Notes when temporarily suspending operations of branches, representative offices, and business locations

Providing support services for temporary suspension of business operations is one of the specialties Siglaw Law Firm offers to our customers. Businesses often request to register temporary suspension of business operations when facing difficulties that cannot be resolved immediately, or when facing difficulties in profits and wanting to find new business directions, markets, products or services. In this article, based on the experience of handling many temporary suspension of business operations registration applications for businesses, Siglaw would like to share the notes when temporarily suspending business operations of branches, representative offices, and business locations.

Conditions for businesses to temporarily suspend operations of branches, representative offices, and business locations

Before suspending operations, businesses need to ensure the following conditions:

• The enterprise tax code must still be maintained in an active state: In reality, many enterprises often violate regulations on procedures and operations, leading to the loss of tax codes. For example: not performing activities at the registered address on the business license, not placing a sign at the headquarters, or not submitting a tax declaration. In this case, before carrying out the procedure to temporarily suspend operations, the enterprise must restore the suspended tax code.
• Notify the business registration authority of the suspension of operations at least 15 days before the actual suspension of operations.

Period of temporary suspension of branches, representative offices, business locations

In case an enterprise, branch, representative office or business location decides to temporarily suspend operations:

• The notification must be sent to the Business Registration Office where the enterprise is registered, and this time must not be later than 15 days from the official date of temporary suspension of business.
• The period of suspension of operations must not exceed one year.
• When the period of suspension of operations ends, if the enterprise decides to continue its business operations or suspend operations again, it must notify the Business Registration Office and the tax authority at least 15 days before the end of the notice period. The total cumulative period of suspension shall not exceed 02 years.
• In case the enterprise suspends its business operations for one year without notifying the Business Registration Office and the tax authority, it may result in the revocation of the Enterprise Registration Certificate.

Tax issues when suspending business activities

Is it necessary to pay business license tax when temporarily suspending business?

According to Decree 22/2020/ND-CP:

If an organization, individual, group of individuals or household engaged in production or business has submitted a written notice to the tax authority on “temporary suspension of production or business activities in the calendar year” before the date on which the business license fee payment is required as prescribed (January 30th of each year), and in case they have not paid the business license fee for that year, they do not need to pay the business license fee in the year of temporary suspension of business.

However, in the case where a business temporarily suspends production or business activities without meeting the above conditions, or the temporary suspension of business does not last for the entire calendar year, it will have to pay the business license fee for the entire year.

Regarding VAT declaration and invoice usage report:

When officially confirmed by the Business Registration Office to temporarily suspend business, the enterprise does not have to submit an invoice report – invoice usage status nor the VAT declaration.

Obligations of the enterprise during the suspension period

Obligations to customers and partners:

During the period of temporary suspension of business operations, the enterprise must ensure the following obligations:

• Pay all outstanding taxes during the period of temporary suspension of business operations.
• Continue to pay debts, complete previously signed contracts with customers and employees, unless otherwise agreed between the enterprise and related parties, or as prescribed by law.

Hopefully, the above article on temporarily suspending the operation of branches, representative offices, and business locations of Siglaw will provide useful information for individuals and businesses looking for related legal procedures. If during the process of consulting and implementing the documents, you have any problems that need to be resolved, please contact Siglaw Law Firm immediately for timely support.

Siglaw Law Firm

Phone: (+84) 961 366 238

Email:

• vphn@siglaw.com.vn
• vphcm@siglaw.com.vn

Headquarters: No.44/A32-NV13, Gleximco A, Le Trong Tan street, An Khanh, Hoai Duc, Ha Noi, Vietnam.

Southern branch: A9.05 BLOCK A, SkyCenter Building, 5B Pho Quang Street, Ward 2, Tan Binh District, Ho Chi Minh City, Vietnam.

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