Notable content on business suspension in Vietnam

Notable content on business suspension in Vietnam (Illustration)

Business suspension notification 

According to Clause 1, Article 66 of Decree 01/2021/ND-CP, it stipulates as follows:

- When an enterprise or its branch/representative office/business location suspends its business or resumes its business ahead of schedule, the enterprise shall send a notification to the Business Registration Office of province where the enterprise or its branch/representative office/business location is located at least 03 days before the planned date of suspension or resumption.

- If the enterprise or its branch/representative office/business location is still suspended after the notified suspension period, another notification must be sent to the Business Registration Office at least 03 days before the planned date of suspension.

- Each notified suspension period must not exceed one year.

Business suspension duration in Vietnam

In Clause 1, Article 66 of Decree 01, the duration for business suspension of each notification must not exceed one year. At the same time, at the end of the business suspension period, if the enterprise wishes to continue to suspend its business, it must carry out procedures for notification to the Business Registration Office.

Tax obligations in Vietnam

Clause 2, Article 4 of Decree 126/2020/ND-CP stipulates as follows:

- The taxpayer is not required to submit tax declaration dossiers, unless the suspension begins in the middle of a monthly/quarterly/annual tax period, in which case the tax declaration dossier of that month/quarter/year must be submitted.

- For household businesses and individual businesses paying presumptive tax, tax authorities shall decide the tax payable upon their suspension in accordance with regulations of the Minister of Finance.

- The taxpayer must not use invoices and are not required to submit invoice use reports. In case the taxpayer is permitted by the tax authority to use invoices in accordance with invoice laws, the taxpayer shall submit the tax declaration dossier and invoice use reports as per regulations.

- The taxpayer shall implement the tax authority’s decisions and notices of debt collection, enforcement of tax decisions, inspection of compliance to tax laws and administrative penalties for tax offences in accordance with Vietnam's Law on Tax administration.

Note: Enterprises that register for tax directly with the tax authority may not register to suspend their operations or business when the tax authority has issued a notice about the taxpayer's inactivity at the registered address.

License fees in Vietnam

According to point c, clause 2, Article 1 of Decree 22/2020/ND-CP:

An operating payer of the license fee that has notified its supervisory tax authority in writing of its suspension of production/business in a calendar year must not pay the license fee for that year of production/business suspension if it has sent a written notification of production/business suspension to its supervisory tax authority before the prescribed deadline for paying the license fee (January 30 annually) and has made no payment of the license fee for the planned year of suspension.

It must pay the license fee for the whole year if it does not meet the abovementioned conditions for production/business suspension.

Penalties for businesses that do not notify their suspension in Vietnam

According to Point d Clause 1 Article 32 of Decree 50/2016/ND-CP,  a fine of VND 1,000,000 - VND 2,000,000 shall be imposed for the act of failure to notify or notify on time the business registration authority or tax authority of the time and duration of business suspension.

Bao Ngoc

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