How to Dissolve a Company in Vietnam: A Guide for Foreign Business Owners

Introduction

Closing or pausing a business is a significant decision for any entrepreneur. On paper, the process for suspending or dissolving a company seems structured, but in reality it involves navigating a lot of legal, tax, and administrative requirements. For foreign business owners, understanding your options—whether pausing operations or permanently shutting down—can help make the best decision for your situation. 

This guide explains the steps, costs, and timelines associated with suspending or closing a company in Vietnam. It also explores potential challenges and tips to ensure a smooth process.

Reasons for Company Dissolution 

Business conditions change. Sometimes, despite the best ideas and intentions, external factors or evolving circumstances push business owners to reconsider their strategies. Common reasons for pausing or closing a company include:  

1. Moving Overseas: Temporary suspension can be a good option for those relocating abroad but considering a return later.  
2. Focus Shift: Entrepreneurs may shift focus to another project while keeping the current company intact through suspension.  
3. Operational Expiry: The company’s license or operating period, as stated in its charter, may expire without renewal.  
4. Strategic Closure: Owners may dissolve a business after completing a project or if market conditions aren’t favorable.  
5. Financial Difficulties: Declining traction or accumulated debt can make dissolution a necessary option.  

Options Other Than Dissolution 

When your business faces challenges or needs to adapt, you can choose between pausing operations (suspension) or permanently closing the company (dissolution). Both paths offer unique advantages depending on your goals.

Option 1: Suspend a Company in Vietnam  

Temporary suspension is ideal if you’re unsure about permanently closing your business or if you want to pause operations while avoiding full closure.  

Key Features of Suspension:  

• The business is officially put “on hold.”  
• You’re relieved from most tax, reporting, and compliance obligations during suspension.  
• Approved for a maximum of one year, with a possible one-year extension.  

Common Scenarios for Suspension:  

- Owners are relocating temporarily.  

- Entrepreneurs want to test a new market or project without dissolving their company.  

- The business requires time to resolve operational or financial issues.  

Steps to Suspend a Company:  

1. Notification Submission: File a suspension notice with the local Department of Planning and Investment (DPI) at least three business days before the proposed suspension date.  
2. Template Completion: Use the official template, explaining your reasons for suspension. A brief, clear explanation is typically sufficient.  
3. Approval Period: Once approved, the suspension lasts up to one year. Afterward, you must either re-activate the company or proceed with dissolution.  

Cost and Timeline:  

- Suspension is quick, typically taking just a few days.  

- State fees are minimal, and service fees for professionals to handle the process range from VND 2–5 million.  

Option 2:  Sell Your Company in Vietnam

Selling your company is an alternative to closing it, allowing you to transfer ownership to another entrepreneur or repurpose it as a shelf company. This option is ideal if the company has value beyond its current operations, such as licenses, permits, or a favorable market position.

Benefits of Selling:

• Allows you to recoup investments or even make a profit.
• Saves time and effort compared to dissolution.
• Ensures the company continues operations under new ownership.

How to Sell a Company in Vietnam:

1. Assess Company Value: Work with a business consultant or valuation expert to determine the worth of your company, considering assets, licenses, and goodwill.
2. Find a Buyer: Potential buyers might include entrepreneurs, investors, or other businesses looking for a ready-to-operate entity.
3. Negotiate Terms: Agree on a sale price and terms of transfer, including licenses, liabilities, and ongoing contracts.
4. Legal Transfer: Update the business registration with the DPI to reflect the new ownership structure.
5. Tax and Compliance Clearance: Ensure all taxes and compliance obligations are cleared before the transfer.

Selling as a Shelf Company:

If your company has minimal activity but retains its registration, you can sell it as a shelf company—a registered, ready-to-use business entity. Shelf companies are valuable for buyers who want to bypass the time-consuming process of registering a new business in Vietnam.

Cost and Timeline:

The timeline depends on the buyer's due diligence and legal procedures. Costs vary but are generally offset by the sale price. Professional services can facilitate a smooth transaction for both parties.

How to Dissolve a Company in Vietnam

If you've decided that the other options aren't suitable, then it's time to start the dissolution process. This is a permanent decision to close your company. It relieves you from all tax, reporting, and compliance obligations once completed.  

Key Features of Dissolution:  

• Suitable for businesses that are no longer viable.  
• Requires full settlement of debts, contracts, and legal disputes.  
• Permanent closure with deregistration from government authorities.  

Common Scenarios for Dissolution:  

• Projects that have ended or fulfilled their purpose.  
• Financial or operational struggles with no feasible path forward.  
• A strategic decision to exit the Vietnamese market.  

Legal Grounds for Dissolution:  

1. The operating period in the company’s charter expires without renewal.  
2. A formal decision by the company’s owners.  
3. Failure to meet minimum legal membership requirements for six consecutive months.  
4. Business registration certificate revocation due to non-compliance.  

Steps to Dissolve a Company:  

1. Decision and Plan: The owners must issue a formal decision outlining the reasons for closure, a liquidation plan, and procedures for paying outstanding debts.  
2. Announcement: Notify stakeholders, including employees, creditors, and the Business Registration Office. Publicize the decision on the National Database and at the company headquarters.  
3. Asset Liquidation: Settle all debts, taxes, and liabilities. Liquidate assets and divide the proceeds among owners based on ownership percentages.  
4. Tax Clearance: Finalize tax obligations and obtain a tax clearance certificate from the tax authorities.  
5. Employee Settlement: Terminate employment contracts, settle salaries and benefits, and obtain confirmation from labor authorities.  
6. Bank Closure: Close all company bank accounts and secure closure certificates.  
7. Business Deregistration: File an application to cancel the Enterprise Registration Certificate (ERC), tax code, and, if applicable, the Investment Registration Certificate (IRC).  

Cost and Timeline:  

Dissolution can take anywhere from 1 month to a year, depending on the complexity of the business and the speed of administrative procedures.  

State fees are minimal, but professional service fees range from VND 10–20 million for small companies. For larger businesses, costs can be higher.  

Challenges in Closing a Business in Vietnam

Whether suspending or dissolving, foreign business owners may face challenges:  

1. Tax Compliance: Finalizing taxes can be complex, requiring meticulous records and possible inspections.  
2. Stakeholder Coordination: Involving employees, creditors, and partners in the process is crucial.  
3. Labor Obligations: Terminating contracts and ensuring compliance with Vietnamese labor laws can be sensitive.  
4. Administrative Delays: Obtaining approvals and certificates from multiple authorities can be time-consuming.  

Tips for a Smooth Dissolution Process  

1. Work with Professionals: Engage experienced legal and accounting professionals to handle paperwork, navigate regulations, and ensure compliance.  
2. Maintain Records: Keep detailed documentation of all financial transactions, contracts, and decisions to simplify the process.  
3. Communicate Clearly: Inform stakeholders early, providing clear timelines and resolving concerns promptly.  
4. Be Proactive: Anticipate challenges by conducting due diligence and addressing potential liabilities before initiating the process. 

Which Option is Right for You?  

• Choose Suspension if you want to pause operations while retaining the ability to restart. This is ideal for temporary challenges or uncertainty about long-term closure.  
• Choose Dissolution if you’re ready to permanently close your company and have resolved all debts, taxes, and obligations. 

Conclusion    

Navigating the suspension or dissolution process in Vietnam requires careful planning and execution. By understanding your options, following the prescribed steps, and seeking professional support when needed, you can handle this transition efficiently.  

Whether you’re pausing your operations or closing your business for good, being informed about the procedures, costs, and timelines will help minimize stress and ensure compliance with Vietnamese regulations.  

Need Assistance? If you’re considering suspension or dissolution for your company in Vietnam, consulting a business service provider can save you time and effort. Professional assistance ensures your process is handled smoothly and meets all legal requirements.