Can a Temporarily Suspended Business Issue Invoices?

In the context of business operations potentially being interrupted for various reasons, temporarily suspending activities is not an uncommon decision for enterprises. However, a legal issue that often arises is whether a business that is temporarily suspended has the right to issue invoices in Vietnam. This article by Viet An Law will clarify this matter for you.

Can a temporarily suspended business issue invoices?

Pursuant to Clause 2, Article 4 of Decree 126/2020/ND-CP, if an enterprise is temporarily suspended from business, it is not permitted to conduct any transactions related to the purchase of goods or services and is not allowed to create or issue electronic invoices.

In cases where a temporarily suspended business requires electronic invoices to deliver to buyers for the performance of contracts signed before the suspension date, the company may use electronic invoices issued on a case-by-case basis, as guided by Clause 2, Article 13 of Decree 123/2020/ND-CP (based on the provisions of Clause 4, Article 16 of Decree 123/2020/ND-CP).

Cases where businesses can still issue invoices during suspension

According to Article 13 of Decree 123/2020/ND-CP, the following cases allow the use of invoices during business suspension:

• Issuance of electronic invoices with tax authority codes on a case-by-case basis for sales invoices within enterprises, economic organizations, households, and individual businesses subject to value-added tax (VAT) under the direct method. This applies when the suspended business needs to issue invoices to fulfill contracts signed before the tax authority announces the business suspension.
• Issuance of electronic invoices with tax authority codes on a case-by-case basis for VAT invoices by enterprises, economic organizations, and other entities subject to VAT under the deduction method. This applies when the suspended business needs to issue invoices to fulfill contracts signed before the tax authority announces the business suspension.

Financial obligations during business suspension

Pursuant to Clause 3, Article 206 of the Enterprise Law 2020 on business suspension, cessation of operations, and business termination, during the suspension period, businesses must pay outstanding taxes, social insurance (SI), health insurance (HI), and unemployment insurance (UI). They must continue to settle debts, fulfill obligations under signed contracts with customers and employees, unless otherwise agreed upon by creditors, customers, and employees.

Business Suspension Procedures

Dossier:

• Notice of business suspension
• Resolution, decision, and a copy of the minutes of the Members’ Council meeting (for limited liability companies with two or more members, partnerships) or the Board of Directors meeting (for joint-stock companies) regarding the business suspension

Competent Authority:

• Business Registration Office

Notification Period:

• Within 03 working days from the date of receipt of a complete and valid dossier
• In cases where suspension is required by state authorities, within 03 working days from the date the Business Registration Office receives the official document from the competent authority requiring the business suspension, cessation of operations, or termination, or after completing penalties or judicial measures as prescribed by specialized law.

Legal consequences of business suspension

With notification in Accordance with the Law:

• Tax declaration dossier: Taxpayers are not required to submit tax declaration dossiers, except for those suspending activities for incomplete months, quarters, fiscal years, or calendar years. In such cases, they must still submit monthly, quarterly tax declarations, and annual settlement dossiers.
• Invoices: Temporarily suspended businesses are not allowed to use invoices and are not required to submit invoice usage reports. However, if tax authorities permit invoice issuance under relevant regulations, businesses must submit tax declaration dossiers and invoice usage reports accordingly.
• Compliance with tax authority decisions: Suspended businesses must comply with tax authority decisions and notices regarding debt collection, enforcement of administrative decisions on tax management, tax audits, inspections, and handling of administrative violations under the Tax Administration Law.

Without notification in Accordance with the Law:

Administrative penalties for failing to notify business suspension: Businesses that suspend operations without notification may face fines ranging from VND 10,000,000 to VND 15,000,000, pursuant to Article 50 of Decree 122/2021/ND-CP on administrative violations in planning and investment.

Revocation of enterprise registration certificate: Pursuant to Article 212 of the Enterprise Law 2020, the Enterprise Registration Certificate may be revoked if a business ceases operations for one year without notifying the Business Registration Office and tax authorities.

Tax Code Lock: In many cases, businesses opting for suspension face financial difficulties. To minimize costs, businesses may:

• Cut office and warehouse rental expenses;
• Reduce accounting and tax reporting fees;
• Limit personnel costs in other departments.

Failure to suspend business in accordance with the law may result in:

• Tax code lock due to the absence of company signage at the headquarters;
• Fines for failing to submit tax declarations.

The above is legal advice from Viet An Law regarding whether temporarily suspended businesses can issue invoices in Vietnam. For any further questions regarding invoices and business suspension, please contact Viet An Law – Tax Agent for detailed consultation. Thank you!