What are the procedures for suspending business? And is it required to carry out tax finalization in case of suspending business?

Legal situation: Due to facing troubles in business, my company wants to suspend business for 02 years. I would like to understand the procedures for suspending business. Does my company need to submit a tax report or carry out tax finalization?

I am looking forward to your response soon. Thank you so much.

FDVN’s opinion:

Thank you for sending your question to FDVN Law Firm (“FDVN”). Regarding your consulting request, after researching relevant legal provisions, FDVN has the following response:

1. Procedures, dossier for suspending business

It is stipulated in Clause 1, Article 206 of the Law on Enterprises 2020 and its guidance prescribed in Article 66 of Decree No.01/2021/ND-CP. Accordingly, an enterprise suspending business has to carry out the following specific procedures:

– Send a written notification to the business registration Office where the enterprise is located at least 03 working days before the planned date of business suspension.

– A dossier is required to prepare:

+ A suspension notification;

+ A resolution or decision and the copy of the minutes of meeting of the Board of Members of the multi-member limited liability company or partnership, or of the Board of Directors of the joint-stock company, or the resolution or decision of the owner of the single-member limited liability company on business suspension;

+ In case the enterprise authorizes others to carry out the procedure, it is required to have a letter of authorization or an authorization contract enclosed with a copy of the authorized person’s ID card.

– Regarding the procedure:

After receiving the dossier for enterprise registration, the Business Registration Office shall give a confirmation slip, examine the validity of received documents, and issue a certification that the enterprise has registered the business suspension within 03 working days from the receipt of satisfactory documents.

If the enterprise 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.

2. Does an enterprise suspending business submit a report or a dossier of tax finalization?

This marrter is stipulated in Clause 2 Article 4 Decree No.126/2020/ND-CP guiding the Law on Tax Management:

“2. During business suspension:

a) 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.

…

c) 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.

d) 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 the Law on Tax administration.”

Therefore, during business suspension, the enterprise is not required to submit tax declaration dossier, 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.

The above is FDVN’s legal opinion related to your consulting request based on researching legal provisions. We hope FDVN’s opinion will be helpful to you.

According to Trần Thị Hạ – FDVN Law Firm.