Taxes and Temporary Business Suspension in Vietnam

Tax Filing Obligations and Early Resumption Explained for Foreign-Owned Companies

Running a business in Vietnam is rarely linear. Market slowdowns, funding delays, restructuring, licensing issues, or internal operational challenges can force even well-managed companies to pause operations temporarily. For foreign business owners and SMEs, one of the most common questions during these periods is deceptively simple:

Do we still need to file tax returns while the business is suspended?

Closely followed by a second, equally important concern:

If conditions improve, can we resume operations before the announced suspension period ends?

These questions are not academic. Filing incorrectly, resuming too early without notification, or misunderstanding invoice obligations can trigger compliance risks, penalties, or unwanted scrutiny from tax authorities.

This article provides a clear, practical explanation, grounded strictly in Vietnamese law, to help foreign-owned enterprises make informed decisions during temporary business suspension. It is based on Decree 126/2020/ND-CP and Decree 168/2025/ND-CP, two key regulations governing tax management and business registration during suspension periods.

Does a Business in Vietnam That Temporarily Suspend Operations Still Need to File Tax Returns?

This is the most critical issue for companies under financial or operational stress.

Legal basis

The governing regulation is Clause 2, Article 4 of Decree 126/2020/ND-CP, which regulates tax management for taxpayers during periods of temporary suspension of business operations.

General rule

If a business has properly registered a temporary suspension of operations, it is generally not required to file tax returns during the suspension period.

However, this rule is conditional and must be applied carefully.

Key Conditions for Vietnam Company Suspension and Filing Tax Reports

1. Full suspension period requirement
   • If the business suspends operations for a full month, quarter, calendar year, or fiscal year, tax returns are not required during that period.
   • If the suspension is shorter than a full reporting period, tax filing obligations still apply.
2. Short suspension exception
   • If the suspension is less than a full month or quarter, the business must still submit:
     • Monthly or quarterly tax returns
     • Annual tax finalization returns
   • This applies even if there is no revenue during that partial period.
3. Household businesses and individuals
   • Household businesses or individual business owners using the lump-sum tax method will have their tax obligations reassessed by the tax authority.
   • This reassessment follows regulations issued by the Ministry of Finance.
4. Invoices and invoice reporting
   • During suspension, businesses are not allowed to use invoices and are not required to submit invoice usage reports.
   • If invoice use is exceptionally approved by the tax authority, normal tax declarations and invoice reporting obligations resume.
5. Ongoing compliance obligations
   • Even during suspension, businesses must still comply with:
     • Tax debt collection decisions
     • Tax enforcement measures
     • Tax inspections or audits
     • Administrative violation handling under tax law

What this means for a Foreign Owned Business in Vietnam

Temporary suspension reduces filing obligations, but it does not remove tax authority oversight. Any misalignment between suspension dates and reporting periods can unintentionally trigger non-compliance.

Can a Foreign Owned Business in Vietnam Resume Operations Before the Announced Suspension Period Expires?

Yes. Vietnamese law explicitly allows businesses to resume operations earlier than planned.

Legal basis

This is regulated under Clause 6, Article 60 of Decree 168/2025/ND-CP, which governs:

• Temporary suspension of business operations
• Early resumption of operations
• Legal status updates for enterprises, branches, and business locations

What the law allows

1. Early resumption is permitted
   • A business may resume operations before the originally registered suspension end date.
   • This applies to:
     • Enterprises
     • Branches
     • Representative offices
     • Business locations
2. Legal status update
   • Upon suspension, the business status is updated from “Operating” to “Temporarily suspended operations.”
   • Upon early resumption, the provincial business registration authority updates the legal status back to “Operating.”
3. Simultaneous updates
   • The enterprise and its branches, representative offices, and business locations are updated simultaneously in the National Business Registration Database.
   • This avoids mismatches between head office and dependent units.

What this means for a Foreign Owned Business in Vietnam

Early recovery is allowed, but resumption is not automatic. Notification and compliance obligations still apply, particularly for tax matters.

Is Prior Notification Required If a Business Resumes Operations Early?

This is where many businesses make costly mistakes.

Legal basis

The notification requirement is governed by Clause 3, Article 4 of Decree 126/2020/ND-CP.

Three distinct scenarios

1. Resuming on the registered suspension timeframe
   • If the business resumes operations on the originally registered suspension period, no additional notification is required.
   • This applies only if operations restart exactly within the approved timeframe.
2. Resuming before the scheduled suspension end date
   • If operations resume earlier than planned, notification is mandatory.
   • The business must notify the authority where the suspension was registered.
3. Special cases requiring advance notice
   • Certain taxpayers must notify the directly managing tax authority at least one working day before resuming operations.
   • This typically applies where invoice usage or specific tax management conditions are involved.

What this means for a Foreign Owned Business in Vietnam

Once business activities restart early, the company must fully comply with all standard tax and reporting obligations, including:

1. Tax declarations
2. Tax return submissions
3. Invoice issuance and invoice usage reports
4. Compliance with inspection and audit requirements

Resuming business without notifying the appropriate authority can retroactively invalidate the suspension period, exposing the company to tax penalties and administrative violations.

Common Risks Foreign-Owned Businesses Should Watch For

Temporary suspension is often seen as a pause button. In Vietnam, it is more accurately a regulated compliance state.

Key risks include:

1. Incorrect suspension period registration
2. Partial-period suspensions triggering unexpected tax filings
3. Early resumption without notification
4. Unauthorized invoice issuance during suspension
5. Assumption that suspension removes audit or enforcement exposure

These issues are especially common among foreign-owned SMEs unfamiliar with Vietnam’s procedural tax enforcement approach.

Strategic Guidance for Foreign Owned Businesses in Vietnam Under Temporary Suspension

For companies navigating financial difficulty, restructuring, or market uncertainty, the suspension framework can be used effectively if managed correctly.

Recommended best practices:

1. Align suspension dates precisely with tax reporting periods
2. Confirm invoice permissions before issuing any documents
3. Plan early resumption with advance notice timelines
4. Maintain clean accounting records even during inactivity
5. Document all communications with tax and registration authorities

Conclusion

Vietnamese law provides businesses with flexibility during periods of hardship, including the ability to suspend operations and resume early when conditions improve. However, this flexibility is tightly regulated.

Under Decree 126/2020/ND-CP and Decree 168/2025/ND-CP, businesses that temporarily suspend operations are generally exempt from filing tax returns, but only if suspension periods align correctly with reporting cycles. Early resumption is permitted, but notification and full tax compliance obligations resume immediately.

For foreign business owners and SMEs, understanding these rules is essential to avoiding unnecessary penalties while preserving operational agility.

United Consulting is here to help!

If your business is considering temporary suspension, early resumption, or is already facing compliance uncertainty in Vietnam:

1. Review your registered suspension dates against tax reporting periods.
2. Confirm your invoice usage status with the tax authority.
3. Seek professional guidance before resuming operations early.

Proper planning now can prevent regulatory complications later.