The setup: after five loss-making years, an investor decides to terminate a manufacturing project early and repatriate the remaining capital. The plan is simple — sell the machines, settle the tax, fly home. Reality is less simple: the law imposes a fixed sequence: terminate, liquidate, settle tax, handle land, then move money out. Skipping steps means the money gets stuck at the bank.
The legal sequence (Article 36, Law on Investment 143/2025/QH15)
- Step 1 — decide and notify: the investor decides to terminate (Article 36(1)(a)) and notifies the investment registration agency; the project termination is recorded.
- Step 2 — liquidate assets: the investor liquidates the project itself under the asset-liquidation legislation (Article 36(4)): sell or dispose of machinery, clear inventory, collect receivables, settle debts.
- Step 3 — settle tax: complete all tax obligations before closure. Article 17 of the Tax Administration Law 108/2025/QH15 (effective 1 July 2026) requires tax obligations to be completed upon termination of operations; income from liquidating or transferring assets is subject to corporate income tax under the CIT Law 67/2025/QH15 (effective 1 October 2025).
- Step 4 — handle land: land-use rights and attached assets upon termination follow the land legislation (Article 36(5)): return leased land, complete land-related financial obligations.
- Step 5 — move money out: only after tax is settled may the remaining capital be remitted abroad through the direct investment capital account under the foreign-exchange regulations.
Three tax traps in liquidation
1. Previously exempted import tax. Machinery imported with investment incentives and then sold or repurposed may trigger retrospective import-tax declaration. 2. CIT on liquidation gains. Proceeds exceeding the assets’ book value are taxable income. 3. Unfinished VAT and withholding. Input VAT on unsold inventory and withholding obligations on payments to foreign contractors must be closed before the tax authority confirms completion.
Frequently asked questions
1. Does terminating the project require dissolving the company?
Not necessarily. The company may pivot to another project or activity not requiring an IRC; dissolution under the Enterprise Law is a separate decision.
2. What about machinery once exempt from import tax?
Liquidating or repurposing incentive-imported assets can trigger retrospective import-tax obligations — declare and pay before closing the tax file.
3. How is liquidation money sent abroad?
Through the direct investment capital account after all tax obligations are completed and confirmed by the tax authority, under the foreign-exchange regulations.
4. Can the project close with tax debts outstanding?
No. Article 17 of the Tax Administration Law 108/2025/QH15 requires completing tax obligations upon termination; the bank will not release funds without tax clearance.
5. How long does liquidation take?
Typically three to six months depending on asset scale and tax complexity; start the tax settlement early — it is usually the longest stage.
This article has been quality-reviewed by the FLAW AI Legal Council