Temporary business suspension is a legal and necessary solution that helps businesses overcome difficult periods, restructure, or await new business opportunities. However, if not carried out in compliance with legal procedures, businesses may face risks such as penalties, tax code suspension, or loss of business rights. APEX PARTNERS offers comprehensive temporary business suspension services, ensuring legal compliance and saving time for your business.
What is temporary business suspension?
Temporary business suspension is when a business, household business, or economic organization decides to halt all business activities for a certain period of time without dissolving or completely terminating its legal existence.
According to the 2020 Enterprise Law, businesses have the right to proactively suspend their business operations but must notify the state authorities and ensure the completion of all tax and insurance obligations.
When should a business temporarily suspend operations?
Temporary business suspension can be considered in the following cases:
- Revenue is insufficient to cover operating costs.
- Lack of working capital and inability to mobilize new resources.
- Legal issues that cannot be resolved immediately.
- The business is undergoing restructuring or changing its line of business.
- Waiting for favorable investment opportunities, partners, or market stability.
Legal basis for temporary business suspension
- Article 206 – Enterprise Law 2020.
- Decree No. 01/2021/ND-CP on enterprise registration.
- Decree No. 122/2021/ND-CP on administrative sanctions in the fields of accounting and taxation.
- Circulars guiding by the Ministry of Finance and the General Department of Taxation.
Conditions and duration of temporary suspension
A business is entitled to suspend operations for up to 12 months at a time, with no limit on the number of suspensions. Notification must be given at least 3 working days in advance. During the suspension period:
- No new contracts may be signed.
- No new invoices may be issued.
- Outstanding tax obligations must be fully settled.
The obligations of a business during its period of temporary suspension.
- Declare and fully pay all previously incurred taxes.
- No new VAT invoices shall be issued.
- The business is still required to pay the business license tax if the suspension does not start at the beginning of the year.
- Not allowed to sign or perform any new contracts.
Key notes
- Early-year suspension: If the suspension is notified before January 30 and the business has not commenced operations, it will be exempt from the business license fee.
- Mid-year suspension: The business may suspend operations if there are no arising transactions, but tax declarations are still required.
- Extension: A notice must be submitted before the suspension period expires.
Consequences of failing to notify suspension in accordance with regulations
- A fine ranging from 10 to 15 million VND
- Marked as a violator in the national business registration system
- The enterprise may have its tax code deactivated or its business license revoked
- Late payment interest on taxes may arise.
Comparison between business suspension and dissolution
| Criteria | Temporarily closed | Business dissolution |
|---|---|---|
| Legal status | Still exists | Loss of legal status |
| Time | Up to 1 year per suspension, renewable. | Complete termination |
| Tax obligations | Taxes must still be declared before the suspension. | Finalization of all tax obligations |
| Cost | Low | More costly |
| Ability to resume operations | Yes | No |
Frequently Asked Questions (FAQs)
Can I suspend business operations in the middle of the year?
Yes, but you must notify at least 3 days in advance and fulfill any financial obligations if applicable.
Do I need to pay taxes during the suspension period?
Only taxes incurred before the suspension must be paid. If there are no arising obligations, no payment is required.
Can I sign contracts during the suspension period?
No. All business activities, including contract signing, are not permitted during the suspension.
Will my business license be revoked if I suspend operations for several consecutive years?
No, as long as you follow proper procedures and fulfill tax obligations.
Conclusion
Properly suspending business operations in accordance with regulations helps ensure legal compliance and builds a strong foundation for future resumption. Let APEX PARTNERS accompany you and provide comprehensive support — so you can focus confidently on your long-term development strategy.