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The business license tax is a mandatory tax for enterprises and business households in Vietnam. However, when a business temporarily suspends operations, many business owners wonder whether they are still required to pay this tax. This article clarifies the issue based on current legal regulations.
1. What is Business License Tax?
Business license tax (now referred to as a business license fee) is a government-mandated fee applicable to organizations and individuals engaged in the production and trading of goods and services. The tax amount is determined based on the business’s charter capital or revenue.
2. Are Businesses on Temporary Suspension Required to Pay Business License Tax?
According to Decree 139/2016/ND-CP and Circular 302/2016/TT-BTC, businesses that meet the following conditions are exempt from paying the business license tax during their suspension period:
- A formal notice of business suspension has been submitted to the business registration authority and the tax authority as required by law.
- The business does not engage in any production or trading activities during the suspension period.
- The suspension period covers an entire calendar year (from January 1 to December 31) to qualify for a full exemption from the business license tax for that year.
If a business suspends operations midway through the year or fails to notify authorities on time, it is still required to pay the full business license tax for that year.
3. Business Suspension Notification Process
To be exempt from the business license tax, businesses must follow these steps:
- Submit a business suspension notice: File the request through the National Business Registration Portal or at the Department of Planning and Investment where the business is registered.
- Notify the tax authority: Submit a business suspension request form so the tax authority can record the suspension and determine the business’s tax obligations.
- Await confirmation and settle any outstanding liabilities: If the business has unpaid taxes or other fees, these must be settled before the suspension is officially recognized.
4. Important Considerations
- During the suspension period, businesses cannot sign contracts, issue invoices, or engage in any business activities.
- If a business resumes operations within the financial year, it is still required to pay the full business license tax for that year.
- Businesses that violate the suspension regulations by continuing operations may face administrative penalties.
Conclusion
A business that fully suspends operations for an entire year and properly notifies authorities is exempt from paying business license tax. However, businesses that suspend operations mid-year or fail to notify authorities must still pay the tax as required. Therefore, businesses should carefully follow the necessary procedures to avoid penalties and optimize their operational costs.
ASL Law is a leading full-service and independent Vietnamese law firm made up of experienced and talented lawyers. ASL Law is ranked as the top tier Law Firm in Vietnam by Legal500, Asia Law, WTR, and Asia Business Law Journal. Based in both Hanoi and Ho Chi Minh City in Vietnam, the firm’s main purpose is to provide the most practical, efficient and lawful advice to its domestic and international clients. If we can be of assistance, please email to [email protected].
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