BUSINESSES AT THE END OF 2025: A WAVE OF MARKET EXIT, LEGAL RISKS SPILLING OVER TO INDIVIDUALS, AND COMPREHENSIVE SOLUTIONS

Suspension of operations or withdrawal from the market does not mean that businesses has “closed” all of theirs obligations. If legal dossiers and tax liabilities are not properly and conclusively handled, risks of tax reassessment, administrative penalties, and long-term legal consequences for the legal representative may continue to arise over time.

BUSINESSES AT THE END OF 2025: A WAVE OF MARKET EXIT, LEGAL RISKS SPILLING OVER TO INDIVIDUALS, AND COMPREHENSIVE SOLUTIONS

1. The Business Landscape at the End of 2025: Key Figures That Cannot Be Ignored

By the end of 2025, Vietnam’s business community is witnessing a large-scale wave of market exits, accompanied by a series of legal and tax consequences that many enterprises and legal representatives have not fully anticipated. According to statistics from the General Statistics Office (Ministry of Finance), in October alone, nationwide there were 6,065 enterprises registering temporary suspension of business operations for a definite period; 6,771 enterprises ceasing operations while awaiting dissolution procedures; and 4,536 enterprises completing dissolution procedures.Cumulatively from the beginning of the year, 190,600 enterprises withdrew from the market, representing an increase of 10.1% year-on-year. On average, approximately 19,100 enterprises exited the market each month.

2. Suspension Without Dissolution – Hidden Legal Risks

In practice, enterprises typically decide to suspend business operations for two main reasons. First, suspension is used as a measure to freeze operations, reduce costs, and wait for market recovery in order to resume business when conditions become more favorable. Second, suspension serves as an interim step toward dissolution, often because tax–accounting obligations, outstanding debts, labor issues, or related contracts have not yet been fully resolved.

However, regardless of the reason, it must be clearly understood that suspension does not terminate legal person status. An enterprise only fully terminates its legal obligations upon completion of dissolution or bankruptcy procedures. Therefore, if an enterprise remains suspended for an extended period without maintaining compliance or monitoring tax and accounting obligations, risks of reassessment, penalties, and late-payment interest may still arise and accumulate over time.

Pursuant to Clause 2, Article 4 of Decree No. 126/2020/ND-CP, during the period in which a taxpayer suspends business operations, the following key points should be noted:

a) Taxpayers are not required to submit tax declarations, except where the suspension does not cover a full month, quarter, calendar year, or fiscal year, in which case monthly or quarterly tax returns and annual finalization dossiers must still be submitted.

b) Household businesses and individual business taxpayers applying the presumptive tax method and suspending operations shall have their presumptive tax obligations reassessed by the tax authority in accordance with regulations of the Minister of Finance.

c) Taxpayers are not permitted to use invoices and are not required to submit reports on invoice usage. Where taxpayers are approved by the tax authority to continue using invoices in accordance with invoice regulations, they must submit tax declarations and invoice usage reports as prescribed.

d) Taxpayers must comply with decisions and notices issued by tax authorities regarding debt collection enforcement, enforcement of administrative decisions on tax administration, tax inspections and examinations, and handling of administrative violations in tax administration in accordance with the Law on Tax Administration.

3. Risks Extend Beyond Enterprises – Direct Impact on Individuals

In practice, many typical situations arise, such as individuals standing as legal representatives for multiple enterprises; enterprises having ceased operations for many years without completing dissolution procedures; violations arising from failure to declare or finalize taxes in accordance with regulations. As a result, legal representatives may be subject to tax enforcement measures, and in certain serious cases, may even face restrictions on exit and entry in accordance with applicable regulations.

Notably, these risks do not depend on the size of the enterprise but rather on the level of compliance and the manner in which legal, tax, and administrative obligations are handled when the enterprise enters a state of suspension.

4. Legal and Tax Advisory Services for Enterprises During Suspension and Dissolution

In the context of hundreds of thousands of enterprises exiting the market, it has become increasingly evident that the greatest risks often arise not during active business operations, but during the period after operations have ceased, when legal and tax matters are handled improperly or left unresolved. Without regular legal advisory services, periodic tax reviews, and a clear plan to address obligations from the moment operations are suspended, tax arrears and late-payment penalties may accumulate over time and eventually escalate into enforcement risks, directly affecting the legal representative.

Accordingly, proper, complete, and conclusive enterprise dissolution has become a necessary solution to fully terminate outstanding legal obligations, prevent future tax enforcement risks, and protect legal representatives from prolonged liability.

A comprehensive dissolution service should be implemented on an end-to-end basis, including a full review of the enterprise’s legal status and tax obligations; examination of invoices, tax returns, penalties, and late-payment interest; advisory on tax debt settlement solutions (if any); tax finalization prior to dissolution; direct liaison with tax authorities and business registration authorities; completion of dissolution dossiers in full compliance with regulations; and ongoing support until the enterprise’s legal status is fully terminated.

At the same time, for enterprises that remain operational or are considering suspension, legal and tax advisory services play a preventive role by conducting periodic reviews of tax obligations, controlling declaration and finalization risks, providing early warnings of potential enforcement, reviewing the responsibilities of legal representatives, and advising on appropriate suspension, dissolution, or restructuring options. This enables enterprises to proactively ensure compliance and helps individuals associated with the enterprise eliminate legal risks in preparation for their next plans.

Enterprise dissolution should not be viewed as a failure, but rather as a timely legal governance decision: a proactive termination of legal person status when operational conditions no longer exist; a resolution of incomplete obligations; a limitation of tax risks and prolonged liability for legal representatives; and, most importantly, a foundation for individuals and enterprises to restart safely and transparently, with clean records, clearly settled obligations, and a proactive mindset for the next stage.

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