Dissolving a business is a complex process that requires strict compliance with legal regulations, especially financial obligations.
Below is a basic guide to help you properly and fully handle financial obligations when dissolving a business in Vietnam:
1. Instructions for tax liability liquidation
The objective of tax liability processing is to have the tax authority confirmed that it does not owe tax. To be confirmed not to owe tax, the enterprise applies the instructions below.
Which cases do not need tax finalization upon dissolution
The following cases do not require tax settlement upon dissolution:
➡️ Pay corporate income tax as a % of revenue
Enterprises and organizations that are liable to pay enterprise income tax at the rate of% on sales of goods and services in accordance with the law on corporate income tax shall dissolve or terminate their operations.
➡️ Businesses do not generate revenue and have not used invoices
An enterprise dissolves or terminates its operation, but from the time it is granted the business registration certificate or the enterprise registration certificate to the time of dissolution or shutdown, the enterprise has not generated any revenue. use invoice.
➡️ Revenue has been generated, invoices have been used but meet the following conditions:
An enterprise that is liable to pay corporate income tax according to declaration shall dissolve or terminate its operation if the following conditions are satisfied:
- Have an average annual turnover (from the year that has not been finalized or tax inspection or examination to the time the enterprise dissolves or terminates its operation) not exceeding VND 1 billion / year.
- From the year the enterprise has not received the tax finalization, tax inspection or examination to the time of dissolution or shutdown, the enterprise shall not be sanctioned for tax evasion law violations.
- The amount of corporate income tax paid from the year that has not been finalized or inspected or audited to the time of dissolution or termination of operations is higher than the amount of corporate income tax if calculated as a percentage of revenue from sales of goods and services with the regulations on percentage of revenue.
- For services (including deposit interest, loan interest): 5%.
- Particularly for educational, medical and art performance activities: 2%.
- For commodity trading: 1%.
- For other activities: 2%. ”
For the cases specified at Points 1, 2, 3 above, within 05 (five) working days from the date of receipt of the dossier submitted by the taxpayer (including the decision to dissolve or terminate its operation; documents proving that the taxpayer falls into the above cases and has fully paid payable tax amounts, if any), the tax office shall confirm that the enterprise has fulfilled its tax liability.
2. Cases where tax settlement is required when dissolving a business
In case the enterprise dissolves or terminates its operation which does not fall into the above-mentioned cases, based on actual needs, the tax agency directly managing the taxpayer will conduct tax finalization according to the plan set by the agency. tariff issued.
➡️ To have the tax authority plan for tax settlement and dissolution, the enterprise needs to complete and submit the following procedures:
- Property liquidation record (if any).
- Notify the result of invoice cancellation and report on the use of the invoice as of the time of submitting the dissolution dossier.
- Corporate Income Tax (CIT) settlement report up to the time of dissolution.
- Personal Income Tax (PIT) report up to the time of submitting the dissolution dossier.
- Submit Value Added Tax (VAT) declaration by the time of submission of application for dissolution of the enterprise.
- Financial statements are prepared up to the settlement date.
Time limit for processing dissolution dossiers at tax authorities.
For enterprises with foreign investment capital, including indirect investment (FII) and direct investment (FDI), they must submit an audited financial statement report up to the time of dissolution.
➡️ After submitting all the documents listed above, within forty-five (45) days from the date of submitting the dissolution decision, the enterprise shall monitor the tax settlement plan of the tax authority to provide documents and records as requested.
During this time, businesses need to carefully prepare, complete accounting books and appoint personnel in charge of explanations to work with tax agency representatives.
3. Instructions for liquidating Social Insurance obligations when dissolving a business
The goal of handling social insurance obligations is to be confirmed by the social insurance agency that there is no social insurance debt. To be confirmed that there is no social insurance debt, the enterprise must follow the instructions below:
In addition to fulfilling obligations to people and employees, enterprises are also responsible for certifying the completion of financial obligations to the social insurance management agency as follows:
➡️ Close employee insurance book as follows:
According to the provisions of Article 47 of the Labor Code as follows: “Article 47. Responsibilities of the employer when terminating the labor contract: Within 07 working days from the date of contract termination labor, the two parties are responsible for paying in full all amounts related to the interests of each party; In special cases, it can be extended but not more than 30 days.
The employer is responsible for completing the procedure for confirming and returning the social insurance book and other documents that the employer has withheld from the employee. ”
➡️ Please confirm that you do not owe any mandatory insurance:
- Comparation of compulsory social insurance to the time of dissolution.
- Please confirm no social insurance debt (if any).
4. Instructions for liquidating other related obligations when dissolving an enterprise
The Enterprise Law provides for the organizers of asset liquidation and the order of debt payment. Accordingly, the owner of a private enterprise, the Members' Council or company owner, the Board of Directors shall directly organize the liquidation of the enterprise's assets, unless the company's charter provides for the establishment of a liquidation organization. private.
The enterprise's debts are paid in the following order:
- Debts of salary, severance allowance, social insurance in accordance with the law and other benefits of employees according to the collective labor agreement and signed labor contract.
- Tax debt.
- Other liabilities.
- After all debts and expenses have been paid, the remaining assets will be divided among private business owners, members, shareholders or company owners in proportion to their ownership of contributed capital or shares. .
According to the Enterprise Law, the contract liquidation period not to exceed 06 months, from the date of approval of the dissolution decision. This period is only suitable for small-scale enterprises, without complicated transaction relationships, and highly liquid assets.
For large-scale businesses or businesses with many assets, it takes a long time to liquidate and pay debts, this time may not be enough to resolve all contracts and pay debts. Therefore, businesses need to review and plan appropriate liquidation.