Important Notes When Dissolving an Inactive Enterprise

The dissolution of an inactive enterprise is an inevitable step in the lifecycle of many organizations. It is not merely an administrative formality but a legal and financial process that requires caution, transparency, and strict compliance. Mishandling or overlooking procedures can result in serious consequences such as tax back-payments, legal liabilities, or reputational damage.

1. Conditions and Legal Basis for Dissolution

An enterprise may only be dissolved when it meets the conditions set forth in the Law on Enterprises 2020, including:

• A dissolution resolution issued by the owner, the Members' Council, or the General Meeting of Shareholders.

• All financial obligations have been fulfilled (taxes, salaries, social insurance, commercial debts, etc.).

• The enterprise is not involved in any ongoing disputes at a court or arbitration body.

The dissolution dossier is specified in Decree 01/2021/ND-CP and Circular 01/2021/TT-BKHDT, which detail the required forms and submission process. Failure to update documents in accordance with the latest regulations can result in repeated rejections and unnecessary delays.

2. Labor Obligations

Before initiating dissolution procedures, enterprises must:

• Fully pay all wages, allowances, and severance payments (if applicable).

• Finalize and fulfill all obligations related to social, health, and unemployment insurance.

• Issue an official notice of employment termination in accordance with the Labor Code 2019.

Failure to fulfill these responsibilities gives employees the right to file a lawsuit or request authorities to suspend the dissolution process.

3. Tax Obligations – A Prerequisite for Dissolution

To complete the dissolution, the enterprise must work with the tax authority to:

• Submit a request to terminate the tax identification number (pursuant to Circular 80/2021/TT-BTC).

• File the final financial statements and complete all tax finalizations (corporate income tax, VAT, personal income tax, etc.).

• Hold a working session and await confirmation that all tax obligations have been fulfilled.

This step is often the most time-consuming. Inexperienced accountants or incomplete documentation can prolong the process from several months to over a year.

4. Asset Liquidation and Debt Settlement – Requires Transparency and Order

The enterprise must conduct an inventory, valuation, and liquidation of all remaining assets. More importantly, all debts—whether owed to partners, banks, or individuals—must be settled transparently, with documented proof of payment.

Note: Under current law, payment priority must follow this order:

1. Dissolution expenses

2. Employee wages, allowances, and social insurance

3. Obligations to the State (taxes, fees)

4. Commercial and loan debts

5. Return of capital contributions

Any attempt to conceal assets or make payments in the wrong order may be deemed evasion of obligations and lead to serious legal consequences.

5. Legal Documentation Standardization – The Foundation for an Effective Dissolution Process

A complete dissolution dossier includes:

• The dissolution decision and minutes of the meeting

• Notification of dissolution sent to the Department of Planning and Investment

• Reports on asset liquidation and debt settlement

• Tax clearance confirmation

• Confirmation of tax code deactivation

• Return of the seal (if a physical seal was used) and registration certificate for the seal sample

Enterprises are advised to prepare documentation in parallel with asset and tax settlement, and to digitize all records for a minimum of 10 years, in accordance with Article 210 of the Law on Enterprises.

6. Post-Dissolution Risk Management – Protecting Executive Legal Liability

Even after a company’s name has been removed from the National Business Registration Portal, its management may still be held liable if:

• There are undisclosed or unsettled debts

• Transactions prior to dissolution caused damage to creditors

• Required records are not maintained or cannot be provided during post-dissolution inspections

Thus, standardizing internal processes and consulting with experienced service providers is essential to safeguarding executives from future legal risks.

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Viet Australia Auditing Company is an independent auditing organization licensed and established in 2007 in the Socialist Republic of Vietnam.