The license tax is an amount of money that an enterprise must pay annually or when start conducting production and business activities based on the charter capital stated in the business registration certificate as well as the year’s revenue. On the other hand, the Covid-19 pandemic has had certain negative effects on the economy of Vietnam as well as nations around the world. Many businesses faced a difficult situation, so they decided to suspend their business for a period of time. In fact, many businesses do not know whether they have to pay license tax during business suspension or not. So, to answer the question, LSX legal firm introduces: “Does business suspension have to pay license tax?”
Legal grounds
- Law on Enterprise 2020
- Decree 47/2019/ND-CP
- Law on Tax Administration 2019
- Circular 80/2021/TT-BTC
Does suspended company pay license tax?
Companies carry out procedures for business suspension when they encounter difficulties and cannot continue operating. The enterprises shall carry out the procedures for suspending the company by sending a notice to the business registration office where the enterprises have registered their operations at least 03 working days before the date of business suspension.
Besides, Point c, Clause 2, Article 1 of Decree 22/2020/ND-CP stipulates:
c) Clause 5 Article 4 is amended as follows:
“5. 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 above mentioned conditions for production/business suspension.”
Thus, during the business suspension, companies will not have to pay a license tax.
License tax
License tax simply understood as the annual tax payable by the business based on the charter capital recorded on the business registration certificate. The regulations on license tax are quite numerous and clear, but not all businesses know well about tax levels, payment time, and regulations on penalties for violation of license tax.
- The license fee: a direct tax, usually a quota levied on the business registration certificate (licenses) of businesses and business households. In short, this is the corporate tax rate that must be paid annually to the direct tax authority.
- The level of collection by tier, based on the registered capital; the revenue of the previous business year, or the added value of the previous business year, depending on the country/locality.
Company exempted from license tax
During the time the taxpayer suspends business operations, the taxpayer does not have to submit a tax return. However, taxpayers who suspend business operations for less than a full month, quarter, calendar year, or fiscal year must still submit monthly, quarterly, and annual tax declaration dossiers.
Taxpayers must comply with decisions and notices of tax administration agencies on urging debt collection, enforcement of administrative decisions on tax administration, inspection and examination of tax law observance as well as handle administrative violations of tax administration according to the provisions of the Law on Tax Administration.
A company that does not have to pay license tax must satisfy two conditions:
- Having a certificate from a competent authority that it has registered to suspend business.
- The business suspends for a full calendar year (for example, from January 1, 2022, to December 31, 2022).
When businesses meet these two conditions, they do not need to pay a license tax. In case one of the above two conditions is not satisfied, the license tax will not be exempted when the business is temporarily suspended.
License fee payer
Article 2 of Decree 139/2016/ND-CP regulates about the license fee payers:
Article 2. Licensing fee payers
The licensing fee payers are the organizations and individuals that operating their trade/production of goods and services except the cases specified in Article 3 of this Decree, including:
1. The enterprises which are established under the regulations of law.
2. The organizations which are established under the Law on Cooperatives.
3. The public service providers which are established under the regulations of law.
4. The business organizations of the political organizations, the social – political organizations, the occupational – social organizations and people’s armed units.
5. Other organizations which have their trade/production activities.
6. The branches, the representative offices of organizations specified in Paragraphs 1, 2, 3, 4 and 5 of this Article (if any).
7. The individuals, groups of individuals and households that have their trade/production activities.
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
Should businesses suspend or dissolve in Vietnam?
Procedures to suspend business online in Vietnam
Where to submit application for business suspension in Vietnam?
Related questions
According to Article 3. Exemption from licensing fees:
…
2. The individuals, groups of individual and households that have their irregular trade/production activities without fixed location as guided by the Ministry of Finance….
Firstly, the individuals, groups of individuals and households with revenues over 500 million dong/year: 1,000,000 dong/year;
Secondly, the individuals, groups of individuals and households with revenues between 300 and 500 million dong/year: 500,000 dong/year;
Thirdly, the individuals, groups of individuals and households with revenues between 100 and 300 million dong/year: 300,000 dong/year;
Firstly, the organizations with charter capital and investment capital over 10 billion dong: 3,000,000 dong/year;
Secondly, the organizations with charter capital and investment capital of less than 10 billion dong: 2,000,000 dong/year;
Thirdly, the branches, representative offices, business location, public service providers and other business organizations: 1,000,000 dong/year;
Contact LSX
Finally, hope this article is useful for you to answer the question about “Does business suspension have to pay license tax?”. If you need any further information, please contact LSX Law firm: +84846175333 or Email: [email protected]
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