Procedures on termination of business location of an enterprise

Termination of business location is a procedure a business carries out when ceasing operations at a specific location. For many subjective or objective reasons, businesses want to terminate their business locations. The following article will guide you in detail about the procedures for terminating business operations. Please refer!

Legal regulations on business locations

What is a business location?

According to Clause 3, Article 44 of the  Law on Enterprises 2020, business location is the place where an enterprise conducts specific business activities. The business location must have a definite address and be legally owned or used by the business. Enterprises can register multiple business locations in one or more provinces and centrally run cities.

The business location is a dependent unit of the enterprise and cannot enter into contracts. Enterprises are responsible for business activities at these locations. Business locations can only choose to register one or several industries and occupations in the list of industries and occupations that the company has registered.

Enterprises need to notify the business registration agency where the location is located. Once approved, the business will receive a Business Location Registration Certificate.

Legal basis: Clause 3, Article 44 of the Law on Enterprises 2020, Clause 2, Article 31 of Decree 01/2021/ND-CP on business registration.

Cases requiring termination of business location operations

Termination of business location is when an enterprise decides to close its business location because it is no longer operating effectively or because a state agency decides to close its business location. Thus, it can be understood that an enterprise must terminate its business location in the following specific cases:

• According to the decision of the enterprise itself and must be approved by the competent authority of the enterprise according to the provisions of law and the company’s Charter;
• According to the decision of a competent state agency, if serious violations of the law are detected or do not meet business conditions as prescribed;
• When the enterprise is dissolved or goes bankrupt;
• When the investment license or business registration certificate is revoked;
• Expiration of the operating term stated in the Business Location Registration Certificate if not renewed.

In all cases, enterprises must fully carry out procedures for terminating business locations according to the provisions of law.

Legal basis: Clause 1, Article 213 of the Law on Enterprises 2020, Article 72 of Decree 01/2021/ND-CP on Business Registration.

Process on termination of business location

Step 1: Prepare documents for termination of operation

Enterprises need to prepare complete and accurate documents for terminating business operations, including:

• Notice of termination of business location (according to form Appendix II-20 issued together with Circular 01/2021/TT-BKHDT).
• If the person performing the procedure is authorized, attach: Authorization document and a valid copy of personal identification documents (Passport/Citizen ID card/ID card).

Careful preparation of documents will help the process of terminating operations take place quickly and smoothly.

Legal basis: Clause 2, Article 72, Decree 01/2021/ND-CP on Business Registration.

Step 2: Notify the Tax Authority

Before announcing the termination of business operations, the enterprise must register with the Tax Authority to fulfill its tax payment obligation according to the provisions of tax law. This process includes:

1. Submit documents to the Tax Authority: Enterprises submit documents to the Tax Department or Tax Branch where the business location is managed. Submissions can be made in person or by mail;
2. Perform tax finalization: Enterprises need to perform tax finalization for the business location that terminates operations. The tax finalization deadline is 45 days from the date of notice of termination of operation.

Legal basis: Clause 1, Article 72, Decree 01/2021/ND-CP on Business Registration.

Step 3: Submit documents to the business registration agency

After completing the preparation of documents, businesses proceed to submit documents to the business registration agency. This process includes the following steps:

1. Submit documents to the business registration agency: Enterprises submit documents to the Business Registration Office under the Department of Planning and Investment where the business location is located;
2. Review the validity of the application: After receiving the application, the Business Registration Office sends information about the business location’s termination to the Tax Authority. The tax authority sends comments on the fulfillment of tax payment obligations of the business location to the Business Registration Office.
3. Receive receipt: After submitting the application, the business will receive a receipt. This receipt confirms the time of submission and the list of documents submitted.

Within 05 working days from the date of receipt of the application for termination of business location, the Business Registration Office shall terminate the operation of the business location in the National Business Registration Database. , and at the same time issued a notice about the termination of business location operations.

Legal basis: Clause 2, Clause 3 Article 72 Decree 01/2021/ND-CP on Business Registration.

Step 4: Complete related procedures

After performing the above steps, businesses need to complete a number of related procedures to ensure the termination of business location operations is carried out in accordance with regulations:

1. Enterprises need to liquidate contracts related to business locations such as premises lease contracts, labor contracts, and service provision contracts;
2. If there are employees working at the business location, the enterprise must arrange benefits for them according to the provisions of the Labor Law;
3. Businesses need to handle assets at the business location, possibly by moving to headquarters or liquidating;
4. Enterprises need to update information about the termination of business location operations on documents, publications, and the enterprise’s website;
5. Enterprises need to store all records related to the process of terminating the business location according to the provisions of law.

Completing these procedures helps businesses ensure compliance with the law and avoid legal problems arising after terminating the business location.

Legal basis: Article 72 of Decree 01/2021/ND-CP on Business Registration.

Important notes on termination of business location

When terminating the operation of a business location, businesses need to note the following important points:

• Enterprises must notify the business registration agency at least 10 working days before the intended date of termination of business operations;
• Ensure completion of all financial obligations related to business location;
• There should be a plan to handle assets, debts and other obligations at the business location;
• After completing the termination procedure, businesses need to update information on documents, publications and the company’s website to avoid causing confusion for customers and partners;
• Maintain full records related to the process of terminating business operations;
• Be responsible for obligations arising from the operation of the business location before termination;
• Inform partners and customers about business location termination to maintain good relationships and avoid affecting business operations;
• Review the entire process to make sure no steps are missed;
• Considering the impact on business strategy, businesses need to evaluate and adjust their business plans accordingly;
• In complicated cases, businesses should consider seeking advice from experts to ensure full compliance with legal regulations.

Business location plays a big role in helping businesses reach new markets and partners. Therefore, when deciding to terminate the operation of a business location, businesses need to pay attention to the above issues to avoid incurring outstanding debt and future risks.

Support service for procedures on termination of business location in Long Phan

Long Phan provides comprehensive support services for businesses during the process of terminating business locations. Our services include:

• Detailed advice on processes, procedures and issues related to terminating business operations;
• Prepare fully and accurately the necessary documents, including notice of termination of operations, business decisions and other related documents;
• Representing businesses to carry out procedures at the business registration agency and tax agency, helping to save time and effort for businesses;
• Support in resolving arising problems: During the process of carrying out procedures, if a problem arises, Long Phan will assist in resolving it quickly and effectively;
• Consulting on strategic issues related to business location termination, including impact assessment and recommending optimal solutions;

The process of terminating a business location requires businesses to strictly comply with legal regulations and fully implement procedures. With in-depth experience, we always bring optimal solutions to customers, supporting the completion of the termination process quickly, effectively and legally. Please contact Long Phan via Hotline 090.673.5386 for detailed advice on procedures for terminating business operations.