TAX REFUND WHEN DISSOLVING A BUSINESS

Dissolving a business is a process that requires careful preparation and compliance with many legal regulations. One of the important issues that businesses need to pay attention to is tax refunds.

VAT refund, also known as value added tax refund, is the process by which a state agency returns to the taxpayer the amount of tax they have overpaid to the State Budget.

Specifically, the amount of tax refunded is the amount of input tax that the taxpayer has paid when purchasing goods and services, but has not been deducted during the tax calculation process. This is especially applicable when the business unit is not allowed to deduct this tax amount during the tax period, or when that unit or individual is not subject to tax. The VAT refund process aims to ensure fairness and transparency in the tax system and the State budget.

During operations, businesses face various expenses such as office expenses, electricity, water, gasoline, and value-added tax that they declare for deduction. However, when a business is no longer in operation and needs to dissolve, the business still has the right to a tax refund.

There are many different reasons why a business decides to dissolve, including losses, expiration of the business term, not having enough employees as required by law, or the business owner no longer wanting to continue the business. Regardless of the reason, when a business decides to dissolve, they are still guaranteed legal protection and have the right to a tax refund as usual. This means that the business will receive back part or all of the value-added tax that they have previously paid.

Conditions for dissolved enterprises to receive tax refunds

To be eligible for a value-added tax (VAT) refund, a single-member limited liability company must meet the following conditions, according to the provisions of law:

• Pay VAT according to the deduction method.

• Have been granted a certificate of business registration or investment license (practice license) or establishment decision by a competent authority.

• Have a seal according to the provisions of law.

• Establish and maintain accounting books and accounting documents according to the provisions of law on accounting.

• Have a deposit account at a bank under the company’s tax code.

Note: If the VAT declaration has declared a request for a tax refund, the company is not allowed to transfer the input tax amount requested for a tax refund to the deductible tax amount of the following month.

Within seven working days from the date of payment of all financial obligations of the enterprise, the legal representative or business owner must submit the dissolution dossier to the business registration authority.

Within seven working days after receiving complete and valid dossiers, the business registration authority will proceed to remove the enterprise’s name from the business registration book. After successfully removing the name, the enterprise will continue to carry out the tax code closure procedure with the tax authority. The tax code closure dossier must include:

Tax registration certificate (the enterprise must submit the original, copies are not accepted, including notarized copies).

Decision to dissolve the enterprise or decision to initiate the dissolution process, including the request to declare bankruptcy or notice of termination of business activities of individuals and business households.

Within five working days from the date of receipt of the dossier, the tax authority must notify the business of the cessation of operations and proceed with the procedure for closing the tax code.

Some other things to note when making a personal income tax refund:

• The tax authority will not automatically make a tax refund, but will only do so when the taxpayer proposes a tax refund request.

• The time spent explaining and supplementing information in the tax refund dossier is not included in the time limit for processing the dossier.

• The time limit for processing the tax refund dossier is calculated from the date of receipt of the dossier. If an individual has a personal income tax refund but is late in submitting the tax finalization declaration according to regulations, no administrative penalty will be applied for exceeding the tax finalization declaration deadline.

• The tax authority shall pay interest at the rate of 0.03% per day, calculated on the amount to be refunded and the number of days of delay in making a decision, if the deadline is exceeded due to the fault of the tax authority.

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