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. They made the decision to suspend production and business for a certain period of time. However, not everyone fully understands the term “business suspension” and the relevant problems such as license tax, tax report,… So, in this article LSX legal firm will answer the question: “Does suspended business have to pay license tax in Vietnam?”
Legal grounds
- Law on Enterprise 2020
- Decree 01/2021/ND-CP
- Decree 22/2020/ND-CP
Business suspension and license tax
Currently, there are no specific regulations on the concept of “business suspension”. However, according to Clause 1, Article 41 of Decree 01/2021/ND-CP:
“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…”
In other words, business suspension means when an enterprise temporarily stops carrying out production and business activities for a certain period of time.
On the other hand, License tax: the annual tax payable by enterprises based on the charter capital registered on the business registration certificate. The license fee is a direct tax and is usually a quota levied on business licenses (licenses) of businesses and business households. The license fee is a direct tax and is usually a quota levied on business registration certificates (licenses) of businesses and business households. In other words, license tax means the corporate tax rate that businesses must pay annually to the direct tax authority.
Does suspended business have to pay license tax?
The fee payer who sent a written notice to the tax authority directly managing the suspension of production and business activities in the calendar year does not have to pay the license fee for the year of business suspension if:
A written document for suspension of production and business activities sent to the tax office before the prescribed fee payment deadline (January 30 of each year) and has not paid the license fee for the year of application for suspension of production operation.
In case of suspending production and business activities without meeting the above conditions, then the business must pay the license fee for the whole year.”
Thus, in order to be exempted from license fees in the year of suspension of production and business, the following conditions must be satisfied:
- Business suspend for a full calendar year (ie from January 1 to December 31);
- A written request for temporary suspension of production and business activities to the tax office before January 30;
- Have not paid the license fee for the year of application for suspension.
If the company satisfies the above conditions, it will not have to pay a license tax. In case the above conditions are not satisfied, the license fee must be paid for the whole year.
Who has to pay the license fee?
Article 2 of Decree 139/2016/ND-CP regulates the license fee payers as follows:
License fee payers are organizations and individuals engaged in production activities; trading in goods and services, except for the case specified in Article 3 of Decree 139/2016/ND-CP, including:
- Enterprises established in accordance with the law.
- The organization established under the Law on Cooperatives.
- Non-business units established in accordance with the law.
- The economic organization of political organizations, socio-political organizations, social organizations; socio-professional organizations, and people’s armed forces units.
- Other organizations engaged in production and business activities.
- Branches, representative offices, and business locations of the organizations specified in Clauses 1, 2, 3, 4, and 5 of this Article (if any).
- Individuals, groups of individuals, and households engaged in production and business activities.
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.
Related articles
Term of business suspension of the enterprise in Vietnam
Procedures for business suspension for businesses facing difficulties due to Covid-19 in Vietnam
Where to submit application for business suspension in Vietnam?
Related questions
Enterprises may resume operations before the time limit for business suspension, but must send a notification form to the Ministry of Planning and Investment. Within a period of about 3 days, businesses can resume business activities
Company must continue to pay social insurance premiums for employees; if the enterprise has no other agreements with the employee.
The enterprise must reach an agreement with the employee on benefits and employment such as salary waiting for work, and temporary suspension. perform the contract because the company suspends business, etc. When the business suspension period expires, the company must continue to perform the labor contract with the employee.
Contact LSX
Finally, hope this article is useful for you to answer the question about “Does suspended business have to pay license tax in Vietnam?”. If you need any further information, please contact LSX Law firm: +84846175333 or Email: [email protected]
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