Question:
Lawyer, can you advise us on the legal risks the Company may face when signing a lease contract for a parking area without completing the registration procedure for a business location?
Response:
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Tax Risks
Since the Company has not registered the business location at the operating site, expenses related to this business location may not be recognized as legitimate expenses and could be disallowed.
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Administrative Penalty Risks
a) Penalties in the field of planning and investment: According to Article 54.1.a of Decree 122/2021/ND-CP, the Company may be fined from 20,000,000 VND to 30,000,000 VND for conducting business at a location without notifying the business registration authority where the enterprise (if the business location is under the enterprise) or branch (if the business location is under the branch) is carrying out business activities.
b) Penalties in the field of commerce: Under Article 6.3.a of Decree 98/2020/ND-CP, the Company may be fined from 10,000,000 VND to 15,000,000 VND for conducting business in goods or services in sectors or professions requiring conditional investment and business without a business license.
