When dissolving a company, many companies are still confused about tax finalization procedures. It is also an important job to complete dissolution procedures. Some cases of dissolved enterprises are exempted from tax settlement. Tax resolution related to company dissolution is a mandatory procedure in the company dissolution process. When a company is dissolved, there are many issues that need to be resolved. If you know what to do to complete the tax finalization procedures related to company dissolution, it will be easy for you to do. Join Viet My to learn more through the article below!

1. Why is it necessary to finalize taxes when dissolving a company?

Dissolving a company means terminating the existence of a business that no longer exists or has no overall value. To find out the legal status of the company, the rights and obligations included in the company registration book, the company owner must carry out legal procedures, must have a notice and decision from the tax authority, The content is that the company has fulfilled its obligations to the tax authority. Tax finalization upon company dissolution is mandatory according to current law.

Tax finalization is essentially a tax administration officer checking and verifying all records, reports and documents of the company. This is to ensure that the company has fully fulfilled its tax obligations to state agencies to avoid the situation where the company does not pay taxes and is still dissolved.

Every organization and individual that has its own tax code and has tax-related activities must comply with taxes. Normally, companies make tax decisions once every 5 years (small companies) and 1-3 years for large companies (companies that generate a lot of income). The time limit for making tax decisions depends on each subject.

It is the duty of the tax department or department of an organization or company to arrange the closing of taxes. If a business needs to complete a tax declaration, the tax authority will notify and send it to the business within 1 minute. Tax finalization must be done even when the enterprise goes bankrupt or dissolves. Tax finalization procedures are complicated and costly. However, not all cases of dissolution require tax settlement, many cases are exempted or reduced in tax settlement upon dissolution.

The end of the tax associated with the liquidation of the company directly depends on whether the company receives income and produces business.

Case 1: When the company has revenue. Stopping tax payments before liquidation if the company has income is a mandatory requirement because all tax activities and obligations must be completed before liquidation. When a business generates income, it has a cash transaction and there is a tax to pay. Therefore, completing tax regulations prescribed by the Ministry of Finance is necessary.

Case 2: When the company does not generate income. If the company does not generate income, the company does not need to declare taxes. However, each company and accounting department still needs to fill out complete accounting information.

2. What needs to be done when settling taxes when dissolving a company?

• Debts to partners, employee salary debts, social insurance debts… businesses can make a plan to request debt repayment within 6 months from the date of liquidation of the company.
• Enterprises engaged in import and export activities must send an official dispatch to request the customs authority where their head office is located to confirm that they no longer owe import or export tax.
• Enterprises must send a document to the tax authority to request the tax authority to stop taxing their unit.
• Enterprises must settle taxes arising during operations and in the final tax settlement.
• The company must pay taxes and close the tax code to stop.

3. Regulations on cases where a dissolved enterprises are exempt from tax settlement

When dissolving a business, you need to pay attention to the regulations and cases that apply to your business to do it properly to avoid difficult dissolution processes or penalties. There are many cases where businesses when dissolved will be exempted from certain activities, including tax settlement activities. This greatly shortens the costs as well as the dissolution time of the business is quicker because there is one less stage.

Article 16 of Circular No. 151/2014/TT-BTC stipulates that dissolved enterprises are exempt from tax finalization as follows:

Companies that cease operations or close their doors must pay corporate income tax at the statutory percentage of sales of goods and services.

The company does not generate income and does not issue expenditure invoices from the date of issuance of the Business Registration Certificate or Business Registration Certificate until the end or termination of operations.

3.1 Dissolved enterprises are exempt from tax finalization when paying corporate income tax according to the percentage of revenue

Circular No. 151/2014/TT-BTC of the Ministry of Finance, points 8.2, 16, a stipulates that traders must pay income tax according to the percentage calculated on the income received from selling goods and services. According to the provisions of the Corporate Income Tax Law, no tax must be paid upon termination of business operations or upon dissolution.

To avoid confusion, businesses need to clearly distinguish between paying corporate income tax as a percentage of revenue and calculating VAT using the direct method.

3.2 Dissolved enterprises are exempt from tax settlement when they do not generate revenue and have not used invoices from the time of operation until the time of dissolution.

According to Point b, Point 8.2, Article 16 of Circular No. 151/2014/TT-BTC, the Ministry of Finance issued a decision to close and terminate the operation of the public service unit from the time of licensing. The business registration certificate is valid until the expiration date. If income has not been generated or invoices have not been used, tax is not payable.

In addition, there is no need to stop paying tax in cases where business establishments have sent invoices if they fully meet the provisions in Article 16 c, Clause 8.2 of Circular No. 151/2014/TT-BTC.

4. Corporate income tax finalization documents upon dissolution

• Corporate income tax declaration according to form No. 03/TNDN
• Financial statements or annual accounts until there is a decision to divide, merge, consolidate, reorganize, dissolve or liquidate the company.
• One or more annexes to the notice issued related to this circular
• Appendix of business results prepared according to Form No. 03-1A/TNDN, Form No. 03-1B/TNDN, Form No. 03-1C/TNDN
• Loss transfer appendix according to Form No. 03-2/TNDN issued with Circular 156/2013/TT-BTC

Appendices on corporate income tax incentives:

• Form No. 03-3A/TNDN: Corporate income tax refund on investment projects for newly established business establishments, people transferring business establishments, new investment projects issued to private individuals, Circular No. 03 /CIT
• Form No. 03-3B/TNDN: Corporate income tax is a preferential right for businesses that invest in building new production lines, expanding scale, upgrading technology, improving the ecological environment, improving ecological environment. High production capacity (expansion investment)
• Form No. 03-3C/TNDN: Corporate income tax incentives for companies that employ ethnic minorities or manufacturing, construction, and transportation companies with many workers.
• Supplement the CIT amount paid abroad to be deducted in the tax period according to form No. 03-4/TNDN
• Additional declaration of corporate income tax for real estate transfer activities according to form No. 03-5/TNDN
• Appendix report on deduction and use of scientific and technical funds (if any) according to form No. 03-6/TNDN
• Add information about affiliated transactions (if any) to form 03-7/TNDN
• Appendix according to form No. 03-8/TNDN calculating corporate income tax for companies with production departments in the same province, different from the head office (if any)
• In case the company has an investment project abroad, in addition to the above documents, the company must complete the documents and documents according to the guidance on corporate income tax of the Ministry of Finance.

5. Tax finalization procedures when dissolving an enterprise

A company operating in the import-export industry that has been completely liquidated must send a document to the customs office at the company’s headquarters (confirming that no import-export tax is owed) before calculating tax.

After that, the company sends a document to the tax authority confirming that the tax authority has completed the tax settlement for the company. A corporate tax audit determines the taxes incurred in the completion of activities and the taxes that companies must undertake.

After completing tax settlement, dissolved companies must close the tax office to complete business dissolution procedures.

6. Frequently asked questions

6.1 What is the deadline for submitting tax finalization documents when dissolving an enterprise?

The company sends personal income tax and corporate income tax declaration dossiers to Direct Tax Department 01 within 45 (forty-five) days from the date of decision to terminate the company’s operations.

6.2 According to regulations, which agency has the authority to issue a decision to dissolve an enterprise?

The dissolution of the company is decided by two competent levels. The Tax Department directly manages the company: The Tax Department evaluates and confirms the completion of liquidation procedures
Department of Investment Planning: Take the confirmation from the Department of Planning and Investment to send a demolition notice

6.3 Does company dissolution require tax payment?

Companies’ tax obligations to the state must be fulfilled even if your company goes bankrupt or is dissolved. However, under the law, there are situations where there is a right to tax relief or tax exemption in connection with dissolution.

6.4 After dissolution of a company, can a new company be established?

Not like a bankrupt company. After liquidation of the company/legal company, the company’s members, shareholders and legal representatives have full rights to establish a new company without restriction.

6.5 What are the conditions for an enterprise to be dissolved?

The company can only be terminated if the company guarantees the full payment of debts and other property obligations and is not currently participating in resolving disputes in court or arbitration.

Above is an article about “Dissolved enterprises are exempt from tax settlement”. Viet My – Your legal partner has provided information about stopping tax payment after company dissolution. Because of the trust of customers, VIET MY LAW AND ACCOUNTING always tries its best to bring customers maximum satisfaction. You can contact us if you have questions about taxes or other issues related to company liquidation. Viet My is always ready to support customers!