In certain necessary cases, businesses may register for a temporary suspension of operations to halt their obligations for an appropriate period. Once the factors leading to the suspension of operations no longer exist, the business can resume operations or dissolve if there is no longer a need to maintain it.
This article provides guidance on how to register for a temporary suspension of business operations, the duration of the suspension, and how to resume business activities.
1. Regulations regarding temporary suspension of business operations
1.1. What does "temporarily suspending business operations" mean?
A temporary suspension of business operations can be basically understood as a business temporarily ceasing its business and production activities. This means the business is not allowed to sign contracts with partners or customers for production and business, issue invoices, or engage in any other activities during the suspension period.
1.2. Cases of temporary business suspension
– Case 1: The business itself wishes to temporarily suspend operations.
– Case 2: Mandatory temporary suspension of business operations:
The business registration authority or competent state agency may require a business to temporarily suspend operations in the following cases:
+ Temporarily suspend business operations in conditional business sectors or sectors with conditional market access for foreign investors when it is discovered that the enterprise does not meet the corresponding conditions as prescribed by law;
+ Temporarily suspend business operations at the request of relevant authorities in accordance with the laws on tax management, environment, and other relevant legal regulations;
1.3. Business Suspension Period
There are three key timeframes related to business suspension that businesses should be aware of:
Deadline for notifying the competent authority
In the case of a business temporarily suspending operations, the business must send a notification to the Business Registration Office where the business is located at least 03 working days before the date of temporary suspension. This means that if a business wants to temporarily suspend operations, it must send a Notice of Temporary Suspension to the competent authority at least 03 working days before the desired date of suspension.
The period during which a business is allowed to temporarily suspend operations.
The duration of each business suspension notice must not exceed one year. Therefore, each time a business is temporarily suspended, it will be allowed to suspend operations for one year.
Furthermore, according to Decree 78/2015/ND-CP, if a business wishes to continue suspending operations after the one-year period has expired, it must notify the Business Registration Authority. The total consecutive suspension period for a business must not exceed two years. However, Decree 01/2021/ND-CP no longer stipulates a maximum of two consecutive years for suspension.
Therefore, it can be understood that a business can temporarily suspend operations for one year, and there is no limit to the number of times a business can temporarily suspend operations.
The processing time for applications has been temporarily suspended.
The processing time will depend on whether the business's temporary suspension application is valid according to regulations. Within 03 working days, if the application is valid, the Business Registration Authority will issue a Certificate of Registration for Temporary Business Suspension; if the application is invalid, the Business Registration Authority will send a notification for the business to amend or supplement it.
1.4. Responsibilities of businesses after temporarily suspending operations.
There are many questions regarding whether businesses that temporarily cease operations are required to file tax returns.
Business law stipulates that during a period of temporary business suspension, enterprises must pay all outstanding taxes, social insurance, health insurance, and unemployment insurance contributions; continue to pay debts, and fulfill contracts signed with customers and employees, unless the enterprise, creditors, customers, and employees agree otherwise.
Furthermore, Decree 126/2020/ND-CP stipulates that taxpayers are not required to submit tax declarations, except in cases where the taxpayer temporarily suspends business operations for less than a full month, quarter, calendar year, or fiscal year; in such cases, they are still required to submit monthly or quarterly tax declarations and annual tax settlement documents.
Therefore, while temporarily suspending business operations, enterprises must still fulfill their outstanding tax obligations. If the suspension of operations does not last for a full month, quarter, calendar year, or fiscal year, the enterprise must still submit monthly and quarterly tax returns; and annual tax settlement documents.
Note: Obligations must still be fulfilled even when business is temporarily suspended.
While temporarily suspending business operations, enterprises must still fulfill their outstanding tax obligations. If the suspension of operations does not last for a full month, quarter, calendar year, or fiscal year, the enterprise must still submit monthly and quarterly tax returns, as well as annual tax settlement documents.
2. Instructions on procedures for temporarily suspending business operations
Legal regulations regarding the procedures for temporarily suspending business operations by enterprises with the Department of Planning and Investment and other relevant agencies. To proceed with temporary business suspension, enterprises need to follow these steps:
Step 1: Prepare the necessary documents for temporarily suspending business operations.
Prepare the necessary documents and paperwork in accordance with business law regulations regarding temporary business suspension. The section explaining the reason for temporary business suspension typically lists various reasons, but businesses often cite financial difficulties and the inability to continue operations.
The documents required for temporary business suspension include:
The application for temporary suspension of business operations, as stipulated by the Enterprise Law, includes the following components:
– Notice of temporary business suspension.
And
+ Resolutions, decisions, and copies of meeting minutes of the Board of Members for limited liability companies with two or more members regarding the temporary suspension of business operations;
+ Resolutions, decisions, and copies of minutes of meetings of the Board of Members of a partnership company regarding the temporary suspension of business operations;
+ Resolutions, decisions, and copies of minutes of the Board of Directors' meetings for joint-stock companies regarding the temporary suspension of business operations;
+ Resolutions and decisions of the company owner regarding the temporary suspension of business operations for a single-member limited liability company.
Business suspension decision forms
Sample notice of temporary business suspension: Appendix II-19
Sample Decision to Temporarily Suspend Business Operations:
- Limited Liability Company (Single Member): Decision - Limited Liability Company
- Limited Liability Company with two or more members: Decision - Limited Liability Company with 2 or more members
- Joint Stock Company: QD – CP
Step 2: Submit the application for temporary business suspension to the Business Registration Authority.
After preparing all the necessary documents for temporary business suspension, individuals, authorized organizations, or businesses can directly submit the application to the Department of Planning and Investment of the Province/City where the business's head office is registered.
How to file an application for temporary business suspension.
Businesses can apply for temporary suspension of operations in the following three ways:
+ Method 1: Submit directly to the Business Registration Authority in the Province/City where the company's head office is located.
+ Method 2: Businesses submit online using digital signatures or their business registration account on the National Business Registration Portal.
+ Method 3: Submit your application via postal service.
Step 3: Receive and verify the validity of the business suspension application.
After reviewing the application, the Business Registration Office will seek opinions from relevant agencies (if necessary) during the processing and finalize the application. They will then submit the decision to the leadership for approval of the application's validity. Following this, the application status will be updated on the National Business Registration Portal.
Step 4: Receive notification of the business suspension procedure.
When the application is valid, the business will receive an approval notification from the Business Registration Office to receive the results. If the application needs to be amended or supplemented, the Business Registration Office will send a notification requesting the business to make the necessary amendments or supplements.
Step 5: Officially suspend business operations.
After receiving a notice of temporary business suspension from the Business Registration Authority under the Department of Planning and Investment, the enterprise will Temporarily suspended from the time stated in the notice.All business activities must cease after the suspension date. Businesses are allowed to resume operations after the suspension period ends or apply to resume operations early before the suspension period ends.
3. Procedures for resuming business operations after a period of temporary suspension.
When businesses encounter difficulties during their operations, they will consider various solutions, including temporarily suspending business for a period to reorient their development plan. If, during this temporary suspension, the business finds a new direction and wishes to re-enter the market, it needs to proceed with the business registration procedures with the relevant authority.
In case you need to resume operations before the deadline, or after your suspension period expires, please refer to the instructions on resuming operations.
See more: The business registration application was submitted before the announced deadline.