Procedures to stop household business can

In business, it is difficult to avoid times when you encounter difficulties and cannot continue to operate. Especially during the time when the Covid epidemic has become complicated. Household businesses are no exception. Faced with these difficulties, business owners are forced to find solutions or pay attention to procedures for stopping individual business.

But how long will it take to stop doing business, and what are the legal consequences of ceasing business?

According to stipulations in Clause 1, Article 91 of Decree 01/2021/ND-CP If a business household needs to temporarily suspend business for 30 days or more, it must notify District business registration authority where the business is registered and the Tax Administration Agency.

Procedures to stop individual household business at the business registration authority

At least 03 working days before suspending business, business households must send notification documents to the business registration authority.

Dossier components include:

– Notice of business suspension (Appendix form Appendix III-4 Circular 01/2021/TT-BKHDT);

– Copy of household member meeting minutes in case household members register for business.

Where to submit an application to temporarily suspend individual household business?

Agencies with authority to process documents:

• The economic department of the district-level People’s Committee, where the specific submission place is the 1-stop department of the district-level People’s Committee.

Processing time:

After receiving all valid documents, the application receiving department will issue a Receipt of appointment to resolve after 3 working days. At the end of this period, the business household will receive a notice of approval to temporarily suspend operations

Procedures for stopping operations at the tax administration agency

During a period of 15 (fifteen) days before suspending business, the business household must send a Notice of temporary business suspension and request for tax exemption or reduction, form 01/MGTH issued with Circular 156/2013/TT-BTC to the tax department where the business household was established.

The tax authority will base on the time of temporary suspension or shutdown of business of flat tax payers to determine:

• Amount of tax to be exempted or reduced and issuance of Decision on tax exemption or reduction, form No. 03/MGTH
• Notification of non-exemption or reduction of tax, form No. 04/MGTH, Tax amount of flat tax payers exempted or reduced due to temporary suspension or shutdown of business is determined as follows:

In case a flat tax paying Household takes consecutive leave for 01 (one) month or more (from the 1st day to the end of the last day of that month) or more:

• Reduce 1/3 of the VAT and personal income tax payable for the quarter;
• If you take 02 (two) months or more of consecutive leave, you will receive a reduction of 2/3 of the VAT and personal income tax payable for the quarter.
• If you leave for the entire quarter, you will reduce the entire amount of VAT and personal income tax payable for the quarter.

In case a Business Household paying flat tax temporarily stops or stops doing business for less than a full month, the flat tax payable of the month will not be reduced.

In case during the business break, the flat tax paying Household still does business, it must pay VAT and personal income tax according to the tax authority’s notice.

Example 34: Mr. A is a business individual whose flat tax payable in 2014 is 12.6 million VND (of which VAT is 7.8 million, personal income tax is 4.8 million). In 2014, Mr. A had a continuous break from business from February 20 to the end of June 20. Before leaving, Mr. A sent to the directly managing Tax Department a Notice of temporary suspension or cessation of business within the prescribed period.

Mr. A’s tax obligations during his business break are determined as follows:

– Mr. A’s consecutive months off from business are March, April and May;

– Monthly value added tax amount is 650,000 VND (7.8 million VND/12 months);

– Monthly personal income tax amount is 400,000 VND (4.8 million VND/12 months).

Therefore:

– In the first quarter: Mr. A takes a break from business for 1 continuous month (March), so Mr. A does not have to pay March’s VAT of 650,000 VND and is entitled to a personal income tax reduction of 400,000 VND in March corresponding to 400,000 VND.

– In the second quarter: Mr. A stopped doing business for 2 consecutive months, so Mr. A did not have to pay VAT of April and May of 1.3 million VND and received a reduction of personal income tax of April and May of 800,000 VND, respectively.

Handling violations related to failure to notify business suspension for individual households
According to the provisions of Article 42 of Decree 50/2016/ND-CP:

– Acts of temporarily ceasing business without notifying or notifying on time in writing to the district business registration authority where the business household is registered: Warning or fine from 500,000 VND to 1,000,000 VND

– Do not conduct business activities within 06 months from the date of issuance of the Business Registration Certificate; Cessation of business activities for more than 6 consecutive months without notifying the district business registration authority: Fine from 1,000,000 VND to 2,000,000 VND.

In addition, business households may also have their Business Registration Certificate revoked.Above is all of ANT Legal’s legal advice related to procedures for stopping individual household business. To receive tax exemptions and reductions and avoid being handled for violations related to temporary business suspension, business households need to strictly comply with the above regulations.