When an enterprise suspends its business operation, not only must carry out the suspension procedures with the Business Registration Office but also must fulfill tax duties to complete the suspension. The tax return is among the questions appearing to people when processing a business suspension. To have an insight into this problem, follow this article of LSX legal firm: “Does tax declaration required for business suspension in Vietnam?”
Legal grounds
- Decree 126/2020/ND-CP
- Circular 151/2014/TT-BTC
Does tax declaration required for business suspension?
Point a, Clause 2, Article 4 of Decree 126/2020/ND-CP
“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.”
Article 14 of Circular 151/2014/TT-BTC
” Article 14. Point dd, Clause 1, Article 10 of Circular No. 156/2013/TT-BTC dated November 6, 2013 of the Ministry of Finance guiding the implementation of the Law on Tax Administration and the Law amending and supplementing a number of articles of the Ministry of Finance. Finance on Tax Administration and Decree No. 83/2013 / ND-CP July 22, 2013 of the Government (hereinafter abbreviated as Circular No. 156/2013 / TT-BTC):
dd) If the taxpayer’s business operation is suspended and tax is not incurred, the tax declaration for the suspension period might not be submitted. If the taxpayer’s business is not suspended over the whole calendar year or financial year, the annual declaration must be submitted.”
Accordingly, if no tax obligations arise during the business suspension; then you do not have to declare taxes for the time of temporary suspension of business such as VAT (Value Added Tax) and PIT (Personal Income Tax).
In case the enterprise suspends operation for the whole calendar year, ie from January 1 to December 31 of that year, the enterprise is not required to pay CIT finalization (CIT). On the contrary, in the case of a business suspending business for less than a calendar year or a financial year, for example, a few months. Businesses still have to pay annual tax finalization as corporate income tax; personal income tax finalization; other kinds of tax,…
In short, only in the case that the enterprise suspends business for a full month, quarter, or calendar year; or financial year, tax returns are still required. Besides, provided that there is no tax liability, other cases of business suspension are not required to submit tax reports.
Does financial statement required for business suspension?
Law on accounting 2015 defined: “Financial statement means a system of financial information of an accounting unit demonstrated according to a form provided for by accounting standards and accounting regime.”
Financial statements are one of the most important records of a business. Financial statements don’t just show the condition of assets; capital; receivables and payables; but also shows the business results of the enterprise.
Since tax declaration include financial statements, when filing a tax return, financial statements are relatively important
According to Point a, Clause 2, Article 4 of Decree 126/2020/ND-CP; Based on the submission of tax reports upon business suspension:
- Suspension of business for the whole calendar year/financial year:
If the enterprise registers to suspend its operation from January 1 to December 31 in the same year; then the businesses are exempt from paying tax. Therefore, businesses do not have to submit tax declarations. That is, there is no need to submit financial statements.
- Suspension of business for less than a calendar year/financial year:
If the time of business suspension of the enterprise is after January 1 and before December 31, the annual tax finalization dossier must be submitted. That means tax returns, including financial statements, is required.
Tax declaration dossiers for enterprise
“Clause 3, Article 16 of Circular 151/2015/ND-CP
CIT declaration shall include annual CIT declarations and CIT declarations that up to the time a decision on division, consolidation, merger, conversion, dissolution, or shut down of the company is made.
b) CIT declarations shall include:
b.1) CIT declarations form using form No. 03/TNDN enclosed herewith.
b.2) An annual financial statement or a financial statement that made up to the time a decision on division, consolidation, merger, conversion, dissolution, or shutdown of the company.
b.3) An appendix or appendices enclosed with the tax declaration form issued together with Circular No. 156/2013/TT-BTC and this Circular (on a case-by-case basis)”
LSX legal firm’s service on business suspension
Business suspension is a necessary solution for businesses when it is impossible to resume business activities for a definite time. The quick business suspension will help businesses avoid unnecessary costs. Meanwhile, the complicated business suspension with many procedures leads to many risks for businesses if they do it themselves. Using LSX’s business suspension service, you will feel secure in every step of the procedure. We provide:
- Advice on the most necessary documents and procedures for business suspension.
- Compilation of registration documents; we guarantee to provide customers with the most appropriate, latest forms.
- On behalf of customers, we will submit documents, receive and respond to appraisals, pay fees and charges.
- Follow the processing of the application.
- Supplement or correct the dossiers at the request of the Senior Case Processing (if there are any).
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.
Related articles
Do suspended enterprises pay employees’ wages in Vietnam
Enterprise dissolved or suspended business in Vietnam
Legal issues about state-owned enterprises according to Vietnamese Law
Related questions
Under the Vietnamese law on accounting, the financial statement in Vietnam must include the following:
– Balance sheet
– Profit and loss
– Cash flow
– Note of financial statement
Companies that are unable to meet the deadline and submit their declaration late will face a fine. The fine for non-timely financial statements in Vietnam starts from VND 700,000 (~US$30) and can go up to VND 25,000,000 (~US$1,100).
Contact LSX
Finally, hope this article is useful for you to answer the question about “Does tax declaration required for business suspension in Vietnam?”. If you need any further information, please contact LSX Law firm: +84846175333 or Email: [email protected]
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