At the Information Technology Monitoring Centre under the Department of Taxation. Experts said that closing a business must become simpler. — VNA/VNS Photo Phạm Hậu

Compiled by Mai Linh

HÀ NỘI — Starting a business in Việt Nam has become increasingly simple, with entrepreneurs able to register online and begin operations within days. Closing one, however, can be a very different story.

For thousands of businesses that have stopped trading, shutting the door for good can mean months or even years of tax procedures, paperwork and accumulated obligations, leaving companies that are economically dead still alive on paper.

An active tax identification number can keep a business on official records and allow obligations to accumulate even after revenue has dried up. Tax declarations, invoices, accounting records and late-payment charges can remain unresolved until the company completes procedures to terminate its tax code.

For some, the cost of closing a business can run into tens of millions of Vietnamese đồng. For others, years of accumulated obligations can turn a failed business into a problem they simply choose to leave unresolved.

One business owner who had stopped trading years earlier said he faced about VNĐ30 million in business licence fees, late payment charges and penalties when she returned in 2026 to close the tax code. Another company that had stopped operating in 2016 faced a potential bill of about VNĐ53 million.

The burden could, however, soon begin to ease.

Prime Minister Lê Minh Hưng said at a meeting on September 10 that Government policy should make it easier for businesses to both enter and leave the market. He asked for efforts to make business registration as simple as possible while streamlining dissolution and bankruptcy procedures for inactive businesses. 

His remarks came as the tax authorities stepped up a nationwide campaign launched in July to clean up tax database.

More than 617,000 tax identification numbers have been flagged for review, according to data from the Department of Taxation. Of these, nearly 292,000 have ceased operations but have not completed procedures to terminate their tax codes. Another 325,500 are no longer operating at their registered addresses and have outstanding tax debts.

IAM law firm director and lawyer Nguyễn Quốc Toản said relatively small unresolved issues such as missing invoices, unfiled declarations, employee expenses or bank transactions could become major obstacles when a business finally tries to close.

Lawyer Hoàng Hà from the HCM City Bar Association commented: "If hundreds of thousands of businesses are dead in reality but alive in the system, it is not just a question of compliance. It is also a signal that the mechanism for leaving the market needs to be reviewed."

Making it easier to leave

A taxpayer checks the e-tax mobile app on his phone. — VNA/VNS Photo Quang Thái

Experts say the solution should not be to remove tax obligations for businesses that have genuinely incurred them, but to create a simpler exit mechanism for companies that have ceased operations without signs of fraud or tax evasion.

The challenge is to distinguish between businesses that deliberately evade taxes and those that genuinely stopped operating but failed to complete administrative procedures.

Hà said authorities should move towards a risk-based approach, which allows businesses that have been inactive for a long period, have no assets, employees, invoices or disputes, and have no outstanding tax liabilities or only minor administrative obligations to qualify for simplified dissolution procedures.

That would allow tax officials to focus their resources on higher-risk cases, such as businesses showing unusual invoice activity, unexplained revenue, asset transfers, tax debts or other signs of fraud.

Authorities should also consider ways to encourage inactive businesses to return to the formal system, including simpler procedures for correcting outstanding records and lower penalties for purely administrative violations, Hà said.

For a business that is genuinely dead, the goal should be to close the case quickly and transparently, rather than making the process so difficult that the business simply continues to leave it unresolved, he added.

Former tax official Nguyễn Ngọc Tú proposed considering automatic termination of tax codes for businesses that have recorded no transactions or tax declarations and have not operated at their registered addresses for a specified period, such as three years.

The tax code could be restored if the business returns and provides an explanation, he said.

Lawyer Nguyễn Văn Được, director general of Trọng Tín Accounting and Tax Consultancy, proposed allowing businesses to dissolve quickly on the basis of self-declaration and self-responsibility.

Business owners could commit to personal responsibility for tax obligations if authorities later discovered violations during post-closure inspections, he said. Such an approach could speed up the exit process while preserving the State’s ability to pursue wrongdoing later.

But Được warned against simply writing off tax debts or penalties, saying that a blanket cancellation will risk creating an unfair precedent for businesses that have complied with their obligations.

Chairwoman of the Vietnam Tax Consultants Association Nguyễn Thị Cúc said taxpayers should be classified based on a risk evaluation.

Businesses involved in illegal invoice trading, tax evasion or fraudulent registration should face strict enforcement. But for businesses that have genuinely stopped operating and have no revenue, expenses or tax debts, authorities could consider not collecting business licence fees, late payment charges or penalties for late tax filings during the period of inactivity, she said.

Mạc Quốc Anh, deputy chairman of the Hanoi Association of Small and Medium Enterprises, said that for small businesses, one major obstacle was simply not knowing what needs to be done.

He proposed a streamlined online procedure allowing taxpayers to see all their outstanding obligations, settle the amounts due and receive confirmation of termination through a single system.

When a business submits a request to leave the market, the system could automatically reconcile its obligations and produce a single statement showing what remains to be settled, he said.

Solutions expected

Tax authorities in Hải Phòng conduct a review to clean up tax data. — VNA/VNS Photo Hoàng Ngọc

The Department of Taxation is aware of the problem and is working on solutions to ease the process for businesses seeking to complete dissolution, while maintaining the principle that genuine tax liabilities must be paid.

Nguyễn Thị Thu, head of the Tax Operations Division at the Tax Department, said the agency had identified difficulties arising from outstanding tax debts and filing obligations accumulated between the time a taxpayer stopped operating and the time it returned to complete procedures.

Solutions were being proposed to the relevant authorities, she said.

For taxpayers that have completed their obligations with the State budget and submitted the required documents, the tax authority could now complete procedures to terminate the validity of a tax code within three working days, Thu said.

The campaign has so far cleaned up about 95,000 tax identification numbers in the first eight months of the year, with more than 3,000 restored as businesses returned to production and business activities.

The figures show that the campaign is not simply about removing inactive businesses from the tax system, but is also intended to identify businesses that can return to the market and those that may have used dormant legal entities for illegal invoice trading or tax evasion.

“We need to distinguish between taxpayers that have complied and those that deliberately violate the law,” Thu said.

The clean-up is also part of a wider push to build more accurate and integrated Government databases, which officials see as a foundation for digital government and more reliable economic data.

Experts say the ultimate goal of the clean-up campaign should not be to collect every outstanding fee, but to create a transparent and lawful business environment while clearly distinguishing genuinely struggling businesses from those deliberately exploiting legal loopholes to evade their obligations.

The task now is to give businesses that have already failed a lawful way to close the chapter. — VNS