According to the current actual situation, when the whole world is suffering the economic consequences after the Covid 19 epidemic, there are many businesses falling into difficult situations, their business is not profitable, therefore they are not businesses. is capable of ensuring business continuity. Many businesses have to find solutions to dissolution because they cannot bear the financial burden. However, when the business is ineffective, the financial status is not satisfactory or there is no feasible business plan, the business owner can choose to temporarily suspend the registration of business operations instead of doing so. dissolution procedures to have more time to find customers and effective business plans.
So how do the Enterprise Law 2020 and Decree 01/2020/ND-CP regulate the temporary suspension of business of Enterprises? And how is temporary business suspension different from business dissolution? Let’s find out in this article.
1. What is temporary suspension of business?
“Temporary suspension of business” is the legal status of an enterprise that is temporarily suspending business according to the provisions of Clause 1, Article 206 of the Law on Enterprises. Thus, it can be understood that temporary suspension of business means that an enterprise temporarily does not carry out business activities, meaning that the enterprise is not allowed to sign contracts, issue invoices or have any other activities. during the pause. After the expiration of the term, the enterprise must resume operations if it does not have to go through dissolution or transfer procedures.
2. Distinguish between business suspension and dissolution
According to the Enterprise Law 2020, it can be understood:
Temporary suspension of business is a case where an enterprise temporarily suspends production and business activities for a certain period of time, and after the temporary suspension period, the enterprise will be able to return to normal operations. Accordingly, the time limit for which an enterprise registers to temporarily suspend business must not exceed 01 year, but when the term expires, it can be extended. This extension is not limited to businesses
Dissolution of an enterprise is the termination of an enterprise’s existence on the market. Then, after completing dissolution procedures, the enterprise no longer exists or has any other business activities.
3. Application for registration of temporary business suspension
According to regulations, documents to register for temporary business suspension include:
• Notice of temporary business suspension (reference form in Appendix No. II-19 Circular 01/2021/TT-BKHDT);
• Decision to temporarily suspend business (of the owner of a one-member limited liability company, of the Board of members of a limited liability company with two or more members, of the Board of Directors of a joint stock company…);
• A valid copy of the meeting minutes of the Board of Members for a limited liability company with two or more members, of the Board of Directors for a joint stock company, of the general partners for a partnership company name.
4. Procedures for implementing business suspension procedures
Enterprises must send a notice to the Business Registration Office where the enterprise is registered at least 03 days before suspending business. Notification content includes:
• Name, head office address, business code and date of issuance of the Business Registration Certificate or other equivalent documents for the business.
• Business suspension period: start date and end date of suspension period.
• Reason for suspension.
5. Processing time for business suspension notification documents
After receiving the business’s dossier, the Business Registration Office will process the dossier within 03 working days to provide the following results:
• Confirmation that the enterprise has registered to temporarily suspend business if the documents are valid;
• Notification of amendments and supplements to documents if the documents are not valid.
6. Duration of temporary suspension of business operations of the enterprise
The period of suspension of business shall not exceed one year. Before the suspension period ends, the enterprise can extend the suspension, the number of extensions is unlimited.
7. Notes when temporarily suspending business operations:
• When carrying out business suspension procedures, enterprises must send a Notice of temporary suspension of operations of branches, representative offices, and business locations to the Business Registration Office where the branch, representative office, or location is located. registered business.
• Regarding tax obligations:
• In cases where taxpayers temporarily suspend business for the entire calendar year (from January 1 to December 31), they do not have to pay license tax for the year of temporary business suspension. In case of suspension for less than the entire calendar year, license tax for the entire year of business suspension must be paid before January 31 of that year.
• Taxpayers who temporarily suspend business and do not incur tax obligations do not have to submit tax declarations for the period of temporary suspension of business operations. In case the taxpayer stops doing business for less than the entire calendar year or fiscal year, he or she must still submit a tax finalization dossier.
• At the end of the business suspension period, taxpayers must declare taxes according to regulations.
• During the temporary suspension of business, the enterprise must still pay debts and complete contracts signed with customers and employees, except in cases where the enterprise and its creditors, customers and employees have other agreement.
• In case an enterprise registers to temporarily suspend business, the Business Registration Office updates the legal status of the enterprise and the status of all branches, representative offices, and business locations of the enterprise in the Enterprise. national database on business registration to a state of temporary business suspension.
• In case an enterprise resumes business before the expiration of the suspension period in the suspension notice, it must send a notice to the Business Registration Office at least 03 days before resuming operations.
8. Consulting service for registration of business suspension procedures of Pham Consult.
With many years of experience advising businesses on business suspension procedures and extending suspension periods for both Vietnamese companies and foreign invested companies, Pham Consult provides consulting services with Competitive prices, supporting you:
• Consulting on conditions, procedures and issues arising when registering business suspension procedures;
• Prepare all necessary documents in bilingual (Vietnamese and English) to ensure foreign investors can easily monitor and evaluate work progress (if customers request)
• Support customers with notarization, consular legalization and notarized translation;
• Submit and receive results at state agencies on behalf of customers;
• Consulting and explaining to state agencies when problems arise.
If you are interested and have many problems about this procedure, please contact us via the following information for a free consultation. Pham Consult always wants and commits to providing customers with the best services and support to help you optimize operating costs to serve your business goals.