounting for leases, comprehensive consolidation principles, and extensive disclosure requirements.

For Vietnamese enterprises seeking international investment, cross-border financing, mergers and acquisitions, or public listings, understanding—and ultimately adopting—IFRS can provide a significant strategic advantage. As Vietnam continues its roadmap toward greater IFRS adoption, organizations that invest early in systems, processes, governance, and professional training will be better positioned to compete in an increasingly global business environment.

Resources : Internet