Abandoning an Inactive FDI Company: 7 Legal Risks Investors Commonly Underestimate
The project is unprofitable. The factory is closed. The office retains only a part-time accountant keeping the books. Many foreign investors in this situation choose the simplest option: leave the company “suspended” there, without dissolving it, without doing anything. No operations means no risk — that is the common assumption.
That assumption is wrong, and the price can be steep. Vietnamese law has no concept of a “dormant company”. As long as an enterprise exists on paper, its obligations remain: filing returns, paying taxes, maintaining its registered address, and the legal representative remains fully liable. Below are 7 real risks of abandoning an inactive FDI company, with legal bases and the right handling for each risk.
Risk 1: Tax Debt “Breeds” Every Day — 0.03%/Day Late-Payment Interest
Even when the company generates no revenue, tax obligations do not disappear on their own. Taxes that arose before operations stopped, if unpaid, are still there. And each passing day, the debt grows.
Note: the business license tax (lệ phí môn bài) was abolished from 1 January 2026 (Article 10(7) of Resolution 198/2025/QH15; Article 6(4) of Decree 362/2025/ND-CP) — only outstanding license tax for 2025 and earlier years (if any) still has to be paid.
Article 16(2)(a) of the 2025 Law on Tax Administration (Law No. 108/2025/QH15, effective 1 July 2026) sets late-payment interest at 0.03%/day calculated on the late-paid tax amount, accruing continuously from the day following the day the late-payment amount arose. 0.03%/day sounds small, but annualized it is nearly 11%/year — far higher than bank interest — and it compounds without stopping until you have paid the budget in full.
Example: a company owes VND 800 million in taxes from early 2024 and has not paid. Each day, late-payment interest grows by VND 240,000 (0.03% × 800 million). After about two and a half years, the late-payment interest alone exceeds VND 200 million — a quarter of the principal.
The right handling: Immediately check the company’s tax debt status on the electronic tax system (eTax). Tabulate all unfulfilled obligations: taxes, late-payment interest, penalties. That is the real number you face — know it early to take initiative, instead of letting it silently grow each day. If cash flow is tight, consider transferring the project or selling the FDI company to another investor instead of continuing to carry the debt.
Risk 2: Not Filing Returns Still Brings Penalties — per Return, Up to VND 25 Million Where Tax Payable Arose
Many people think: the company has no operations, nothing arose, so no returns need filing. Wrong. Unless business suspension procedures have been completed and accepted by the tax authority, the enterprise must still file tax dossiers on time — including “blank” returns (no tax payable arising).
Article 13 of Decree 125/2020/ND-CP (as amended by Article 1(10) of Decree 310/2025/ND-CP) distinguishes two frames: filing a tax return 91 days or more late with no tax payable arising is fined VND 8–15 million; filing more than 90 days late with tax payable arising, with the full tax and late-payment interest paid before the tax authority announces an inspection/examination decision or issues a violation record, is fined VND 15–25 million — with a capping rule: if the fine under this frame exceeds the tax arising on the tax return, the maximum fine equals the tax payable, but not less than the average of the VND 8–15 million frame. For a company left “suspended” for 2–3 years, the number of overdue returns can reach dozens — each return a separate penalty decision, and total fines can exceed the original tax debt.
The right handling: Review all missing filing obligations and make supplementary filings immediately. Penalties are calculated per violation, so “filing late is better than never filing” — the longer the delay, the heavier the frame. This is also a mandatory step before dissolving an FDI enterprise, because the tax authority will not confirm tax obligations as fulfilled while returns remain unfiled.
Risk 3: Tax Enforcement — Account Freezes, Invoice Suspension, Asset Seizure
When tax debt exceeds 90 days from the payment deadline, the enterprise is subject to enforcement of administrative decisions on tax administration (Article 48, 2025 Law on Tax Administration). This is no longer a “reminder”. The tax authority may apply 8 enforcement measures under Article 49(1) of the 2025 Law on Tax Administration, including some very “painful” ones:
- Withholding money and freezing bank accounts to pay the budget, without your consent.
- Suspending use of e-invoices — a major barrier if you later want to sell the company.
- Seizing and auctioning assets: machinery and inventory can be seized.
- Revoking the Enterprise Registration Certificate (ERC) and other operating licenses: the heaviest measure, striking directly at the enterprise’s legal status (Article 49(1)(h), 2025 Law on Tax Administration). The Investment Registration Certificate (IRC) is not subject to tax enforcement measures — IRC revocation is carried out under the Law on Investment (see Risk 4).
In practice, these measures are usually applied in escalating combination — if the lighter measure is ineffective, a heavier one follows. A “suspended” company nobody monitors will travel this entire path in silence, until the investor discovers that accounts are frozen and invoices suspended.
The right handling: Do not let tax debt reach the 90-day overdue threshold. If enforcement has begun, prioritize paying the tax debt in full to terminate the enforcement measures. In parallel, seriously assess: can this company resume operations? If not, terminating the FDI investment project in an orderly manner is always cheaper than letting the state authorities “clean up” for you.
Risk 4: Investment Certificate and Enterprise Registration Certificate Revoked — Loss of Control
This is the most dangerous “passive” scenario: you do nothing, but the state will act for you — in the most disadvantageous way.
On the investment side: Article 36(2)(d) of the 2025 Law on Investment (Law No. 143/2025/QH15, effective 1 March 2026, replacing the 2020 Law on Investment) provides that the investment registration authority terminates the investment project when the project has ceased operations, 12 months have passed since cessation, and the authority cannot reach the investor or its lawful representative. A “suspended” company with nobody receiving mail and nobody dealing with the investment registration authority — 12 months is enough to lose the project.
On the enterprise side: Article 212(1)(c) of the 2020 Law on Enterprises provides for ERC revocation when the enterprise ceases business operations for 1 year without notifying the business registration authority and the tax authority.
When revoked under these grounds, the enterprise falls into mandatory dissolution (Article 207(1)(d), 2020 Law on Enterprises). And in mandatory dissolution, the managers concerned are jointly liable for the enterprise’s debts (Article 207(2)). Meaning: abandoning the company does not help you escape debt — it turns the company’s debt into your own joint liability.
The right handling: Acting proactively is always better than passively. If you decide to exit, complete the project termination and dissolution procedures in accordance with legal order, where you control asset liquidation, capital recovery, and the debt repayment sequence. Being revoked unilaterally means losing the right to dispose of assets and facing joint liability.
Risk 5: The Legal Representative Faces an Exit Suspension — Stuck in Vietnam
This is the most direct personal risk, and what shocks many foreign directors the most: learning at the airport that they cannot exit.
Article 17(5) of the 2025 Law on Tax Administration lists cases in which tax obligations must be fulfilled before exit, including individuals who are legal representatives of enterprises subject to tax enforcement that have not fulfilled tax obligations. Decree 252/2026/ND-CP (effective 1 July 2026, guiding the 2025 Law on Tax Administration) details at Article 28: the legal representative of an enterprise subject to tax enforcement will be subject to temporary exit suspension when the enterprise has tax debts of VND 500 million or more that are 120 days or more overdue.
Particularly note: also under Article 28, if the tax authority has issued a notice that the taxpayer is not operating at its registered address, and after 120 days the taxpayer has not completed tax code restoration or tax code termination procedures, the legal representative is also subject to exit suspension. A “suspended” company with no office and no tax notices received — is exactly this case.
The process gives advance warning: the tax authority sends a notice of intended exit suspension 30 days in advance via the electronic tax system. But for a company nobody monitors for tax emails, this notice also passes invisibly.
The right handling: Before any long trip or leaving Vietnam permanently, check the company’s tax debt status and exit suspension status. If the company has overdue tax debts, prioritize resolving them. Read the detailed analysis in the article on the personal liability of the legal representative upon FDI dissolution/project termination.
Risk 6: A “Black Mark” on the Record — Affecting the Next Investment
The law does not bar an individual who was the representative of a “suspended” enterprise from establishing a new enterprise (the list of persons prohibited from establishing or managing enterprises at Article 17(2) of the 2020 Law on Enterprises does not include this case). However, in our observation and practice experience — emphasizing that this is practical dossier handling, not a legal provision — this “black mark” still exists in other forms:
- Tax risk profile: a person who represented an enterprise with tax debts and abandoned its business address is placed under tax monitoring. New enterprises under their name face a higher risk of early and frequent tax inspections.
- Difficulties in procedures: when establishing a new company or changing business registration, the business registration authority may require explanations about the old enterprise’s incomplete termination procedures.
- Reputation with partners: in subsequent fundraising or M&A transactions, the due diligence party always researches the representative’s enterprise history. An old company whose license was revoked for abandonment is a serious negative mark.
The right handling: Close the past cleanly before starting anew. A complete dissolution dossier, with the tax authority’s confirmation of fulfilled tax obligations, is the best “pass” for the next investment in Vietnam. See the 12-step FDI project termination checklist so no procedure is missed.
Risk 7: Personal Liability Lasting for Years — Even After the Company “Disappears”
Many people think that once the license is revoked and the tax code closed, everything ends. It does not.
Article 210 of the 2020 Law on Enterprises provides: members of the Members’ Council, Directors/General Directors, and legal representatives are responsible for the truthfulness and accuracy of dissolution dossiers. Where the dissolution dossier is inaccurate or falsified, these persons are jointly liable for settling unresolved employee benefits, unpaid taxes, and other outstanding debts — and bear personal legal responsibility for consequences arising within 05 years from the date of filing the dissolution dossier.
More seriously, if the “abandonment” is accompanied by acts such as failing to declare taxes or using illegal invoices to reduce tax payable, the individuals involved may face criminal liability for tax evasion under Article 200 of the 2015 Penal Code (amended 2017): tax evasion of VND 100 million or more may be fined VND 100 million to 500 million or imprisoned for 03 months to 01 year; the larger the amount, the heavier the frame, up to 07 years’ imprisonment.
The right handling: Never falsify dissolution dossiers to “erase” tax debts. The only safe path is transparency: declare fully, pay taxes in full, settle in the correct priority order (employees first, then taxes, then other debts — under Article 208(5) of the 2020 Law on Enterprises). Costly today, but peaceful sleep for the 5 years after.
Conclusion: “Suspending” a Company Is the Most Expensive Choice
Abandoning an inactive FDI company is not cost-saving — it is the way to turn a controllable cost (proper dissolution) into a chain of uncontrollable risks: multiplying tax debts, enforcement, license revocation, exit suspension, personal liability lasting 5 years, even criminal liability.
If the project is no longer viable, choose one of two proactive paths: dissolve and terminate the project in accordance with legal order, or transfer the project/company to another investor to recover part of the capital. Both are cheaper and safer than letting the state “handle it” for you.
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