Closing a business in Vietnam involves far more than simply ceasing operations. Whether you’re a foreign investor exiting the market or a local entrepreneur winding down due to financial challenges, the process of dissolving a company in Vietnam is governed by strict legal and tax regulations.

Failing to follow the correct steps can lead to unpaid taxes, outstanding labor liabilities, and unresolved debts that may follow you even after the company ceases to function. Moreover, an incomplete or informal dissolution can prevent future investment, delay capital repatriation, or trigger penalties from authorities.

This guide breaks down the step-by-step legal process, highlights common mistakes to avoid, and helps you understand how to formally dissolve a business in Vietnam in a clean, compliant, and risk-managed manner.

Voluntary vs. Involuntary Dissolution: Key Differences

There are two main types of company business dissolution in Vietnam:

• Voluntary dissolution: This is initiated by the business owner(s) or members’ council or shareholders’ meeting through a decision or shareholder resolution. This occurs when the business is no longer viable, has fulfilled its objectives, or plans to withdraw from the market for strategic reasons. Voluntary dissolution provides companies with the opportunity to manage the exit in a structured and transparent manner which would minimize reputational damage and preserve relationships with their partners and regulators.
• Involuntary dissolution: This is ordered by government authorities, typically the Department of Finance (DOF), due to violations such as failure to file reports, non-payment of taxes, or prolonged inactivity. This type of dissolution may involve legal enforcement, asset freezing, or penalties.

In both cases, the business must undergo formal liquidation, tax audits, and deregistration to be officially removed from the National Business Registrar (also known as the National Business Registration Portal). While voluntary dissolution offers more flexibility and planning control, involuntary closure is typically more complex, time-sensitive, and risk-prone.

Legal Prerequisites Before Dissolving a Company

Before initiating the dissolution process, companies must satisfy all financial, operational, and employment-related obligations under Vietnamese laws. This ensures that authorities will accept the dissolution application without unnecessary delays.

Core requirements include:

• Tax compliance: All tax declarations (including Value-Added Tax – VAT, Personal Income Tax – PIT, and Corporate Income Tax – CIT) must be filed and outstanding payments must be settled with the General Department of Taxation (GDT). Any pending penalties or overdue interest must also be cleared;
• Labor termination: Employers must properly terminate all labor contracts in accordance with the labor regulations. This includes providing advance notice, paying severance or unused leave days, and finalizing social insurance contributions for each employee;
• Debt resolution: Companies must notify all creditors and settle obligations including unpaid invoices, loans, or lease payments;
• Operational wind-down: Businesses should cease revenue-generating activities, close open contracts, and stop issuing tax invoices.

Foreign-invested companies must also address:

• Capital repatriation: The remaining registered capital must be legally returned to foreign investors through proper banking channels, which are subject to tax and forex regulations.
• Investment Certificate closure: The Investment Registration Certificate (IRC) must be formally canceled with the licensing authority.

Skipping these steps or submitting incomplete documentation can lead to rejections, fines and remedies or future liabilities for directors and shareholders.

Step-by-Step Process to Dissolve a Company in Vietnam

The general legal steps to dissolve a business in Vietnam are as follows:

1. Adoption of a Resolution to Dissolve: Owners, shareholders, or members must pass a resolution stating the intent to dissolve and appointing a liquidation committee or representative. This step forms the legal foundation for the process and must be documented accurately;
2. Publication of the Notification of dissolution: File a notice of dissolution must be filed with the local business registration office and published on the National Business Registration Portal within 7 days. This public disclosure is essential for notifying third parties and potential creditors;
3. Debt Settlement and Liquidation: The company must settle all financial obligations, sell or distribute remaining assets, and close operations. This step can become complicated for businesses with unresolved disputes, multiple creditors, or missing inventory records. Proper documentation and creditor communication are critical;
4. Tax Finalization: Final tax returns and supporting documents shall be submitted to the tax authority. A tax audit will be conducted before approval. This is often the most time-consuming and complex phase, particularly for companies with historical tax issues or inconsistent filings. Businesses are advised to prepare well in advance and seek professional support;
5. Returning of Licenses and Enterprise Registration Certificate: After tax clearance, all business registration documents, seals, and relevant licenses shall be returned to authorities. It is worth ensuring that all submitted paperwork is consistent with previous filings;
6. Business Deregistration: The DOF will remove the company from the national registrar, officially dissolving the entity. It’s recommended to retain all dissolution records in case of post-closure inspections or audits.

Tax Finalization and Deregistration

Tax clearance is often the most time-consuming step in the dissolution process. The tax authority will review the company’s books, VAT filings, CIT payments, PIT declarations, and invoice usage.

Requirements include:

• Submission of the final Corporate Income Tax (CIT) return;
• Closure of VAT obligations and cancellation of unused invoices;
• Reconciliation of PIT and insurance contributions for employees;
• Settlement of tax arrears or penalties from previous audits.

Common challenges include missing accounting records, late filings, or incorrect tax calculations-all of which can delay the process or result in penalties. Businesses are advised to consult an accountant or tax lawyer before submitting the final declaration.

Liquidation of Assets and Settlement of Liabilities

Asset liquidation involves selling off or distributing remaining company assets in an orderly, transparent, and well-documented manner. This step requires businesses to assess and manage their tangible and intangible property while maintaining compliance with tax and regulatory obligations. Any assets not properly accounted for may raise red flags during the tax clearance process.

These may include:

• Real estate, lease rights, or construction permits;
• Inventory, equipment, or company vehicles;
• Intellectual property such as trademarks, domain names, or proprietary software licenses.

The company must also settle all liabilities before it can proceed to final deregistration, including:

• Pay off debts to vendors, service providers, financial institutions, and tax authorities
• Pay employees any outstanding wages, termination benefits, and final insurance contributions
• Resolve or terminate contracts, including lease agreements, franchise rights, or partnership deals, in accordance with legal terms

If the company holds secured assets, settlement arrangements may require negotiation with creditors or banks to release guarantees. Transparency and documentation are key throughout this process.

In some cases, a liquidation committee is formally appointed to oversee asset and liability resolution, particularly for companies with large asset bases or significant stakeholder involvement. This committee may include accountants, lawyers, or directors tasked with producing a liquidation report, which is submitted to authorities during the dissolution application.

Accurate documentation of all transactions, valuations, and settlements is essential for both legal compliance and successful tax clearance.

Notifying Relevant Authorities and Stakeholders

In addition to tax and business registration offices, the following stakeholders should be notified:

• DOHA (Department of Home Affairs) to deregister employees and close labor records
• Customs Authority, if the business engaged in import and/or export
• Banks, to close company accounts and release any blocked funds
• Licensing bodies, especially in regulated sectors (e.g., education, food or medical devices)
• Clients, vendors, landlords, and joint venture partners, depending on contractual obligations

Public notice of the dissolution ensures transparency and allows any third-party claims to be submitted during the winding-up period.

Common Mistakes and Delays in Company Dissolution

Many businesses underestimate the procedural and documentation burden involved in formal company closure. Common pitfalls include:

• Failing to complete tax clearance, which prevents deregistration
• Terminating employees informally without following legal steps
• Overlooking social insurance debts or payroll liabilities
• Not submitting the public notice or dissolving via shareholder resolution
• Losing important company seals, certificates, or records

These errors can delay the process and may result in fines or legal complications that follow stakeholders after their exit. 

Special Considerations for Foreign-Owned Enterprises

Foreign Direct Investment (FDI) companies have a few additional requirements and considerations that differ from those of domestic businesses. These requirements apply both to wholly foreign-owned enterprises (WFOEs), and to joint ventures and representative offices.

Key legal and regulatory steps include:

• Return or close Investment Registration Certificate (IRC): The company must formally cancel the IRC, which was issued during the initial investment phase.
• Ensure repatriation of remaining capital: Any remaining registered capital or profits must be legally transferred back to the foreign investor in compliance with Vietnam’s foreign exchange control laws. Improper repatriation may be blocked by banks or lead to penalties.
• Notify MOF or DOF: Depending on the level of investment licensing, either the Ministry of Finance (MOF) or the local Department of Finance (DOF) must be notified of the closure.
• Representative office closure: Representative offices, governed by Decree No. 07/2016/ND-CP, follow a separate dissolution process that includes notifying the licensing body, tax authority, and closing bank accounts.

Additional complexities foreign businesses may encounter include:

• Navigating dual licensing (e.g., having both an ERC and an IRC)
• Complying with tax on repatriated capital gains
• Coordinating with banks for capital account closure
• Translating key documents for cross-border communication with parent companies

Engaging experienced legal counsel is highly recommended to manage cross-border documentation, foreign investor notification procedures, and compliance with currency and capital controls. A poorly managed exit can damage a company’s regional reputation, complicate future licensing, and even lead to regulatory scrutiny in future ventures.

Conclusion

Formally dissolving a company in Vietnam is not just a bureaucratic formality, it’s a legal safeguard. A clean exit protects business owners, shareholders, and directors from future liabilities, fines, and reputational damage.

By following a structured approach, preparing documentation in advance, and working with experienced advisors, businesses can close operations smoothly while meeting all Vietnamese legal requirements.

Le & Tran is recognized as a leader in Vietnam’s legal landscape, earning praise from top legal publications like Chambers, Legal500, and Benchmark Litigation, as well as being highly recommended by AmCham Vietnam and the US Consulate. Our top-ranked Litigation Lawyers are known for delivering practical and strategic solutions that protect your rights and interests. Whether navigating complex disputes or resolving sensitive legal challenges, we’re here to guide you every step of the way with precision and professionalism. For professional support in dissolving a company in Vietnam, contact us at info@letranlaw.com.