An enterprise may suspend operations for a period of time over its life cycle if it encounters difficulties. This is a type of short-term market withdrawal strategy. However, if a company is unable to continue its operations, it must exit the market entirely, either through dissolution or bankruptcy. Dissolution is the act of ending an enterprise’s existence at the request of its owner or appropriate authorities with the condition of resolving all debits and other equity responsibilities. However, the dissolution process includes many different procedures and complicated steps. Does enterprise dissolution require tax finalization in Vietnam? What are the procedures? Follow this article of LSX legal firm for informative instruction.
Legal ground
Law on enterprise 2020
- Law on corporate income tax amended in 2013
- Circular 151/2014 / TT-BTC guiding the implementation of Decree 91/2014 / ND-CP.
- Circular No. 156/2013/TT-BTC.
Does enterprise dissolution require tax finalization?
Businesses must fulfill their Tax obligations whether in operation, bankruptcy or dissolution. However, according to the law, the reduction or exemption of tax finalization upon dissolution may occur in certain cases.
The legal provisions on dissolution procedures are not many in many legal documents and in many different fields. Including business registration, tax, insurance, police (for procedures to cancel registration seal before July 1, 2015),… Besides, in order to carry out enterprise dissolution, enterprises must perform a series of procedures within the enterprise with many different procedures. the agencies.
Article 10 of Circular No. 156/2013/TT-BTC guiding the deadline for submitting tax declaration dossiers:
“…dd) The enterprise before submitting the dissolution dossier at the business registration office; according to the guidance in the Law on Enterprises, Decree 78/2015/ND-CP dated September 14, 2015, of the Government; Circular No. 20/2015/TT-BKHDT dated December 1, 2015, of the Ministry of Planning and Investment; The application must be sent to the tax authority directly managing it as prescribed in Clause 3, Article 202 of the Law on Enterprises (in case of self-dissolution) or Clause 2, Article 203 of the Law on Enterprises (for the case of dissolution when the business registration certificate is revoked….)”
Therefore, the company has to finalize – fulfill its tax obligations. However, there are still cases when enterprises do not need to finalize tax when they dissolve their companies.
Dissolution without tax finalization
Some businesses do not need to carry out this procedure (dissolved enterprises exempted from tax finalization), as Clause 8, Article 16 of Circular 151/2014/ TT-BTC specified:
Firstly, in the case of enterprises and organizations that are subject to corporate income tax as a percentage of revenue from selling goods and providing services. When the company is dissolved, there is no need to finalize tax with the tax authority because the enterprise has already settled tax on each revenue generation.
Secondly, the firm dissolved or terminated, but it does not generate income or invoices from the time of business registration certificate/ enterprise registration certificate issuance to the time of dissolution or termination.
Thirdly, enterprises are subject to corporate income tax; when declaring the dissolution or termination, but met the following conditions:
- Having an average revenue of not more than 1 billion VND/year (before tax finalized/inspected to the time of dissolution/termination);
- The enterprise has not been sanctioned for violating the law on tax evasion (before tax finalized/inspected to the time of dissolution/termination);
- The paid corporate income tax (before tax finalized/inspected to the time of dissolution/termination) is higher than the corporate income tax in the percentage of the revenue from the sale of goods and services. That means the enterprise has fulfilled its tax obligations with the tax authorities. So, there is no need to make tax finalization.
Additionally, if the enterprise has already fulfilled all tax and financial obligations to creditors, they don’t need to make tax finalization with the enterprise. tax authorities.
Tax finalization procedure for business dissolution
Submit dossiers for dissolution
The company submits 1 set of tax finalization dossier on corporate income tax and personal income to the District Tax department within 45 days from the date of the company’s dissolving decision.
Prepared documents depend on the requirements of the tax department. However, the basic dossiers include:
- Official dispatch request for dissolution;
- Notarized copy of Business Registration Certificate, Tax Registration Certificate;
- Confirmation of tax debt-free from the General Department of Customs (If required);
- Resolution on dissolution and the minutes of meeting of shareholders (for joint-stock companies, limited liability companies with multi-members);
Prepare dossiers for tax finalization
- A declaration for finalization of corporate income tax, made according to the form issued by the Ministry of Finance.
- Annual financial statements or financial statements up to the time of dissolution or termination.
- Some other papers: identity papers, power of attorney (if needed)
Tax payable
The tax authority will notify the company in writing of the tax payable. The company shall pay the tax authorities by the given deadline.
LSX legal firm service on business dissolution
According to current regulations, dissolving a company is quite difficult. Complex processes from the preparation of documents to the submission made it difficult for enterprises to comply with the law.
LSX provides company dissolution services to help clients settle neatly; Prepare all documents and papers for dissolution dossier. Besides that, the process of submitting dossiers or receiving results is also provided in this service.
LSX ‘s service costs are highly competitive; especially depending on the nature of the case. From only 2,000,000 VND, a very reasonable price, LSX provides services with the hope that customers can experience the best. In addition, We guarantee the most suitable and economical cost for customers.
Những bài viết liên quan
- Procedures for dissolution of cooperatives in Vietnam
- Enterprises dissolved, temporarily suspended business in Vietnam
- Register for business dissolution in Vietnam
Related questions
A company in Vietnam can only be dissolved when the below one of the below circumstances occur:
– The decision of dissolution is made by the owner, partners, Board of Members, or General Meeting of Shareholders, depending on the structure of the company
– The operational period in the charter of the company has expired without an extension decision
– The company is unable to retain the minimum number of members
– The business registration certificate is annulled
– All debts and liabilities of the company can be settled
– The company is not in any court disputes or arbitration tribunal
a) The operating period specified in the company’s charter expires without an extension decision;
b) The enterprise is dissolved under a resolution or decision of the owner (for sole proprietorships), the Board of Partners (for partnerships), the Board of Members and the owner (for limited liability companies) or the GMS (for joint stock companies);
c) The enterprise fails to maintain the adequate number of members prescribed in this Law for 06 consecutive months without converting into another type of business;
d) The Certificate of Enterprise Registration is revoked, unless otherwise prescribed by the Law on Tax administration.
Contact LSX
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