Closing a foreign-invested company in Vietnam is usually harder and slower than opening one. The authorities will only approve termination once every tax, employment and financial obligation has been settled, and there is no shortcut through that stage.
Background
Liquidation is a sequential process involving several authorities: the investment registration body, the business registration body, the tax authority, the social insurance agency and your bank. Each step depends on the outcome of the one before it.
The stage that consumes most of the timeline is almost always the closing tax finalisation. The tax authority reviews all periods still within the limitation window before allowing the tax code to be closed, so anything accumulated over the years is dealt with in one exercise at exactly this point.
Only after financial obligations are settled and the tax code closed can the investor repatriate remaining capital through the direct investment capital account. Companies that abandon the process midway typically end up with a suspended tax code for years and an investor who cannot recover the balance.
Common challenges
- Underestimating time and cost. Exits planned for a few months routinely run much longer once the tax finalisation stage begins.
- Years of exposure surfacing at once. Errors never previously identified are all reviewed at closing, producing assessments and interest that were not budgeted for.
- Employee obligations unfinished. Social insurance books not closed and severance not fully settled will stop the file from progressing.
- Assets and inventory unresolved. Disposal of fixed assets and remaining stock has its own tax consequences and needs planning rather than being left to the end.
- Abandoning the process midway. Ceasing operations without completing the procedure leaves filing obligations running, penalties accruing and capital trapped.
How TrustlineAX helps
- A realistic exit plan. An assessment of your tax, employment and asset position, turned into a sequenced plan with an honest estimate of duration and cost.
- Exposure dealt with before the authority finds it. Review of open periods and voluntary remediation ahead of the closing review, which is what actually determines how long the exit takes.
- Your people settled correctly. Termination of employment contracts, severance calculated and paid, and social insurance books closed for every employee.
- Assets and liabilities cleared. Advice on disposal of assets and inventory, reconciliation and settlement of receivables and payables.
- Tax code closed. Closing finalisation carried out and the tax authority worked through to confirmation and deregistration.
- Licences surrendered and accounts closed. Termination of the investment project, surrender of the Enterprise Registration Certificate, bank account closure and seal cancellation.
- Capital returned to the investor. Repatriation of the remaining balance through the correct channel under foreign exchange rules.
How we work
- Position assessment. We establish the real scale of work across tax, employment, assets and liabilities.
- Clean-up. Tax exposure remediated and employee entitlements settled before the formal procedure starts.
- Formal resolution and notification. Liquidation resolution drafted, authorities and interested parties notified.
- Closing tax finalisation. We work with the tax authority through to confirmation and closure of the tax code.
- Completion and repatriation. Licences surrendered, accounts closed, seal cancelled and remaining capital returned.
Frequently asked questions
How long does liquidation take?
There is no standard duration. The determining factor is the state of your tax records: a clean history moves substantially faster, while significant backlog can extend the process to many months or beyond a year.
Can we simply stop operating instead?
A company may register a temporary suspension of business for a defined period, but that is only a holding measure. Ceasing activity without any filing leaves declaration obligations running and attracts penalties.
Will the investor recover the full capital?
The remaining balance is returned after the company has discharged its financial obligations, including tax, employee entitlements and other creditors. What is actually recovered depends on the financial position at liquidation.
Is an audit required before liquidation?
Requirements depend on the circumstances and on what the authorities request. In practice a company generally needs financial statements prepared to the liquidation date as the basis for the closing tax finalisation.