Several years later, the owner returned to finally close the company. By then, the taxes, fees and penalties totaled around VND100 million. His previous business had failed, and he was already struggling financially. Where could he find that kind of money to close a company that had long ceased to operate?

The situation above is part of a much bigger problem. In the middle of this year, taxation agencies launched a campaign to clean up tax identification numbers, reviewing more than 617,000 outstanding cases. Of these, nearly 292,000 were businesses that had ceased operations but had not completed dissolution procedures, while around 325,500 were businesses no longer operating at their registered addresses and had outstanding tax debts.

Don't lump failed businesses together with fraudsters

The tax authorities' caution is understandable. ‘Bogus’ companies, invoice trading, and abandoning of registered addresses to evade taxes or avoid creditors are all real problems that must be dealt with.

But among those hundreds of thousands of cases are many businesses that simply failed, ran out of capital and shut down. When their owners return years later to complete dissolution procedures, the accountants may have left, documents may have been lost, and former capital contributors may have gone to different places.

Meanwhile, tax obligations and debts still have to be settled before a company can officially close. The situation is even more difficult for businesses that have become insolvent, because they may not meet the conditions for dissolution and instead have to go through bankruptcy proceedings. 

For a small business that has run out of money and virtually has no staff or operating apparatus left, completing the process can be even harder than starting the company in the first place.

Therefore, businesses that genuinely no longer operate need a simple way to close legally, rather than remaining on the system simply because their owners cannot afford to complete all the procedures.

Give clean businesses a "green lane"

In the first eight months of the year, tax authorities handled nearly 72,000 outstanding cases dating from 2025 and earlier and is reviewing the obligations and penalties of businesses under Status 03, i.e., taxpayers that have ceased operations but have not completed procedures to terminate the validity of their tax identification numbers, and Status 06. i.e., taxpayers no longer operating at their registered addresses.

This is an opportunity to separate businesses that have been inactive for years, with no revenue, invoices or disputes, and allow them to close quickly instead of treating them like potentially high-risk cases. Singapore and the UK have adopted similar approaches.

Another obstacle is the accumulation of fees, charges and penalties during the period when businesses are no longer operating. Tax debts, unpaid wages and debts to creditors obviously have to be settled, but charges that arise mainly because the business closure procedures were left unfinished for years should be reconsidered.

In reality, many people leave a business after running out of money. When they return several years later, the amount they have to pay to close the company may have exceeded what they can afford. Some may now be working as employees, while their old businesses remain on the system simply because they lack the money and time to close them.

Leaving a back door open

The Tax Department has called for action to address the prolonged processing of cases, the practice of requiring additional documents and the assignment of responsibility to heads of agencies.

An official approves the termination of a company's tax identification number. Several years later, an inspection or audit discovers an old outstanding obligation. The official who signed the decision may well be asked to explain the decision made years earlier.

Therefore, the rules governing cases eligible for expedited closure must be sufficiently clear. If an official has acted correctly, there must also be a legal basis to protect that decision later. Without addressing that concern, it will be difficult to ask officials handling these cases to sign off decisively.

Closing and starting anew

Reviewing more than 617,000 cases is an opportunity to resolve the massive backlog of long-inactive companies on the system.

The task for this review is clear: providing genuinely inactive businesses with a clear path to close without continuing to pay penalties for procedures left unfinished years ago.

Entrepreneurs may fail once, or even multiple times. But if every failure leaves behind an unclosable legal entity weighed down by compounding fees and penalties, few will ever want to try again.

Tu Giang