Question:
My company needs to suspend the business for some reasons and intends to do so before August 2024. I would like to receive advice on the procedure and documentation required to request a suspension of business activities. During this period, do we still need to pay taxes and submit tax declaration dossiers?
Answer:
- Business suspension means the enterprise’s legal status during its business suspension. (clause 1 Article 41 of Decree No. 01/2021/ND-CP)
- If a company wishes to suspend the business, you shall send a written notification to the business registration authority at least 03 working days before the suspension. (clause 1 Article 206 of the Law on Enterprise and clause 1, Article 66 of Decree No. 01/2021/ND-CP) According to your company's needs, if you intend to suspend your company's business activities before August 2024, you shall submit a written notification to the business registration authority no later than July 27, 2024. Note: - If the company is still suspended after the notified suspension period, another notification must be sent to the Business Registration Office at least 03 days before the planned date of suspension. Each notified suspension period must not exceed one year. - The company may apply for resumption of business ahead of the notified schedule. The Business Registration Office shall update the company's legal status on the National Enterprise Registration Database at the same time.
- Required documents:
- Notification of the business suspension of the company according to the Form in Appendix II-19 issued with Circular No. 01/2021/TT-BKHDT;
- Resolution or decision and the copy of the minutes of meeting of the Board of Members of the multi-member limited liability company or partnership, or of the Board of Directors of the joint-stock company, or the resolution or decision of the owner of the single-member limited liability company on business suspension.
- Procedure:
Step 1: The company submits the application to the Business Registration Office where the company is headquartered.
Step 2: Receive the Confirmation slip and wait for the Business Registration Office to examine the validity of the application.
Step 3: Await the issuance of the certificate confirming the temporary suspension of business by the company, while the Business Registration Office updates the company's legal status on the National Enterprise Registration Database to “business suspension”.
- Obligation to pay business license tax:
According to legal regulations, for the business license tax, the company will not be required to pay the tax if it meets the following two conditions: 1- Submitting a written notification of production/business suspension to its supervisory tax authority before the prescribed deadline for paying the license fee (January 30 annually); 2- Having made no payment of the license fee for the planned year of suspension. If the above conditions are not met, the business license tax for the entire year must be paid (point c, clause 2, Article 1 of Decree No. 22/2020/ND-CP).
Therefore, whether business license tax needs to be paid during business suspension depends on the timing of the registration for business suspension.
- Tax declaration obligation:
According to legal regulations, the company is not required to submit tax declaration documents during the period of suspension of business. However, if the suspension begins in the middle of a monthly/quarterly/annual tax period, in which case the tax declaration dossier of that month/quarter/year must be submitted. (clause 2, Article 4 of Decree No. 126/2020/ND-CP)
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