The procedure for temporarily suspending a company’s business is when a business temporarily suspends its business activities for a period of time and is carried out at the Department of Planning and Investment. During the temporary suspension of business, what can and cannot a business do? Please refer to the article below for the answer.
1. What is a business suspension?
According to Clause 1, Article 41 of Decree 01/2021/ND-CP, it is stipulated as follows:
Temporary suspension of business is the legal status of an enterprise that is temporarily suspending business as prescribed in Clause 1, Article 206 of the Law on Enterprises.
After the data on the national information portal records the status of “Temporary suspension of business”, it is the date the enterprise registers to begin temporarily suspending business.
The end date of the legal status of “Temporary suspension of business” is the end date of the temporary suspension period that the enterprise has notified or the date the enterprise registers to resume business before the notified period.
2. Why do businesses temporarily suspend operations?
There are many reasons why a company must temporarily suspend operations, but most of them are financial difficulties, labor difficulties, etc., forcing the business to carry out procedures to temporarily suspend operations.
In fact, some common reasons why a business must temporarily suspend operations are as follows:
– The business encounters difficulties in business operations;
– The business has changes in the company structure or changes the company’s location;
– When the business is making a loss and cannot continue to maintain operations, it can temporarily suspend operations;
– The business owner temporarily suspends operations and then establishes a new business to do business in other industries and professions more effectively.
3. 4 things to note before suspending business
– Enterprises must notify at least 03 working days before the date of temporary suspension of business
According to Clause 1, Article 206 of the Enterprise Law, “Enterprises must notify in writing to the Business Registration Authority at least 03 working days before the date of temporary suspension of business”.
– The maximum suspension period for each suspension shall not exceed 01 year and there is no limit on the number of consecutive suspensions
According to the new regulations, the total maximum period for each temporary suspension of business shall be 01 year and there is no limit on the number of consecutive suspensions
– Enterprises are not required to submit tax reports during the period of temporary suspension of business
According to Point a, Clause 2, Article 4, Decree 126/2020/ND-CP, “Taxpayers are not required to submit tax declarations, except in cases where taxpayers temporarily suspend operations or do not conduct business for a full month, quarter, calendar year or fiscal year, they must still submit monthly and quarterly tax declarations; annual settlement records”.
– Enterprises are exempted from paying business license tax
According to Clause 5, Article 4 of Decree 139/2016/ND-CP amended and supplemented by Decree 22/2020/ND-CP, it is stipulated that:
“A fee payer who is currently operating and has a written request to the direct tax authority regarding the temporary suspension of production and business activities in the calendar year is not required to pay the business license fee for the year of temporary suspension of business activities, provided that the written request for temporary suspension of production and business activities is sent to the tax authority before the deadline for paying the fee as prescribed (January 30 of each year) and has not paid the business license fee for the year of temporary suspension of production and business activities”.
4. Regulations on notice of temporary suspension of business for joint stock companies
At least 03 working days before the date of temporary suspension of business, the joint stock company must notify the Business Registration Office (see detailed instructions in Section 2).
When carrying out the procedure for temporary suspension of business, the joint stock company must also simultaneously notify the temporary suspension of operations for its branches/representative offices/business locations.
The period of temporary suspension of business must not exceed 01 year. After the expiration of the notified period, if the company still needs to continue to temporarily suspend business, it must notify again at least 03 working days before the date of continued temporary suspension of business.
During the period of temporary suspension of business, the joint stock company must pay all outstanding taxes; outstanding social insurance, unemployment insurance, health insurance; continue to pay debts, complete the implementation of contracts signed with customers and employees; except in cases where the joint stock company, creditors, customers and employees have other agreements.
5. Procedures for notification of temporary suspension of business for joint stock companies
The dossier includes:
1. Notice of temporary suspension of business (Form Appendix II-19 issued with Circular 01/2021/TT-BKHĐT);
2. Decision of the Board of Directors on temporary suspension of business;
3. Valid copy of the Minutes of the Board of Directors’ meeting on temporary suspension of business;
4. For companies operating under an Investment License, Investment Certificate (also the Business Registration Certificate) or documents of equivalent legal value, the following documents must be submitted:
– Valid copy of the Investment License, Investment Certificate or documents of equivalent legal value;
– Valid copy of the company’s Tax Registration Certificate;
– Request for supplementing and updating business registration information (Form Appendix II-14 issued with Circular 01/2021/TT-BKHĐT).
5. Authorization letter for the person submitting the application and receiving the results if he/she is not the legal representative. This document does not need to be notarized or certified;
6. Valid copy of one of the following personal identification documents of the person authorized to carry out the procedure (if any):
– For Vietnamese citizens: Citizen identification card or Identity card or valid Vietnamese passport.
– For foreigners: Foreign passport or valid document in lieu of foreign passport.
Place of submission: Business Registration Office – Department of Planning and Investment where the company is headquartered.
Processing time: Within 03 (three) working days from the date of receipt of complete and valid documents.
In addition, an operating joint stock company that sends a document to the directly managing tax authority or the business registration authority regarding the temporary suspension of production and business activities during the calendar year (from January 1 to December 31) is not required to pay the business license fee for the year of temporary suspension of business activities, provided that: The document requesting temporary suspension of production and business activities is sent to the tax authority or the business registration authority before the deadline for paying the fee as prescribed (January 30 of each year) and the business license fee for the year of temporary suspension of production and business activities has not been paid.
In case of temporary suspension of production and business activities that do not meet the above conditions, the business license fee for the whole year must be paid.
Above is the procedure for suspending joint stock activities, please read and follow the procedures according to the law. If you have any questions, please contact us at the following address:
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_Nguyen Thu Phuong_