Company Dissolution Service

I. SERVICE PROVISION PROCESS AT VINASC:

Stage 1: Vinasc receives basic information regarding the company’s dissolution

• Information about the company to be dissolved
  • Business licenses: Enterprise Registration Certificate (ERC); Investment Registration Certificate (IRC – for companies required to have an IRC); Business License (also known as sub-licenses – for regulated business sectors)
  • Internal documents, if any: company charter, financial regulations, salary regulations, etc.

Vinasc will review the specific legal requirements related to the dissolution and develop a service implementation plan.

Stage 2: Carry out the company dissolution procedure

To terminate the tax code and complete the dissolution procedure with the business registration authority, we proceed with the following steps:

Detailed Steps:

1. Step 1: Terminate the IRC investment project (for companies with investment projects).

• Implementation time: Within 15 days from the decision to terminate the investment project.
• Result: Notification of the termination of the investment project.

2. Step 2: Notify the business registration authority of the dissolution decision:

• Implementation time: Within 7 days from the company’s dissolution decision;
• Result:
  • Dissolution information is recorded in the national business information system for the company to proceed with company dissolution procedures;
  • Information from the business registration authority is forwarded to the tax authority for further processing;
  • Notification from the business registration authority of the receipt of documents and a request for confirmation of tax code termination by the tax authority.

3. Step 3: Decision to remove the company name and dissolve the company

Notify the relevant govermental agencies, employees, creditors, etc., about the dissolution and publicly post the information at the headquarters.

• Implementation time: Depends on the number of parties involved. However, we usually provide advice to minimize the number of involved parties to shorten the process time.
• Result: Ensure all stakeholders have received the information and agreed to the company’s resolution plan for the next dissolution procedures.

4. Step 4: Reconcile, confirm, and fulfill tax obligations with the Customs Authority (if the company engages in import/export activities)

• Implementation time: 5-10 days, depending on the number of transactions with the Customs Authority.
• Result: Notification or confirmation report that tax obligations have been completed.
• If not completed, the company must pay to fulfill its tax obligations with Customs.

5. Step 5: Reconcile, confirm, and fulfill obligations related to Social Insurance, Health Insurance, etc., if any;

• Implementation time: 5-10 working days, depending on the company’s size and compliance level before the dissolution decision;
• Result: Notification of remaining obligations for Social Insurance, Health Insurance, etc.
• If there is an outstanding balance, the company will pay to fulfill its obligations with the state authorities.

6. Step 6: Submit documents to the tax authority and proceed with the tax code termination procedures;

• Implementation time: Currently, this is a lengthy and complex procedure when dissolving a company. There are no specific regulations on the time required to complete the tax procedures for dissolution. Based on experience and flexible working methods, we will strive to shorten this time as much as possible for our clients.
• Result:
  • Tax finalization minutes and documents for dissolution purposes;
  • Notification of tax code termination by the tax authority for dissolution purposes.

Step 6 is the most crucial step in the entire company dissolution process. The tax authority needs to review all tax documents for any unchecked periods to ensure compliance, determine obligations, and the fulfillment of tax obligations by the company.

During this step, the company may incur penalties such as additional tax payments, administrative fines for tax violations, fines for fraud, tax evasion, and late payment fines.

7. Step 7: Submit the dissolution registration documents along with the tax authority’s notification of tax code termination to the business registration authority.

• Implementation time: After 5-7 days from receiving the tax code termination notification, the business registration authority will issue a notice of company dissolution.
• Result: Notice of company dissolution.

Stage 3: Service Completion

• Review all service implementation steps to ensure the service has been comprehensively completed.
• Clients can check the final results on the national information system and the tax code lookup system.
• Deliver to the company the specific results that Vinasc collected on behalf of the company during the service provision process.

II. DOCUMENT CONTENTS TO NOTE WHEN CONDUCTING COMPANY DISSOLUTION PROCEDURES

1. Check and prepare the company’s legal documents:

• Business licenses: Enterprise Registration Certificate (ERC); Investment Registration Certificate (IRC – for companies required to have an IRC); Business License (also known as sub-licenses – for regulated business sectors)
• Internal documents, if any: company charter, financial regulations, salary regulations, etc.

2. Accounting documents (primarily for the period before tax inspection):

• Employment contracts, appointment decisions, decisions on salary increases or decreases, etc.
• Financial statements, audit reports (for foreign-invested companies)
• All accounting books, including accompanying accounting documents. Invoices and economic contracts are indispensable.
• Tax reports and related tax reporting documents.
• Payroll, employment contracts, etc.
• Accounting documents should pay attention to transactions involving asset liquidation and transfer before company dissolution to ensure the prices are reasonable, avoiding rejection by the tax authorities for not matching market prices. This issue can lead to disagreements and prolong work with the tax authorities.

3. For foreign-invested companies:

• Check and prove compliance with investment activities, including capital contribution through an investment account per Circular 12/2022 of the State Bank.
• Check the remaining funds to be transferred abroad after fulfilling tax and other obligations in Vietnam.
• Foreign-invested companies must notify and comply with the regulations on repatriation of capital.

III. COMPANY DISSOLUTION COSTS AND FINANCIAL RISKS FOR COMPANIES

Most companies seeking dissolution are in difficult situations and unable to continue covering operating costs. Therefore, the costs associated with dissolution procedures are a primary concern. Below, we list the costs incurred or potentially incurred during the dissolution process:

1. Service fees for notifying and working with the business registration authority
2. Service fees for dealing with Customs, Social Insurance, etc.
3. Fees for working with the tax authority:
4. Tax arrears
5. Administrative fines for tax procedures:
6. Fines for incorrect tax declarations amounting to 20% of the incorrectly declared tax amount.
7. Fines for tax evasion and fraud ranging from 1 to 3 times the undeclared or evaded tax amount.
8. Late payment interest of 0.05% per day from the date the tax obligation arises, calculated on the unpaid tax fine.

In particular:

• Costs (1), (2), and (3) are considered dissolution procedure service fees.
• Costs from (4) to (8) are the company’s responsibility and are usually substantial. To minimize these losses, companies should review and audit all tax documents before dissolution. This includes:
  • Ensuring all tax returns are filed completely and on time;
  • Ensuring all tax returns are based on accurate and comprehensive tax obligations;
  • Ensuring no tax obligations are overlooked for any income, nor any increase in expenses that reduce taxable income;
  • Ensuring accounting books are fully prepared, signed, and stored;
  • Ensuring invoices and documents are fully organized and stored;
  • Preparing data in digital form to facilitate providing information to the tax authorities.

Vinasc Group always offers timely and advantageous consulting solutions for companies wishing to dissolve. Contact us for the best consultation and service: Contact Now