1. What is the temporary suspension of business?
Temporary suspension of business is the right of an enterprise to temporarily suspend its business activities. When temporarily suspending the business activities, enterprises are obliged to notify in writing about the time and duration of business suspension to the Business Registration Office where the enterprises are headquartered at least 15 days before the date of suspension.
Due to the impact of the COVID-19 pandemic, many enterprises have chosen to temporarily suspend business activities in this period to minimize the costs of business management.
2. The term of temporary suspension of business
The enterprise may notify its temporary suspension of business for a period not exceeding one year.
After the expiry of the noticed temporary suspension of business, if the enterprise continues to suspend business, it must notify the Business Registration Office. The total duration of continuous business suspension must not exceed two years.
3. Things that enterprises have to do during the business suspension
During the time of temporary suspension of business, enterprises still have to comply:
(i) To fully pay the outstanding taxes;
(ii) To keep paying debts;
(iii) To keep executing contracts with customers and employers, unless otherwise agreed among the enterprise, its creditors, customers, and employees.
4. The procedure for noticing the temporary suspension of business
The enterprise shall send a notice of temporary suspension of business to the Business Registration Office where it is headquartered within 15 days before the temporary suspension of business.
Depending on the type of enterprise, the enterprise will enclose with the notice of temporary business suspension the following documents:
(i) For a one-member limited liability company, the enterprise must enclose the owner’s decision.
(ii) For a limited liability company with two or more members, enclosed: A decision of the Members’ Council and a valid copy of the meeting minutes of the Members’ Council.
(iii) For a joint-stock enterprise, enclosed: The Decision of the Board of Directors and a valid copy of the meeting minutes of the Board of Directors.
(iv) For a partnership company, enclosed: The decision of the Members’ Council and a valid copy of the meeting minutes of the Members’ Council.
When carrying out the procedure of temporary suspension of business of an enterprise, the operation of its branches, representative offices, business locations will also be suspended.
After fully receiving valid dossiers, within 03 working days, the Business Registration Office will issue a Certificate of business suspension registration.
5. Procedure for announcing the resumption of business before the end of the temporary suspension of business
In case an enterprise temporarily suspending its business would want to resume its business activities before the notified time, the enterprise shall send a notice to the Business Registration Office at least 15 days before resuming its business.
6. Issues to be noted regarding tax and during the temporary suspension of business
6.1. Tax declaration
During the temporary suspension of business period, if the enterprise does not incur tax liabilities will not have to submit tax declaration documents of the temporary suspension period.
6.2. License tax
Enterprises that have the temporary suspension period for whole calendar year will not have to submit the license tax of the year of temporary suspension period. In case the temporary suspension period is not whole calendar year, the enterprise will have to submit the full license tax of such year.
6.3. Tax finalization
If the period which the enterprise temporary suspends its business is not in the whole calendar year or whole fiscal year, the annual tax statement of such year must be submitted.
This article is a part in our Covid-19 Legal Handbook published on the first wave of pandemic in Vietnam in 2020. We hope you can find it is still useful currently. The full handbook can be read here.
