Many FDI companies believe that hiring an accountant is sufficient to ensure tax and legal compliance. However, in reality, a large number of enterprises are still subject to administrative penalties, tax reassessments, or even prolonged inspections. Why does this contradiction occur? What are FDI companies overlooking in their legal risk management in Vietnam?
During operations in Vietnam, many FDI enterprises assume that hiring in-house accountants or outsourcing accounting services will ensure full legal compliance. However, recent inspections and audits show that the number of FDI companies facing administrative penalties continues to rise. This raises a critical question: where does the real problem lie?
To answer this, it is necessary to clearly understand the relationship between accounting and corporate legal compliance for FDI enterprises—two areas that appear closely connected but contain significant and risky gaps.
The primary role of accountants is to record, reflect, and report financial and tax data based on documents provided by the enterprise. In most cases, accountants neither have the obligation nor the authority to assess the legality of business activities.
For FDI enterprises, just one activity such as:
operating beyond the scope of the investment registration certificate,
generating revenue without proper licensing, or
implementing commitments inconsistently with authorities,
may lead to serious administrative penalties, even if accounting records are complete and accurate.
A common mistake among foreign investors is equating proper accounting with legal compliance. In reality, these two concepts are not entirely the same.
Vietnamese laws on investment, enterprises, and taxation require FDI companies to comply not only with financial figures, but also with:
business conditions,
administrative procedures,
investment reporting obligations,
regulations on foreign exchange control and foreign labor.
If relying solely on accounting, enterprises are likely to overlook “non-financial” legal obligations that form the primary basis for administrative penalties.
A closer look at individual cases shows that the violations are often not complex but persist quietly over long periods. When inspections occur, the consequences frequently exceed the investor’s initial expectations.
These are the most common groups of violations DEDICA Law encounters when advising FDI enterprises.
Many FDI enterprises expand their business activities in response to market demand but fail to carry out procedures to amend their investment registration certificates.
Accountants typically record revenues and expenses without reviewing:
whether the business line is permitted,
whether it is subject to conditional licensing,
whether additional sub-licenses are required.
Once detected, enterprises may face:
administrative fines,
mandatory operational adjustments,
or even partial suspension of projects.
Related-party transactions are a major risk area for FDI enterprises. Many companies believe that proper declaration forms are sufficient, yet fail to prepare:
transfer pricing documentation,
transfer pricing risk analyses,
internal contracts aligned with actual operations.
In many cases, accountants comply with numerical requirements but fail to assess legal tax risks, resulting in significant tax reassessments and late-payment penalties.
From the risks above, it is clear that the core issue for FDI enterprises is not a lack of accountants, but the absence of a comprehensive legal compliance control system.
To operate safely and sustainably in Vietnam, FDI enterprises need more than a purely accounting function.
An increasing number of FDI companies are adopting outsourced legal department models, where corporate lawyers provide ongoing support to:
conduct periodic legal compliance reviews,
issue early warnings of legal risks,
advise before business decisions are made,
support dealings with authorities during inspections and audits.
This model enables enterprises to prevent risks at their root rather than managing consequences after penalties are imposed.
DEDICA is a professional law firm based in Ho Chi Minh City, with an experienced team of lawyers.
DEDICA Law provides comprehensive legal services for FDI enterprises, including:
ongoing legal advisory services,
establishment and adjustment of investment projects,
advisory on related-party transactions and tax compliance,
licensing and permit applications and amendments,
dispute resolution and representation before authorities.
We do not only help enterprises resolve violations but also accompany them in preventing legal risks from the outset, optimizing legal costs, and protecting investor reputation in Vietnam.
Are you operating an FDI enterprise and concerned about administrative penalties despite having accountants?
Do not let hidden legal gaps quietly undermine your investment project.
Contact DEDICA Law for the most suitable legal strategy for your FDI enterprise.
📞 Hotline: (+84) 39 969 0012 (WhatsApp, WeChat & Zalo supported)
🕒 Working hours: Monday – Friday (8:30 – 18:00)
Contact us now for a free initial consultation with our professional legal team.
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