Tax Finalisation on FDI Dissolution/Project Termination — 5 Common Reassessment Risks

When everything is nearly done, tax is what gets stuck the longest

Hypothetical scenario: a 100% foreign-owned manufacturer decides to exit Vietnam. They follow the right process: Members’ Council meeting, dissolution announcement, asset liquidation, full payment of debts and employee benefits. The accountant files the CIT finalisation return up to the dissolution point — in many people’s minds, that is just “closing the books”.

But the tax authority inspects the finalisation and issues a handling decision: CIT reassessment for disallowing a large expense lacking invoices, plus a 20% penalty on the under-declared tax and 0.03%/day late-payment interest. On top of that, a technical consultancy contract with the overseas parent is found to have never had contractor tax withheld — the Vietnamese side must pay it on behalf.

For the overall picture before diving into tax, see also the FDI company dissolution process and the investment project termination sequence.

1. Which taxes must an FDI enterprise finalise?

When dissolving the enterprise or terminating the investment project operation, the enterprise must file tax returns and finalise up to the termination point, by each tax:

Corporate income tax (CIT). The most important stage. Under Article 16 of Circular 151/2014/TT-BTC, the enterprise performs “finalisation up to the point of the decision that the enterprise… dissolves or ceases operation” — not waiting until year-end. After filing, the tax authority inspects the finalisation; in practice, for large-scale FDI enterprises, processing time depends on dossier scale and tax obligation complexity.

Value-added tax (VAT). The enterprise must file VAT returns up to the operation cessation point. The commonly missed point: how uncredited input VAT at dissolution is handled — wrong declaration can mean both losing the credit right and having expenses disallowed.

Personal income tax (PIT). On dissolution, the enterprise pays final-month salaries, bonuses, severance and job-loss allowances — as the income-paying organisation, it must withhold, declare and finalise PIT for these payments, including correctly determining foreign employees’ residence status.

Contractor tax. The most “hidden” tax: royalties, technical service fees, management fees from the parent, consultancy fees paid to foreign organisations and individuals… Circular 103/2014/TT-BTC — the contractor tax guiding document for over a decade — was abolished from 01/7/2026, replaced by Circular 89/2026/TT-BTC. Under current rules, when the foreign contractor does not self-declare and pay tax in Vietnam, the Vietnamese side is responsible for withholding and paying on behalf at payment. Many enterprises paid their overseas parent for years without withholding — at the dissolution finalisation, all of these are “dug up”.

Filing deadline. Under point b, clause 5, Article 10 of Decree 252/2026/ND-CP, the finalisation dossier for operation cessation must be filed no later than day 45 from the date the taxpayer has the decision on operation cessation, dissolution, bankruptcy… — this milestone is counted in calendar days, not working days.

Tax code deactivation. After finalisation, the enterprise deactivates the tax code under the Law on Tax Administration 2025 and its guiding documents — Decree 252/2026/ND-CP, Circular 90/2026/TT-BTC — without confirmation of tax completion, the enterprise cannot complete dissolution procedures at the business registration authority. See details in deactivating the tax code when dissolving an FDI company.

2. The five most common reassessment risks

Risk 1: Expenses disallowed from deductible expenses

This is the most common risk. Article 9 of the CIT Law 2025 provides that enterprises may only deduct expenses meeting all conditions: actually incurred in connection with production and business operations; with sufficient invoices and vouchers; and — for each payment of 05 million VND or more — with non-cash payment vouchers (clause 1, Article 9 of Decree 320/2025/ND-CP guiding Article 9 of the CIT Law 2025). Decree 320/2025/ND-CP lists non-deductible expenses in detail.

When inspecting the dissolution finalisation, the tax authority typically disallows: expenses without lawful invoices/vouchers; cash-paid expenses where non-cash payment vouchers are required (for each payment of 05 million VND or more); expenses not proven to relate to production and business operations; improperly accrued expenses and provisions.

Consequence: each disallowed expense increases taxable income by exactly that amount — CIT reassessed at the applicable rate (normally 20% under Article 10 of the CIT Law 2025), plus a 20% penalty on the under-declared tax (Article 16 of Decree 125/2020/ND-CP, as amended by Decree 310/2025/ND-CP) and 0.03%/day late-payment interest (point a, clause 2, Article 16 of the Law on Tax Administration 2025).

Risk 2: Transfer pricing — related-party transactions with the parent

“Transfer pricing” is pricing in transactions between related parties — e.g. the Vietnamese subsidiary transacting with the overseas parent — with the principle that prices must follow market prices as between independent parties.

Decree 255/2026/ND-CP (effective 01/7/2026, replacing Decree 132/2020/ND-CP, applying from the 2026 CIT tax period) governs tax administration for enterprises with related-party transactions: taxpayers must declare related-party and related-party-transaction information under Appendix I (Article 18); some cases are exempt from declaration and from preparing the Transfer Pricing Documentation (Article 20) — but exemption from documentation does not mean exemption from proving market price when the tax authority requests it.

Why does this risk erupt exactly at dissolution? Because many FDI enterprises, in the final stage, liquidate inventory and machinery to the parent or affiliates at below-market “internal” prices to clear the books quickly — and the tax authority has the right to re-determine prices and reassess the difference.

Risk 3: Tax incentives revoked and reassessed

Many FDI enterprises enjoy CIT incentives under their investment project: preferential rates, tax holidays for some years, 50% reduction for following years (Articles 13, 14 of the CIT Law 2025). But incentives are conditional — failing conditions triggers reassessment and penalties.

Article 18 of the CIT Law 2025 prescribes incentive application conditions: maintaining accounting, invoice and voucher regimes and paying tax by declaration; separately accounting incentivised and non-incentivised income. Failing conditions → tax reassessment and violation penalties.

Situations leading to incentive recovery on dissolution: actual operations deviating from the registered investment project content while claiming incentives on all income; splits, divisions, mergers or owner conversions while claiming incentives as a “new investment project” — Article 18 clearly states these cases do not qualify; or inability to separately account incentivised and non-incentivised income. When incentives are recovered, the tax authority reassesses the difference between tax paid under incentives and tax payable at the ordinary rate — possibly accumulated over many years.

Risk 4: Leftover contractor tax from contracts with foreign parties

Contractor tax is the most easily “forgotten” tax because the obligation falls on the Vietnamese side as the withholding agent, while the actual service beneficiary is abroad — typically: royalties paid to the parent; management, technical and consultancy service fees from the parent or foreign third parties; hiring foreign experts for short-term work (distinguish from PIT-applicable salaries).

The contractor tax legal framework completely changed from 01/7/2026: Circular 103/2014/TT-BTC was abolished under Circular 89/2026/TT-BTC — the conditions for contractor self-declaration, Vietnamese-side withholding and revenue-based rates in Circular 103 no longer apply. Under current rules, when the foreign contractor does not self-declare and pay tax in Vietnam, the Vietnamese side is responsible for withholding and paying on behalf for the contractor, declaring on contractor tax return form 01/NTNN, NCCNN per each payment.

Calculation basically retains the common rates: for services, 5% VAT and 5% CIT on taxable revenue (CIT under clause 3, Article 12 of Decree 320/2025/ND-CP; royalties subject to 10% CIT); if the contract is priced NET (excluding tax), gross-up to taxable revenue before computing the withheld tax. Contractor tax arises per each payment — a 5-year royalty contract never withheld means the dissolution finalisation must pay on behalf for all 5 years, plus late-payment interest counted from each payment.

Risk 5: Invoices, inventory and fixed assets on liquidation

Dissolution always comes with liquidation: selling inventory, machinery, fixed assets. Three common mistakes: failing to issue invoices or issuing at the wrong time when selling assets and inventory (e-invoices under Decree 123/2020/ND-CP); failing to declare output VAT and other income from liquidation — many accountants think “selling at a loss means no tax”, but output VAT still arises on the sale price; and inventory count discrepancies — physical inventory below book figures without proper handling minutes, which the tax authority may treat as goods sold without invoices and undeclared revenue.

3. Finalisation dossier preparation checklist

To make the finalisation inspection fast and low-risk, the enterprise should prepare these dossier groups in advance:

1. Foundation legal dossier: IRC, ERC, dissolution/project termination decision, owner/Members’ Council meeting minutes.
2. Financial statements for years not yet inspected (audited if subject to mandatory audit).
3. Tax returns for CIT, VAT, PIT and contractor tax for relevant periods; CIT finalisation return up to the dissolution point.
4. Detailed accounting books, purchase-sale invoice lists, non-cash payment vouchers.
5. Related-party transaction dossier: Appendix I for each year, Transfer Pricing Documentation (if required), contracts with related parties.
6. Tax incentive dossier: incentive confirmation document, exempted/reduced tax calculation tables, vouchers proving incentive conditions.
7. Contractor tax dossier: contracts with foreign organisations and individuals, outward payment vouchers, filed returns and vouchers of tax withheld and paid on behalf.
8. Labour — PIT dossier: payroll tables, decisions paying severance/job-loss allowances, PIT withholding vouchers.
9. Asset liquidation dossier: inventory count minutes, liquidation decisions, asset/inventory sale contracts, sale invoices.
10. Tax code deactivation dossier under Circular 90/2026/TT-BTC.

General principle: any self-discovered error — proactively file supplementary declarations and pay the full tax before the tax authority announces the inspection decision.

4. When do you need a lawyer, not just an accountant?

A good accountant handles figures and returns. But some situations go beyond pure accounting and need a tax lawyer involved:

• Disputes over tax incentive application: when the tax authority says the enterprise fails incentive conditions and demands multi-year reassessment — defending the position requires legal argumentation based on documents, not just figure explanations.
• Tax imposition on related-party transactions: when the tax authority rejects the enterprise’s applied price and re-determines taxable income.
• Contractor tax on complex contracts: mixed contracts (both goods and services), contracts with multiple parties in multiple countries.
• Personal liability risk of the legal representative when the enterprise still has tax debts while dissolution procedures have gone far — see also personal liability of the legal representative when dissolving an FDI company.
• Enterprises with disputes against partners or contractors in parallel with dissolution — see also disputes on FDI project termination.

Do not let tax be the last thing holding you back

Tax finalisation on FDI dissolution or project termination is not a mere administrative procedure — it is a “general inspection” of the enterprise’s entire operation in Vietnam. The five risks above — disallowed expenses, transfer pricing, revoked incentives, leftover contractor tax, liquidation mistakes — quietly accumulate over years and only surface when the enterprise wants to leave. But most can be controlled if reviewed in advance, instead of waiting for the tax authority to find them.

FLAT Law Firm supports FDI enterprises in reviewing tax obligations before dissolution, preparing finalisation dossiers and handling arising reassessments and tax impositions.

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This article is general information, not legal advice for specific cases.

More in the FDI exit topic cluster: Dissolving an FDI company in Vietnam · Terminating an FDI investment project · Contractor tax on FDI exit · 12-step FDI project termination checklist