In case the business faces financial difficulties, the business can choose to suspend operations. While carrying out procedures for business suspension, enterprises usually pay attention to related problems such as tax returns and tax declarations. Many businesses wonder whether they have to pay taxes when suspending business or not. So, in this article LSX legal firm will answer the question: “Do businesses pay tax when suspending business in Vietnam?”
Legal ground
- Law on Enterprise 2020
- Circular 302/2016/TT-BTC
Business suspension
Suspension of business can simply understood as the temporarily shutting down of business for a period of time prescribed by law. At this time, the business still exists but is not able to sign contracts, issue invoices, or do any other transactional business activities. This legal act is different from dissolution. If dissolved, the enterprise will terminate its business activities and legal status.
Suspending a business simply means “taking a break” for a while and then continuing to operate. At the end of the maximum “rest” period permitted by law, if the enterprise does not continue to operate, it must carry out procedures for dissolution or transfer.
Enterprises have the right to suspend. However, enterprises can only exercise this right when they meet certain conditions as prescribed by law. This includes notification procedures for state authorities and related financial obligations. The right to suspend business prescribed by law as follows:
- An enterprise has the right to suspend its business but must notify in writing of the time and duration of the suspension or resumption of business to the business registration office at least 15 days before the date of suspension or resumption of business. This provision applies in case the enterprise resumes business before the announced time limit.
- The business registration agency or the competent state agency shall request an enterprise to suspend its conditional business lines when detecting that the enterprise does not fully satisfy the conditions prescribed by law.
Do businesses pay tax when suspending business?
According to Circular 302/2016/TT-BTC, organizations, individuals, groups of individuals, and households that have notified the tax authority of the suspension of business for the whole calendar year not required to pay the license fee for that year. In case of business suspension for less than a calendar year, the license fee for the whole year must still be paid.
Thus, if the company suspends its business for the whole year, it does not have to pay the license tax. In contrast, if the company suspends its business for less than a year, it must pay the license tax. Currently, the level of payment of license fees of enterprises is specified in Clause 1, Article 4 of Decree 139/2016/ND-CP:
- If the charter capital or investment capital is over 10 billion VND, the fee is 3 million VND/year.
- If the charter capital or investment capital is 10 billion VND or less, the fee is 2 million VND/year.
- The level of charter capital or investment capital of branches, representative offices, business locations, non-business units, and other economic organizations, the fee is 1 million VND/year.
Do business suspensions have to file tax returns?
Monthly tax return:
- In case the business suspends for the whole month (01 month, first day of month to last day of month): then no need to file a tax report.
- In case the business suspends for less than a month: the monthly report must still be submitted.
Quarterly tax return:
- In case the business suspends for a full quarter (3 months, counting from the beginning of the first day of the first month of the quarter to the last day of the last month of the quarter): no tax return required.
- In case the business suspends for less than a quarter, then the business has to submit a tax return.
Tax report by calendar year, fiscal year:
- If the suspension is not for a full year: financial statements must be submitted.
- If suspended for a full year: no financial statements required.
Notes for business suspension
- The period for business suspension of an enterprise must not exceed two consecutive years.
- Must pay all outstanding taxes, debts to partners, customers,…
- Prepare 1 set of suspension documents, including Notice of business suspension; Decision and valid copy of minute of the General Meeting of Shareholders; A copy of the personal identification paper of the person who directly submits the application; Authorization letter.
- Taxpayers need to make a tax declaration when the business suspension expires.
- In case the business household or enterprise continues to suspend its business after the expiration in the notice; it has to further notify the competent authority.
- In case the enterprise resumes business before the time limit stated in the notice of business suspension; it must notify the competent authority. Also, submit tax declaration dossiers to the tax authorities directly managing them according to regulations.
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.
Related articles
Does business suspension subject to tax inspection in Vietnam?
Prestige and quickly dossiers to suspend business in Vietnam
Minutes of Board of Members meeting on business suspension in Vietnam
Related questions
Each time suspending business is up to 1 year. However, businesses can suspend their business many times in a row (no time limit) but must not exceed 2 consecutive years.
The Company needs to notify the Business Registration Office of the business suspension at least 3 days in advance to receive a certification of the Company’s business suspension;
During the time when the Company registers to suspend its business, the Company’s tax identification number must be in operation to ensure the tax declaration obligations are transparent before and after the business suspension registration.
Notice of business suspension;
Decision and copy of meeting minutes of the Board of Directors on business suspension;
Authorization letter for the individual to carry out the procedure (if not self-implemented);
Copy of the company’s business registration certificate (if any).
Contact LSX
Finally, hope this article is useful for you to answer the question about “Do businesses pay tax when suspending business in Vietnam?”. If you need any further information, please contact LSX Law firm: +84846175333 or Email: [email protected]
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