A tax settlement is a mandatory legal procedure for enterprises during dissolution. Performing the tax settlement when dissolving a company aims to ensure compliance with Laws on Tax and termination of the company's tax obligations. In addition, the tax settlement is also related to the fulfillment of other financial obligations of the company.
I. Current status of the Tax Settlement when dissolving the company
In fact, tax settlement is a mandatory legal procedure during company dissolution, but many enterprises still encounter difficulties and delays in the process. Many enterprises are not familiar with the legal regulations regarding tax settlement when dissolving the company, making it difficult to complete these procedures for the first time. Moreover, many enterprises have to amend and supplement related documents multiple times before they can complete the tax settlement for company dissolution.
In addition, some enterprises lack specialized personnel related to the tax settlement, especially for small and medium-sized enterprises. For large enterprises, the costs of tax settlement can cause difficulties in payment at the time of dissolution because the enterprise can only be dissolved when it ensures that all debts and other property obligations have been paid and is not in the process of disputes at the Court or Arbitration.
II. Legal regulations on the Tax Settlement when dissolving the company
The implementation of the tax settlement when dissolving the company is specifically regulated in specialized legal documents such as the Law on Enterprise 2020, the Law on Tax Management 2019 and guiding documents for these Laws.
1. What is the tax settlement when dissolving the company?
Pursuant to Clause 10, Article 3 of the Law on Tax Management 2019, the tax settlement is the determination of the amount of payable tax for the tax year (financial year) or the period from the beginning of the tax year to the termination of the tax obligation activities or the period from the arising time to the termination of the activities arising tax obligations as prescribed by Law.
Therefore, the tax settlement when dissolving the company is the process by which the enterprise has to determine the payable taxes for the period from the beginning of the tax year to the termination of the tax obligation activities. The tax settlement when dissolving the company includes a corporate income tax settlement and a personal income tax settlement.
2. What does the enterprise need to do when settling taxes to dissolve?
The law stipulates that the enterprise can only be dissolved when it ensures that all debts and other property obligations have been paid and is not in the process of resolving disputes at the Court or Arbitration. When settling taxes for dissolution, the enterprise must:
- Submitting a request to the tax authorities to inspect the enterprise's tax settlement at the tax authorities.
- Settling the taxes arising during the operation and the tax settlement process.
- Paying taxes and completing tax settlement procedures to close the tax code.
- Receiving a decision on the completion of tax obligations.
Thus, the enterprise needs to implement tax settlement procedures with the tax authorities to fulfill its tax obligations and continue the process of dissolving its enterprise.
3. Tax Settlement Dossier
The tax settlement dossier for dissolving the company is regulated in Article 43 of the Law on Tax Management 2019, including:
+ Tax settlement declaration;
+ Financial statements up to the time of company dissolution;
+ Other documents related to the tax settlement.
The types of taxes and receivables that must be declared for tax settlement up to the time of dissolution are specified in Clause 6, Article 8 of Decree 126/2020/ND-CP and Decree 91/2022/ND-CP amended and supplemented by Decree 126/2020/ND-CP. The documents and forms for these taxes and receivables are regulated in Appendix I issued together with Decree 126/2020/ND-CP. Specifically, for the corporate income tax settlement dossier:
- The corporate income tax settlement dossier under the revenue-expense method includes: Corporate income tax settlement declaration form No. 03/TNDN; Result appendix of manufacturing business activities according to form No. 03-1A/TNDN (manufacturing, trade and services, excluding security and national defense companies), No. 03-1B/TNDN (banks and credit), and No. 03-1C/TNDN (securities companies and securities investment fund management companies); Loss transfer appendix form No. 03-2/TNDN; and some other appendices depending on the business lines of the enterprise;
- The corporate income tax settlement dossier under the revenue ratio method includes: Corporate income tax declaration form No. 04/TNDN; Annual financial statements in accordance with the Law on accounting and independent audit (except in cases where financial statements are not required to be prepared in accordance with regulations).
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In addition, the tax settlement dossier also includes documents related to personal income tax, value added tax and some other receivables, depending on the business lines in which the enterprise operates. The documents and forms for these taxes and receivables are also detailed in Appendix I attached to Decree No. 126/2020/ND-CP.
III. Answers to some questions about the tax settlement when dissolving the company
1. What is the payment order for dissolved company’s debts?
The priority order for paying the debts of the enterprise is regulated in Article 208 of the Law on Enterprise 2020, specifically:
1. Debts of salaries, severance pay, social insurance, health insurance, unemployment insurance according to the law and other benefits of employees according to the collective labor agreement and labor contract signed;
2. Tax debts;
3. Other debts.
After all the costs of dissolving the company and debts have been paid, the remaining assets will be distributed to the ownership of the sole proprietorship (if it is the sole proprietorship), or members, shareholders or owners of the company according to the capital contribution and stock ownership ratio (in the case of Liability Limited Company and Joint Stock Company).
2. Are there any cases where a dissolved company is exempt from the tax settlement?
The tax settlement is an indispensable procedure for the company when it dissolves. However, in some cases, the law still stipulates that a dissolved company does not have to settle taxes. Specifically, Point g, Clause 1, Article 110 of the Law on Tax Management 2019, guided by Article 72 of Circular 80/2021/TT-BTC, stipulates the cases of dissolution and termination of business activities that do not have to settle taxes, including:
- Taxpayers who are subject to corporate income tax at a percentage of the revenue from the sale of goods and services as prescribed by the law on corporate income tax implement dissolution and termination of business activities.
- Taxpayers who dissolve and terminate their business activities, but from the time of establishment to the time of dissolution and termination of business activities, the enterprise has no revenue and has not used invoices.
3. Is there a duration for submitting the tax settlement dossier when dissolving the company?
The duration for submitting the tax settlement dossier when dissolving the company is no later than 45th day from the date of dissolution according to Article 44 of the Law on Tax Management 2019.
However, in some cases, enterprises can extend the duration for submitting the tax settlement declaration dossier. Specifically, if the taxpayer is unable to submit the tax declaration dossier on time due to natural disasters, epidemics, fires or unexpected accidents, the head of the managing tax authority shall directly extend the duration for submitting the tax settlement declaration dossier for 60 days from the expiration date of submission. In this case, the taxpayer must send a written request to the tax authorities before the expiration date, stating clearly the reason for the extension request with confirmation from the commune People's Committee or the Public Security of the commune, ward or town where the extension is granted.
4. Procedures for dissolving the company are implemented at which agencies?
The procedures for dissolving the company are implemented at the Business Registration Agencies, the Tax Authorities and the Insurance Agencies. In which, the Tax Authorities shall implement the procedures related to tax settlement and closing the tax code, the Business Registration Agencies shall implement the procedures related to the company dissolution dossier and the Business Registration Certificate, and the Insurance Agencies shall implement the procedures related to the social insurance books of employees.
For some enterprises that use seals issued by the public security agencies, such the enterprises are responsible for returning the seals and the Certificates of registration of the seal models to the public security agencies as prescribed when implementing the dissolution procedures.
IV. Legal advisory services on company dissolution
The tax settlement when dissolving the company is an important procedure that requires strict compliance with the provisions of Law. However, in practice, understanding and implementing this procedure can be difficult for many enterprises.
NGOC PHU LAW COMPANY LIMITED is a law firm with professional experience in consulting and implementing procedures related to tax settlement when dissolving the company, including:
- Receiving enterprises’ information related to tax settlement when implementing dissolution;
- Consulting enterprises on preparing dossiers and documents to complete the tax settlement procedures when dissolving;
- Drafting, amending and supplementing dossiers and documents in accordance with legal regulations;
- Supporting and representing Clients in working with competent state agencies;
- In addition, NPLaw provides consulting services and performs procedures throughout the entire process of company dissolution.
With a team of enthusiastic and highly specialized lawyers and legal experts, we will help you complete this procedure promptly, efficiently and cost-effectively.
The above is the information to answer questions about the Tax Settlement when dissolving the company that NPLAW sends to readers. If readers have any further questions that need to be answered, please contact NPLAW with the following contact information:
