Dissolving a business is not simply a matter of announcing the cessation of operations, but a process of settling all legal obligations with state authorities. The case of Mr. Luu The Quynh in Ho Chi Minh City illustrates that many business owners are confused when faced with taxes and fees that arise even after their company's tax identification number has been deactivated. This article provides an in-depth analysis of current regulations to help managers carry out the dissolution procedure legally and efficiently.
Legal risks from closing the tax identification number before dissolution.
Many business owners mistakenly believe that when their tax identification number is closed due to the taxpayer not operating at the registered address, all tax obligations are temporarily suspended. However, according to the 2019 Tax Administration Law, the closure of a tax identification number is merely a management status by the tax authorities and does not mean the legal entity ceases to exist or is exempt from obligations. When carrying out the official dissolution procedure, the business is required to restore or complete all obligations during this closure period to finalize its legal documentation.
Common violations that occur during this period include late submission of value-added tax returns, corporate income tax returns, and reports on invoice usage. These violations are subject to administrative penalties under tax management laws, creating unnecessary financial pressure and prolonging the tax settlement process for dissolution. Therefore, maintaining compliance even during temporary suspension of operations is crucial to protecting the interests of the business.
Addressing issues regarding business license fees for inactive businesses.
The most contentious issue currently is the obligation to pay business license fees when a business has no revenue or its tax identification number has been suspended. According to Clause 1, Article 1 of Decree No. 22/2020/ND-CP amending and supplementing several articles of Decree No. 139/2016/ND-CP, the exemption from business license fees only applies to the first year of establishment or business operation, from January 1st to December 31st of that year. This means that the exemption is only valid for a specific period and does not extend into subsequent fiscal years.
For businesses established in 2024, the exemption period for business license fees is limited to 2024. In 2025, regardless of whether the business's tax identification number is revoked or if it ceases actual business operations, the obligation to pay business license fees will still arise according to current laws. The tax authorities have full legal grounds to require the business to pay this fee along with any related late payment penalties before issuing a notice approving the termination of the business's tax identification number for dissolution.
Tax filing obligations and responsibilities of the legal representative.
To complete the procedure for terminating a tax identification number, businesses must strictly adhere to the tax filing schedule as stipulated in Article 44 of the 2019 Tax Administration Law and Circular No. 86/2024/TT-BTC. First, taxpayers must submit all missing tax returns up to the time of officially submitting the dissolution application to the tax authority. Afterward, the business must finalize its corporate income tax and pay all outstanding tax debts and administrative penalties incurred during its operation.
A key new point to note in Clause c, Point 5, Article 17 of Circular No. 86/2024/TT-BTC is that the tax authority will focus on comparing records and tax debt status instead of requiring on-site verification at the registered address in this case. This regulation offers certain advantages in terms of time but also places strict requirements on the accuracy and completeness of the documents provided by the business. The legal representative must bear full responsibility for the truthfulness of the declared data to avoid future legal problems.
Coordination mechanism for confirming customs obligations in the dissolution process.
A common obstacle that prolongs the dissolution process beyond the stipulated 45-day period is the confirmation from the customs authority. According to Article 16 of Circular No. 86/2024/TT-BTC, the directly managing tax authority is required to obtain confirmation from the Customs Department regarding the enterprise's fulfillment of tax obligations related to import and export activities. This is part of an integrated control process aimed at ensuring that state budget revenue is not lost when legal entities withdraw from the market.
Even if a business is not registered for import/export activities and has no actual operations related to this, the interconnected administrative procedures between tax and customs authorities must still be carried out sequentially. Delays in responding between inter-agency bodies often stem from businesses failing to proactively provide explanations or not appearing when tax authorities send invitations. This lack of coordination not only hinders the process of state agencies but also causes losses of time and opportunities for the business owner.
Advice for optimizing the business dissolution process.
To ensure a smooth and quick dissolution process, business owners need to proactively implement several practical solutions early on. The first step is to regularly check the status of their tax identification number on the national information system to avoid having it closed without their knowledge, which could lead to accumulated penalties for late filing of periodic tax returns. Simultaneously, businesses should prepare their tax settlement documents as soon as the internal dissolution decision is made, rather than waiting for an official request from the directly managing tax authority.
Finally, maintaining smooth communication channels and a cooperative attitude with tax authorities is crucial for resolving any outstanding issues. Upon receiving notification of outstanding tax or business license fees, businesses should fulfill their financial obligations immediately to prevent the accumulation of late payment penalties. In case of delays from the customs authorities, businesses have the right to send a written request for assistance in urging payment or contact the one-stop service department of the management agency directly for guidance on handling the matter according to the legally prescribed procedures and deadlines.
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Content production is overseen by: Mr. Le Hoang Tuyen – Founder & CEO of MAN – Master Accountant Network, CPA Vietnam with over 30 years of experience in accounting, auditing, and financial consulting.
Source of the article: Government Newspaper
