Company dissolution in Vietnam with VAT refund.

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Last updated on July 16, 2021
Company dissolution in Vietnam with VAT refund

International investors are taking advantage of the consistent growth opportunities available in Vietnam, and when their investments and local entities become obsolete or require changes within their statutory structure, they often seek to undertake a company dissolution process.

In this article, we delve into the conditions, procedures and practical provisions regarding company dissolution in Vietnam, and we highlight important elements such as taxation compliance, bank accounts and VAT refund.

Cases, conditions and prohibited actions

Following the Enterprise Law 2020, there have several cases where an enterprise may be dissolved:

  • The operating period specified in the company’s charter expires without an extension decision
  • The enterprise is dissolved under a resolution or decision of the owner (for private enterprise), the Board of Partners (for partnerships), the Board of Members and the owner (for limited liability companies) or the GMS (for joint stock companies)
  • The enterprise fails to maintain the adequate number of members prescribed in this Law for six consecutive months without converting into another type of business
  • The Certificate of Enterprise Registration is revoked, unless otherwise prescribed by the Law on Tax administration

If the Certificate of Enterprise Registration of an enterprise in Vietnam is revoked, the relevant executives and the enterprise are jointly responsible for the enterprise’s debts. In Vietnam, an enterprise may only be dissolved after all of its debts and liabilities are fully paid and is not involved in any court dispute or arbitration settlement.

From the issuance date of the dissolution decision, the enterprise and its executives are prohibited from the following actions:

  • Concealing, disguising assets
  • Denying or reducing the creditors’ claims to the debts
  • Convert unsecured debts into debts secured with the enterprise’s assets
  • Concluding new contracts, except for dissolving the enterprise
  • Pledging, donating, leasing out assets
  • Terminating effective contracts
  • Raising capital in any shape or form

Procedure and timeline

When commencing the dissolution procedure, the enterprise will work with the business registration authority, tax department and other relevant authorities. For the purpose of this article, we have detailed the dissolution process, excluding the case when the Certificate of Enterprise Registration is revoked.

The process includes six (6) basic stages:

Step 1Send a notification of dissolution to the Business Registration Office of the province where it is headquartered.7 working days
(From the day on the decision of dissolution)
Step 2The enterprise’s legal status on the National Business Registration Portal is required be changed into “undergoing dissolution” and the information about enterprise dissolution shall be sent to the tax authority.1 working day
Step 3Undertake tax audited and complete the payment of any tax liabilities with tax authorities.From 3 to 12 months
Step 4Submit the VAT refund application (If any)40 working days
Step 5Submit an application for dissolution to the Business Registration Office5 working days
Step 6Return the seal and the certificate of seal registration to the police authority (In case an enterprise uses a seal issued by a police authority)1 working day

Before submitting the application for dissolution, the enterprise must complete the procedure to shutdown its branches/representative offices/business locations with the Business Registration Office of the provinces where the branch/representative office/business location is situated.

Required documents

The standard documents required for the dissolution of an enterprise in Vietnam are listed below. The legal documents of the company may vary depending on the jurisdiction of the investors, however the following list provides a general guidance as to the documents required to be lodged with the authorities.

No.Document
1Legal documents:

  • Original Enterprise Registration Certificate (ERC)
  • Original Investment Registration Certificate (IRC)
2The notification of the enterprise’s dissolution
3A resolution or decision on the dissolution
4The report on liquidation of the enterprise’s assets; list of creditors and paid debts, including tax debts, social insurance, health insurance, unemployment insurance of employees after the dissolution decision is issued (if any).
5Confirmation of Customs on tax liabilities (If any)
6Confirmation of authority on the fulfilment of tax obligations
7Confirmation on tax code validity termination

Note: This checklist does not purport to be exhaustive and depending on the authority’s consideration as well as the company’s operation record, additional information may be required subject to the licensing authority’s review of the lodged documents.

Review of the company’s tax obligation

The enterprise is required to prepare and submit PIT finalisation, Financial Statements, CIT finalisation for the last period until the dissolution time. The deadline for submitting a terminal tax declaration is the 45th day from the day on which a decision on such dissolution is made.

Where the company holds registered red invoices or e-invoices, the enterprise shall process the cancelation of unused invoices.

Bank accounts closure

Once they have received the notification of enterprise status update to “dissolution” on the national enterprise registration database, companies may proceed to close bank accounts. For more information, enterprises is required to work together with the bank officers to carry out the required procedures.

VAT refund procedure in case of dissolution

If the enterprise has a deductible VAT balance at the dissolution time and wishes to apply for a refund, it should submit the VAT refund application to the 1-stop department of the tax authority. In this case, the enterprise is subject to an inspection before the tax refund is applied, and then the authority will conduct the VAT refund examination process based on the inspection result.

The process includes two basic stages:

Step 1Submit the VAT refund application.1 working day
Step 2The tax authority may conduct an examination visit at the office of the taxpayer. According to the results of taxation inspection, the tax authority shall determine the refundable VAT amount given to the taxpayer.40 working days

Required documents for the VAT refund procedure

1A request for refund (form 01/DNHT enclosed the Circular No. 156/2013/TT-BTC dated November 06, 2013)
2A decision of a relevant authority on the dissolution
3A declaration or terminal declaration of tax upon dissolution

Note: this checklist does not purport to be exhaustive, depending on the authority’s consideration as well as the company operation record, additional information may be required subject to the licensing authority’s review of the lodged documents.

At Acclime Vietnam, we help foreign investors process the dissolution procedure of their own company in Vietnam. Our services are designed around simple and practical advice, with clear processes from start to finish. We guide investors through the government requirements, removing the confusion and providing clarity for what can be an otherwise drawn-out process for starting a business, so that your Vietnamese company is established and ready for you to operate.

The above information is general in nature, and under each specific situation of the investor’s company status, the dissolution and VAT refund applications will need to be reviewed in depth. If you need any assistance with these or any other matters relevant for international investors in Vietnam, our experts are ready to work with your company to ensure you understand how the above will apply to your specific situation in Vietnam.

Nguyen Thi Vu Phung – Accounting Director – phung.nguyen@acclime.com

Nguyen Thi Huong Giang – Senior Accounting Officer – giang.nguyen@acclime.com

Matthew Lourey – Managing Partner – m.lourey@acclime.com

Kevin Lam – Partner – k.lam@acclime.com

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