Dissolution of Foreign-Invested Enterprises: What Procedures Must Enterprises Complete?

1. Can a Foreign-Invested Enterprise (FIE) Be Dissolved?

Yes. In principle, foreign-invested enterprises may undergo dissolution procedures in accordance with the Law on Enterprises, provided that all statutory conditions for dissolution are satisfied.

Under the Law on Enterprises, a company may be dissolved in the following circumstances:

• Expiry of the operating term stated in the company’s Charter without extension;

• Resolution or decision of the company owner or competent governing body of the enterprise;

• The company fails to maintain the statutory minimum number of members/shareholders for six consecutive months without completing procedures to convert its corporate form;

• Revocation of the Enterprise Registration Certificate (ERC), unless otherwise provided by the law on tax administration.

In practice, the most common scenario for FDI enterprises is where the foreign investor proactively decides to terminate operations and dissolve the entity due to a cessation of business interest in Vietnam. However, prior to initiating dissolution procedures, the enterprise must ascertain the exact legal status of its investment project and all associated obligations.

2. Statutory Conditions for the Dissolution of an FDI Company

Under the Law on Enterprises, an enterprise may only be dissolved when:

• First: It ensures the full settlement of all debts and property obligations. These obligations may include:

  • Tax obligations;

  • Salaries, wages, and other payables to employees;

  • Statutory social insurance, health insurance, and unemployment insurance liabilities;

  • Bank loans;

  • Trade payables to suppliers;

  • Liabilities to customers;

  • Rental payments for offices, factories, or warehouses;

  • Other outstanding financial liabilities.

• Second: The enterprise is not currently involved in dispute resolution before a court or an arbitration tribunal.

Consequently, an investor's decision to exit Vietnam does not imply that the enterprise can immediately cease its legal existence. The enterprise must fully settle all outstanding liabilities prior to completing the dissolution process.

3. Must an FDI Enterprise Terminate Its Investment Project Prior to Dissolution?

This issue must be evaluated on a case-by-case basis. If the enterprise is operating an investment project that was issued an Investment Registration Certificate (IRC), the investor must review the project’s status and determine whether procedures for the termination of the investment project are required.

Where the investment project is terminated concurrently with the company's dissolution, the enterprise must carry out statutory procedures to terminate the investment project in accordance with investment laws. This distinction is critical because the IRC and the ERC are two distinct legal documents serving different purposes:

• The IRC records information regarding the investment project;

• The ERC certifies the legal personality and corporate registration details of the enterprise.

Therefore, the cancellation or revocation of the ERC does not automatically mean that all matters pertaining to the investment project have been settled. FDI enterprises should thoroughly review their IRC prior to dissolution to establish the required procedural sequence.

4. Fundamental Steps in Dissolving an FDI Company

Depending on the actual status of the enterprise, the dissolution process is generally carried out through the following phases:

Step 1: Legal and Project Due Diligence

The enterprise must review:

• The ERC;

• The IRC;

• The Company Charter;

• The status of capital contributions;

• The operating status of the investment project;

• Specialized business sub-licenses/operational permits;

• The operational status of dependent branches, business locations, or representative offices (if any).

This preliminary audit is essential to determine which prerequisite procedures must be finalized prior to formal dissolution filings.

Step 2: Adoption of the Dissolution Decision

The competent corporate governing body adopts a resolution or decision on dissolution in accordance with the corporate form:

• For a Single-Member Limited Liability Company (LLC): The decision falls under the authority of the company owner;

• For a Multiple-Member LLC: The resolution falls under the authority of the Members' Council;

• For a Joint Stock Company (JSC): The resolution is decided by the General Meeting of Shareholders in accordance with applicable laws and the company’s Charter.

Step 3: Termination of the Investment Project (if applicable)

If the enterprise operates an active investment project, it must terminate the project and surrender or handle the IRC in accordance with applicable investment regulations. The enterprise must also review obligations arising from the project, including:

• Project assets;

• Leased land or project implementation sites;

• Project-related financial liabilities;

• Paid-in capital status;

• Obligations to personnel assigned to the project;

• Project-related permits and approvals.

Step 4: Tax Clearance and Finalization Procedures

The enterprise must work directly with the competent tax authority to audit, finalize, and fulfill all tax obligations, which typically include:

• Value-Added Tax (VAT);

• Corporate Income Tax (CIT);

• Personal Income Tax (PIT);

• Invalidation/cancellation of unused electronic invoices;

• Final tax returns and financial statements;

• Outstanding tax liabilities and penalties (if any);

• Other state budget charges.

For FDI enterprises, special scrutiny must be given to transactions with foreign parent companies or foreign affiliates (transfer pricing/related-party transactions), such as:

• Service and management fees;

• Royalties and licensing fees;

• Shareholder/parent company loans;

• Loan interest payments;

• Cross-border accounts receivable and payable.

These transactions can substantially impact the timeline and outcome of the tax clearance audit prior to dissolution.

Step 5: Settlement of Labor and Employment Obligations

The enterprise must settle all obligations owed to employees prior to dissolution.

• For Vietnamese employees, the enterprise must address: wages/salaries, statutory severance or allowances (if applicable), compulsory social, health, and unemployment insurance, and contractual benefits.

• For foreign employees, the enterprise must additionally regularize the status of: work permits or certificates of work permit exemption, business/work visas, Temporary Residence Cards (TRCs), and other relevant immigration documents.

The closure of an enterprise should not be executed without concurrently resolving the residency and work permit status of foreign personnel stationed in Vietnam.

5. How Are Assets of an FDI Company Disposed Of?

Prior to completing dissolution, the enterprise must conduct a comprehensive inventory and liquidate or dispose of all assets under its ownership or management, including:

• Machinery, equipment, and production lines;

• Vehicles and transportation equipment;

• Inventory and raw materials;

• Office furniture and fittings;

• Bank deposit balances;

• Accounts receivable;

• Fixed assets;

• Property rights and intellectual property;

• Assets formed through the investment project.

For assets belonging to an investment project, the enterprise must clarify their legal origin, customs status (e.g., duty-exempt imported machinery), and disposal scheme before completing project termination and dissolution. If assets are sold, transferred, or liquidated, applicable taxes and statutory accounting documentation must be processed properly.

6. Must an FDI Company Close Its Bank Accounts Before Dissolution?

Yes. The enterprise should review and close all bank accounts prior to the completion of dissolution. In particular, FDI companies may operate:

• Direct Investment Capital Accounts (DICA);

• VND current/operating accounts;

• Foreign currency accounts;

• Escrow or specialized loan accounts.

The enterprise must settle all balances, clear outstanding transactions, and pay bank maintenance/service fees before closing the accounts.

For the Direct Investment Capital Account (DICA), special care is required regarding the remittance of remaining liquidation capital, asset distribution proceeds, or post-liquidation funds back to foreign investors. Investors must coordinate with their authorized commercial bank and legal/accounting advisors before executing final transfers to ensure strict compliance with the State Bank of Vietnam’s foreign exchange administration regulations.

7. Handling Office and Factory Lease Agreements

Premises leases represent a common area of dispute when an FDI enterprise dissolves. If leasing:

• Corporate offices;

• Factories or manufacturing facilities;

• Warehouses;

• Business sites;

• Land or land-attached infrastructure,

the enterprise must review the lease contracts to determine:

• Lease term and expiry;

• Conditions and notice periods for early termination;

• Handling and refund of security deposits;

• Outstanding rental payments and utility charges;

• Premises reinstatement and handover obligations;

• Dilapidation or restoration costs.

Where a lease is terminated prematurely, penalty clauses, damages, or deposit forfeitures must be fully negotiated and settled prior to completing dissolution.

8. Can an FDI Company Dissolve If It Still Owes Debts to Foreign Partners?

No. An enterprise cannot complete dissolution without having paid all outstanding debts and property liabilities in full. Regarding debts owed to a foreign parent company or offshore partners, the enterprise must clarify:

• The outstanding principal and interest;

• The legal basis and contracts giving rise to the debt;

• Repayment deadlines;

• The registration/reporting status of the loan with the State Bank of Vietnam (if classified as a foreign loan);

• Payment channels and methods;

• Applicable Foreign Contractor Tax (FCT) and foreign exchange requirements.

Cross-border debt settlement must be handled prudently to prevent delays in tax clearance and non-compliance with statutory foreign exchange control rules.

9. What Documents Comprise the Dissolution Dossier of an FDI Company?

In general, the corporate dissolution dossier is prepared pursuant to the Law on Enterprises and decree provisions on enterprise registration. Subject to the specific case, the dossier typically includes:

• Resolution or decision on corporate dissolution;

• Formal notice of dissolution;

• Asset liquidation report;

• List of creditors and proof of settled debts;

• Confirmation from tax authorities regarding tax clearance and closure of the enterprise tax identification number (tax code);

• Confirmation from customs authorities certifying no outstanding customs debt (if engaged in import-export);

• Confirmation from social insurance agencies certifying closure of insurance obligations;

• Documentation regarding the termination of the investment project (if applicable);

• Documentation regarding the resolution of labor contracts and obligations;

• Other supporting documents corresponding to the actual legal status of the enterprise.

Under current administrative procedures on the National Public Service Portal:

• The processing timeline for the dissolution registration stage is 05 working days from the receipt of a complete and valid dossier;

• The processing timeline for the dissolution notice stage is 03 working days from the receipt of a valid notice.

• State administrative fees are currently exempt for dissolution registration.

Note: These timelines represent only the statutory review period taken by the Business Registration Authority for specific filings; they do not reflect the total timeframe required for an enterprise to complete the comprehensive pre-dissolution liquidation and tax clearance process.

10. How Long Does It Take to Dissolve an FDI Company?

There is no uniform statutory timeframe applicable to all FDI enterprises. The actual duration depends entirely on the factual and legal standing of each enterprise.

The process may proceed relatively quickly for an enterprise with:

• No remaining employees;

• No outstanding debts or liabilities;

• No complex assets to liquidate;

• No tax arrears or pending audits;

• No active investment project requiring formal termination.

Conversely, the process is often substantially extended if the company involves:

• Complex tax profiles or pending transfer-pricing audits;

• Outstanding or contested liabilities;

• Foreign personnel requiring visa/work permit cancellation;

• Offshore loans requiring regulatory clearance;

• Bonded or duty-exempt project assets;

• Long-term real estate or factory lease disputes;

• Multiple specialized sub-licenses.

Foreign investors should not rely solely on the administrative review times of business registry portals to estimate their overall exit timeline.

Conclusion

Dissolving a foreign-invested company in Vietnam entails a multi-layered regulatory procedure compared to purely domestic entities.

Beyond standard corporate dissolution under enterprise law, an FDI enterprise must simultaneously resolve procedures relating to its investment project, IRC, tax finalization, labor liabilities, asset disposal, contractual commitments, bank accounts, and cross-border transactions. Correctly identifying the status of the investment project and extinguishing all outstanding liabilities before corporate deregistration will substantially mitigate the risk of prolonged administrative delays or residual post-exit liabilities.

Foreign investors are strongly advised to conduct a comprehensive legal and financial audit prior to initiating dissolution in order to formulate an orderly, compliant exit strategy aligned with the entity's actual conditions.