Who shall fulfill outstanding tax when a enterprise shuts down in Vietnam?

Who shall fulfill outstanding tax when a enterprise shuts down in Vietnam?

Pursuant to Article 67 of the Law on Tax Administration 2019 regarding the fulfillment of tax liability upon dissolution, bankruptcy, or shutdown, the regulation is as follows:

Fulfillment of tax liability upon dissolution, bankruptcy, or shutdown

1. The fulfillment of tax liability upon business dissolution is carried out according to the laws on enterprises, laws on credit institutions, laws on insurance business, and other relevant regulations.

2. The fulfillment of tax liability upon business bankruptcy is carried out according to the procedures stipulated in the Bankruptcy Law.

3. If an enterprise ceases operations or abandons its registered business address without fulfilling its tax liability, the remaining tax debt shall be the responsibility of the private business owner, the owner of a single-member limited liability company, capital-contributing shareholders, members, or partners, who shall pay according to the provisions applicable to each type of enterprise as specified in the Enterprise Law.

4. For business households or individual businesses that cease operations without fulfilling their tax liability, the remaining tax debt is the responsibility of the household head or individual.

5. Taxpayers with branches or dependent units that cease operations but still owe taxes and other amounts payable to the state budget are responsible for inheriting the debts of the branches or dependent units.

Thus, if a business shuts down operations without paying taxes, the outstanding tax debt will be the responsibility of the owner or shareholders as stipulated for each type of business in the Enterprise Law.

Who shall fulfill outstanding tax when a enterprise shuts down in Vietnam? (Image from Internet)

What are the tax declaration documents required upon shutdown of enterprises in Vietnam?

According to Clause 6, Article 43 of the Law on Tax Administration 2019, the tax declaration documents required upon shutdown include:

- Tax finalization declaration;

- Financial statements up to the point of shutdowns or shutdown of a contract or conversion of business type or reorganization of the enterprise;

- Other documents related to tax finalization.

What are the penalties for an enterprise that delays submitting tax declaration documents upon shutdowns in Vietnam?

According to Article 13 of Decree 125/2020/ND-CP on sanctioning administrative violations for delayed submission of tax declaration documents, the regulation is as follows:

Sanctioning violations of deadlines for submitting tax declaration documents

1. A warning for late submission of tax declaration documents from 1 to 5 days with mitigating circumstances.

2. A fine ranging from 2,000,000 VND to 5,000,000 VND for late submission of tax declaration documents from 1 to 30 days, except as specified in Clause 1 of this Article.

3. A fine ranging from 5,000,000 VND to 8,000,000 VND for submission of tax declaration documents beyond the prescribed deadline from 31 to 60 days.

4. A fine ranging from 8,000,000 VND to 15,000,000 VND for any of the following acts:

a) Submission of tax declaration documents beyond the prescribed deadline from 61 to 90 days;

b) Submission of tax declaration documents beyond the prescribed deadline from 91 days or more but no tax is payable;

c) Failure to submit tax declaration documents but no tax is payable;

d) Failure to submit annexes as required for tax management concerning businesses with associated transactions along with corporate income tax finalization documents.

5. A fine ranging from 15,000,000 VND to 25,000,000 VND for late submission of tax declaration documents over 90 days from the deadline, with payable tax arising, and the taxpayer has paid the full amount of tax and late payment into the state budget before the tax authorities announce the decision on tax inspection, investigation or before the tax authorities make a record of acts of late submission of tax declaration documents as regulated at Clause 11, Article 143 of the Law on Tax Administration.

In the case that the fine amount under this clause exceeds the payable tax amount on the tax declaration document, the maximum fine amount is the amount of payable tax on the tax declaration document, but not lower than the median level of the fine range specified in Clause 4 of this Article.

6. Remedial measures:

a) Compulsory payment of the late tax payment to the state budget for acts specified in Clauses 1, 2, 3, 4, and 5 of this Article in cases where late submission of tax declaration documents leads to late tax payment;

b) Compulsory submission of tax declaration documents, annexes attached to tax declaration documents for acts specified at points c, d of Clause 4 of this Article.

Additionally, based on point a, clause 4, Article 7 of Decree 125/2020/ND-CP regarding the principle of applying fines for administrative violations concerning taxes and invoices, it is regulated as follows:

Forms of sanction, remedial measures, and principles for applying fines in tax and invoice administrative violations

...

4. Principles for applying fines

a) The fines stipulated in Articles 10, 11, 12, 13, 14, 15, Clauses 1, 2 of Article 19, and Chapter III of this Decree are applied for organizations.

For taxpayers who are households, household businesses, the fines are the same as for individuals.

...

Thus, a business delaying the submission of tax declaration documents upon shutdowns will be subject to administrative penalties according to the law, with the lightest penalty being a warning and fines ranging from 2,000,000 VND to 25,000,000 VND based on the period of delay.

Additionally, when delaying the submission of tax declaration documents, businesses are required to undertake remedial measures such as paying the full amount of delayed tax payments into the state budget and submitting the tax declaration documents and annexes linked with the tax declaration.