Guidelines on tax finalization procedures for enterprise dissolution

During the process of enterprise dissolution, tax finalization and the fulfillment of tax obligations are mandatory and decisive steps. The enterprise must prepare and submit the tax finalization dossier to the competent tax authority within the statutory deadline, while fully discharging its obligations relating to tax declarations, tax payments, invoices, and other relevant liabilities. Only upon confirmation from the tax authority that all tax obligations have been duly fulfilled may the enterprise proceed with the dissolution procedures at the business registration authority.

1. Order and procedures[1]

Step 1: Within 45 days from the date of issuance of the dissolution decision, the enterprise must make and submit a tax finalization dossier to the tax authority directly managing it. [2]

Step 2: The tax authority receives and checks the dossier.

1. The tax authority directly managing the revenue shall coordinate with the tax authority managing the revenue where the taxpayer has incurred obligations to the state budget to finalize the taxpayer’s obligations at the tax authority managing the revenue (complete tax declaration dossier, fulfillment of tax payment obligations,  obligations on invoices and handling of overpaid tax amounts, value-added tax amounts not yet deducted (if any)), clearing tax obligations or refunds in accordance with law.[3]
2. The tax authority managing the revenue shall update the information of the taxpayer who has fulfilled the tax obligation for the revenue under the management of the tax authority into the tax registration application system on the same working day or at the latest in the early hours of the next working day on the day the taxpayer fulfills the tax payment obligation at the tax authority managing the revenue. [4]
3. The tax authority directly managing the clearing or refund clearing procedures for the obligations of other taxpayers in accordance with the Law on Tax Administration and guiding documents. [5]
4. The supervisory tax authority shall directly request the customs authority to certify that the taxpayer has fulfilled the obligation to pay tax and other revenues belonging to the state budget for import and export activities in accordance with the Circular of the Ministry of Finance regulating customs procedures;  customs supervision; export duty, import tax and tax administration for exports and imports and the Circular of the Ministry of Finance regulating electronic transactions in the field of taxation within 03 days from the date of issuance of the Notice of the taxpayer’s suspension of operation and procedures for invalidation of tax identification numbers. [6]
5. In some cases, the directly managing tax authority may conduct tax inspection at the head office of the taxpayer who is the enterprise undergoing dissolution procedures.[7]

Step 3: After completing the inspection, if the taxpayer has fulfilled the tax obligation, within 03 working days, the tax authority will issue a “Notice of the taxpayer’s fulfillment of the tax payment obligation to submit a dossier of dissolution/termination of operation to the Business Registration Authority”. At the same time, change the taxpayer’s status to the status of “taxpayer ceased operation and has completed the procedures for invalidation of MST” on the tax registration application system.[8]

2. File

A tax finalization dossier upon enterprise dissolution shall contain at least the following documents:[9]

1. Declaration of finalization of corporate income tax  (“CIT”);
2. Annual financial statements or financial statements up to the time of issuance of decisions on the dissolution or termination of operation of enterprises;
3. In fact, depending on  the actual arising of the enterprise, the following additional papers shall be submitted:
   • Appendix to production and business results;
   • Appendix to the transfer of losses;
   • Appendices of CIT incentives;
   • Appendices to the CIT amounts already paid abroad to be deducted in the tax period;
   • Appendix of CIT for real estate transfer activities;
   • Appendix to the report on extraction and use of science and technology funds (if any);
   • Appendix of information on related-party transactions and related-party transactions (if any);
   • Appendix to the table of distribution of payable CIT amounts for production establishments (if any).
4. Certificate of cancellation of unused invoices (if any).[10]
5. In case an enterprise has a foreign investment project, the tax authority may request the submission of additional documents related to revenues generated from abroad.
6. In addition, if there are employees, enterprises need to submit personal income tax (“PIT”) finalization dossiers of employees.

3. Notes in the process of tax finalization to invalidate tax identification numbers

1. If the enterprise commits to inherit all tax obligations of the dependent unit, the enterprise must simultaneously make tax finalization for the inherited obligations.[11]
2. If an enterprise terminates its operation or abandons its business registration address and has not fulfilled its tax payment obligation, the remaining tax debt shall be paid by the owner of the sole proprietorship, the owner of a single-member limited liability company, a capital contributing shareholder, a capital contributor or a general partner according to regulations for each type of enterprise at the Law on Enterprise.[12]
3. For the settlement process to take place smoothly and on schedule, businesses should actively coordinate closely and regularly communicate with the tax administrator in charge for guidance, information updates and timely support.