Due to various reasons, the enterprise decided to suspend its business. However, many businesses that want to temporarily suspend their business but do not know the conditions as well as the order and procedures for business suspension. So, in this article LSX legal firm will inform you: “Conditions for business suspension of business in Vietnam”
Legal ground
- Law on Enterprise 2020
- Decree No. 01/2021/ND-CP
Business suspension
Suspension of business means that an enterprise will suspend its business operations for a certain period of time due to various reasons such as difficulties in business operations, inability to continue business operations, or the need time to rearrange work. Besides, businesses must notify in writing of the time to start and duration of the suspension.
On the other hand, clause 1, Article 41 of Decree No. 01/2021/ND-CP stipulates business suspension as follows:
“1. “business suspension” means the enterprise’s legal status during its business suspension as prescribed in Clause 1 Article 206 of the Law on enterprises. Starting date of “business suspension” status is the date of business suspension registered by the enterprise. Ending date of “business suspension” status is the ending date of business suspension period as notified by the enterprise or the date of resumption of business ahead of schedule registered by the enterprise.”
One outstanding advantage of suspending business is that when the business resumes operations, the procedure is very simple. In case the suspension period expires, the business will resume operation by itself, and if the business wants to resume earlier than the suspension period, it only needs to make a written notice.
Conditions for business suspension
When suspending business, you need to pay attention to the following conditions:
To begin with, the tax code of the company must not be closed by the competent authorities when the company registers to temporary stopping operations. Many established businesses, in fact, do not do business at their registered headquarters or do not conduct any business at all in reality, and hence do not file a complete tax return.
When violations as above appear, the Tax Department will close the tax code for these businesses. So want to do the registration procedure to suspend the business; Your business will have to carry out the procedure of recovering a closed tax code first.
Secondly, the business must notify the business registration office of the temporary suspension of its operations at least three days before it starts suspending the business.
For example: on September 15, the business temporarily stopped operating. No later than September 12; the enterprise will have to send a notice of suspension to the Business Registration Office where the company is located.
Note when meeting the conditions to suspend business
When meeting the conditions for business suspension, you need to pay attention to the following points when conducting business suspension:
- Send a notice in writing at least 03 days before suspending business.
- The dependent units must suspend their business if the main unit suspends.
- Taxpayers who do not incur tax obligations during the business suspension period are not required to submit tax returns for the period of business suspension. In case taxpayers suspend their business for less than a calendar year or a fiscal year; they still have to submit annual tax finalization dossiers.
- The license fee is not payable if the business is suspended for the whole calendar year (specifically specified in Official Dispatch 1263/TCT-KK).
- During the suspension period, the enterprise must fully pay the outstanding tax amount; continue to pay the debts and complete the performance of the contract signed with customers and employees; unless otherwise agreed by enterprises, creditors, customers, and employees.
However, in practice, businesses that owe taxes often will not allowed to suspend business until they have fulfilled their tax obligations with the tax authorities.
Suspend the business of an enterprise
Suspending business gets a way for businesses to have time to improve, change, and complete the apparatus to do business more effectively in the future.
In fact, most business owners do not know that when the company suspends business, they have to notify the Department of Planning and Investment where the company located. This notification is mandatory; If not, they will face the risk of an administrative penalty of up to 2 million VND (According to Article 32 of Decree 50/2016/ND-CP).
Additionally, when the enterprise has actually suspended without notifying the business suspension, it will continue to perform the legal obligations regarding:
- Declare and report tax quarterly and annually for the company.
- The tax authority will still conduct periodic inspections of business establishments.
- Obligation to declare and pay compulsory social insurance for employees even though the company has stopped operating in reality;
- Obligation to pay annual license tax even though no longer doing business.
Business suspension service of LSX Legal Firm
Business suspension-a necessary solution for businesses when they cannot continue doing business for a specified period of time. Suspending business quickly will help businesses avoid unnecessary costs. Meanwhile, the business suspension process contains complicated procedures so if businesses do it themselves, they will face many risks. Using the business suspension service of LSX will make you feel secure in each stage of implementation.
To make your case more convenient, LSX will perform:
- Legal advice related to new regulations in business suspension;
- Representing in drafting and editing documents;
- We commit the papers to be valid, and legal for use in all cases;
- Represent to submit documents, receive results, and hand them over to customers.
With a team of experienced, reputable, and professional consultants; The firm is always ready to support and work with clients to solve legal difficulties.
Furthermore, using our service, you do not need to do the paperwork yourself, We guarantee to help you prepare documents effectively and legally.
Also, you will not have to waste time preparing the application, submitting application, or receiving results. At those stages, we will help you do it smoothly.
After all, LSX provides the service with the desire that customers can experience it the best way. Additionally, we guarantee the cost to be the most suitable and economical for customers.
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Related questions
The status of “Suspended business” ends at the time that the enterprise has announced; or the date the enterprise registers to continue its business before the announced time limit.
According to Article 206 of the Enterprise Law 2020 and Article 10 of Circular 156/2013/TT-BTC, enterprises during the temporary suspension of business are not allowed to conduct any transactions of buying and selling goods or providing services. Therefore, enterprises can not issue invoices during this time.
The authority to decide to suspend business belongs to the Board of Directors. So the joint stock company needs to send the minutes of the meeting and the decision of the Board of Directors (not the Shareholders’ Council).
Contact LSX
Finally, hope this article is useful for you to answer the question about “Conditions for business suspension of business in Vietnam”. If you need any further information, please contact LSX Law firm: +84846175333 or Email: [email protected]
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