Stringent tax procedures blocking thousands of businesses from exiting market

Complex tax procedures and bureaucratic obstacles are preventing hundreds of thousands of Vietnamese businesses from closing down. Ms. N.T.H., a construction materials business owner in Hanoi, has been frustrated by the regulatory maze. She had to pay a tax debt after 10 years of inactivity, despite her company not operating for years.

Mr. C.V.H., who registered a media firm in Ho Chi Minh City in 2020, now faces a VND40 million (US$1,540) demand for accumulated licensing fees and steep late penalties. Business owners in Hanoi, HCMC, and elsewhere have highlighted tax-related administrative procedures as the primary reason corporate dissolutions are repeatedly bogged down.

Despite the Enterprise Law allowing dissolution updates after 180 days of clearing debts, firms are facing a formidable hurdle of finalizing tax closures. Even short-term businesses without revenue or violations must endure the same complex steps, creating massive paperwork backlogs and unnecessary compliance burdens. Over 600,000 enterprises in Vietnam are currently under strict scrutiny for ceasing operations or abandoning their registered addresses without completing proper dissolution procedures.

The total outstanding corporate tax debt is around VND290 trillion ($11.16 billion), a massive increase of over 21 percent compared to late 2025. The taxation sector has processed nearly 95,000 cases of TIN invalidation, while assisting over 3,500 businesses in restoring their TINs. Tax consultants propose a more tailored mechanism to address these hurdles, including specific qualitative criteria to classify different enterprise groups when undertaking tax procedures for bankruptcy.