Businesses stop operating but cannot close
Establishing T.T. M Co., Ltd. in 2021, Mr. Q.H. D (Thanh Tri commune, Hanoi), the legal representative of the company, said that the enterprise operated and had revenue for more than 1 year. During this time, the company had accounting, so it carried out periodic declarations and full reports. Due to unfavorable market conditions, the company stopped operating from the end of 2022, no business or revenue arose, but has not completed procedures to terminate the tax identification number. Recently, Mr. D proactively contacted the tax authority to complete the procedures.
Mr. D shared that the amount to be handled could be up to about 30 million VND, including license fees, late payment fees and fines for late payment of tax declaration dossiers. Finding back dossiers and documents from the time the company was still operating is also difficult. "I know that the delay in completing procedures to terminate the tax identification number is my responsibility, but I hope there will be policies to remove obstacles, especially for arising expenses, so that businesses that have stopped operating can complete the dissolution procedures" - Mr. D said.
Similarly, Ms. N.H. H (Thanh Hoa) recently informed that when logging into eTax Mobile, she received a notification that "taxpayers are not operating at the registered address". In September 2020, she established a company but had not had time to operate when the COVID-19 epidemic occurred. The business did not generate revenue or invoices; then she gave birth, was busy, so she forgot about work and still registered for the company. When learning about the business closure procedures, Ms. H realized that this process was not simple, and may have to handle additional penalties and late payments.
The problem of handling hundreds of thousands of businesses that have stopped operating
The story of Mr. D and Ms. H is not unique. In the campaign to clean up taxpayer data, the Tax sector is reviewing hundreds of thousands of businesses that have stopped operating but have not completed dissolution and terminated the validity of tax codes.
According to the Tax Department, the review focuses on 617,462 enterprises, including about 291,962 enterprises that have stopped operating but have not completed dissolution and 325,500 enterprises that do not operate at registered addresses and have tax debts. Some enterprises and business households have temporarily stopped for many years but have not completed procedures to terminate, even prolonged for 10-20 years.
From this reality, experts believe that it is necessary to distinguish between cases where businesses have actually ceased operations and no business activities have arisen, and cases where they do not fulfill or intentionally evade obligations, thereby having appropriate handling directions.
Proposal to remove obstacles and support businesses to complete dissolution procedures
Ms. Nguyen Thi Cuc - Chairwoman of the Vietnam Tax Consultants Association - said that there are businesses established but have never done business, have not registered to use invoices, have not generated revenue or expenses; or have temporarily suspended operations but have not carried out procedures for dissolution or termination of tax identification number.
When wanting to officially "close down", businesses still have to handle obligations arising during the suspension of operations. There are cases where they have to pay license fees until 2025, along with fines for not submitting tax returns. Accumulated over many years, the amount can be up to tens, even hundreds of millions of VND.
According to Ms. Cuc, not notifying of business cessation, not carrying out procedures to terminate the validity of the tax identification number is a violation according to regulations. However, in cases where operations have actually ceased, the collection of business license fees and penalties for tax declaration dossiers that do not arise may create additional difficulties when taxpayers carry out termination procedures.
According to Mr. Le Van Tuan - Director of Keytas Tax Accounting Co., Ltd., it is necessary to study not to retroactively collect license fees from businesses that have ceased operations.
Mr. Tuan assessed that the license fee is an administrative fee that must be paid when state agencies provide public services when doing business. Therefore, when a business has stopped operating for many years, this fee should not continue to arise newly.
Taxpayers should only be administratively sanctioned for the act of not not notifying of business cessation, and it is not necessary to penalize late payment for blank declarations that do not generate revenue. According to him, the key point is to distinguish between "not fulfilling obligations" and "intentionally evading obligations".
To clean up the tax identification number, a reasonable solution is needed. But as it is now, the rich can be dissolved, and the poor continue to be abandoned. Many companies, the total amount of dissolved debts is sometimes more than 100 million VND, so it is difficult to dissolve" - Mr. Tuan said.
