Knowledge Temporarily suspended

Cases where temporary business suspension should be considered:

• Prolonged business losses: Businesses need time to comprehensively restructure their operations and finances in order to cut unnecessary operating costs.

• Temporary financial difficulties: Facing pressure regarding cash flow or maturing debt, but still able to assess the prospects for market recovery and the business model in the near future.

• Changes in strategy and model: A period of downtime is needed to prepare personnel, technological infrastructure, or perfect a new product before relaunching it to the market.

• Seasonal factors and industry specifics: Suitable for businesses that operate seasonally (tourism, agriculture) or units that need to temporarily shut down for routine maintenance of technical systems.

• Renovating and upgrading facilities: Facing issues with business location, requiring time for repairs, upgrades, or relocation of warehouses and factories to comply with new planning regulations.

• Waiting for legal procedures to be completed (Updated 2025): Temporarily suspend operations pending approval of sub-licenses or completion of procedures for converting business type or large-scale share transfers.

Benefits of temporarily suspending business operations:

• Legal status remains unchanged: The business is not removed from the Business Registration Book and retains its tax identification number, making it easier to resume operations later.

• Reduce tax and reporting obligations: During a period of temporary suspension for an entire tax year, businesses are not required to file tax returns and are exempt from business license fees if the suspension lasts for the entire calendar year.

• Temporarily suspending social insurance contributions: Contributions to the pension and death benefit fund may be temporarily suspended for employees if they meet the eligibility requirements regarding the percentage of temporarily laid-off workers as stipulated in the Social Insurance Law.

• Continue using the seal and account: Businesses are still entitled to use their bank accounts and seals to settle outstanding obligations or transactions that arose before the temporary suspension period.

• Use this time to restructure: This is a valuable time for management to review personnel, optimize operational processes, and explore new directions without being pressured by daily maintenance costs.

Tax and reporting obligations during a temporary suspension:

• Temporary suspension notice: Businesses only need to submit their documents to the Business Registration Authority; the national information system will automatically connect and notify the tax authorities about your temporary suspension of operations.

• Submit financial statements and tax returns: Businesses must complete the submission of financial statements and corporate income tax returns for the period from the beginning of the year to the time of temporary business suspension (except in cases of suspension for the entire calendar year).

• Periodic tax filing: During a period of suspension lasting a full tax period (month or quarter), businesses are not required to file tax returns. However, if the suspension period is not for a full tax period, you are still required to file tax returns for that period.

• Obligations to employees: All outstanding salaries, allowances, and insurance benefits (including finalizing social insurance records) for employees up to the time of temporary suspension must be fully paid.

• Settling overdue debts: The suspension does not terminate civil obligations; the business must still have a plan to repay creditors and fulfill signed contracts, unless the parties agree otherwise.

Effective strategies during downtime:

• Comprehensive evaluation of the business model: Review the effectiveness of sales channels, target customer segments, and supply chains; eliminate underperforming business segments to focus on core value.

• Internal restructuring and streamlining of the organization: Implement personnel restructuring towards multitasking, standardize work processes, and apply new management technologies to reduce fixed operating costs.

• Developing new products and services: Utilize the downtime for research and development (R&D), refine new product ideas to align with consumer trends, and prepare a marketing plan for the reopening day.

• Addressing outstanding financial issues: Proactively negotiate with creditors regarding repayment schedules, review accounts receivable, and re-evaluate assets to clean up the balance sheet.

• Training and capacity building for the workforce: Organize online training courses for core personnel on new skills, especially digital skills, to ensure the team is ready when the business reactivates its operations.