The business license tax (LPMB) is a mandatory tax that foreign-invested enterprises (FDI) in Vietnam must pay annually. However, many businesses either delay or forget to pay this tax, leading to serious legal consequences.

This article provides a detailed analysis of the consequences of late or non-payment of the business license tax, including penalties and corrective measures from a legal perspective.

1. Legal Basis for Penalties on Late or Non-Payment of Business License Tax

Penalties for late or non-payment of the business license tax are governed by the following legal documents:

• Law on Tax Administration 2019 (amended in 2023) – Establishes the legal framework for tax management and penalties.
• Decree No. 125/2020/ND-CP – Specifies administrative penalties for tax and invoice violations.
• Circular No. 80/2021/TT-BTC – Guides the implementation of the Tax Administration Law concerning business license tax.

These regulations apply uniformly to both domestic and foreign-invested enterprises operating in Vietnam.

2. Penalties for Late Payment of Business License Tax:

Determining the Delay Period

The penalties for late payment of the business license tax are based on the number of overdue days. According to Decree No. 125/2020/ND-CP, the penalty framework is as follows:

Late Payment Period	Penalty Amount
1 – 5 days (with mitigating circumstances)	Warning
1 – 30 days	2,000,000 – 5,000,000 VND
31 – 60 days	5,000,000 – 8,000,000 VND
61 – 90 days	8,000,000 – 15,000,000 VND
Over 90 days (without tax liability)	8,000,000 – 15,000,000 VND
Over 90 days (with tax liability)	15,000,000 – 25,000,000 VND

In addition to fines, businesses must pay the outstanding business license tax amount along with late payment interest, as determined by the tax authorities.

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3. Consequences of Non-Payment of Business License Tax

If a business fails to pay the business license tax for an extended period, the consequences can be severe, including:

3.1. Tax Enforcement Measures

According to Article 125 of the Law on Tax Administration 2019, tax authorities may apply enforcement measures such as:

Requesting the revocation of the business license if the company persistently fails to pay taxes.

Withdrawing funds from the company’s bank account to settle the tax liability.

Deducting a portion of the business’s revenue if it has contracts with domestic partners.

Suspending the use of invoices, which can severely disrupt business operations.

3.2. Negative Impact on the Company’s Credit Rating

• Businesses may be listed in the tax debt database and publicly disclosed on the General Department of Taxation’s website.
• It can affect the company’s ability to secure loans from banks or engage in international partnerships.

3.3. Risk of Criminal Prosecution

In severe cases, if a business deliberately evades taxes through organized or fraudulent means, it may be prosecuted under Article 200 of the Penal Code 2015 (amended in 2017). Penalties include:

• Fines ranging from 500 million to 4 billion VND.
• Imprisonment from 1 to 7 years for responsible individuals.

4. How to Remedy and Minimize Legal Risks

To avoid severe consequences for late or non-payment of business license tax, businesses should take the following steps:

4.1. Proactively Settle Outstanding Tax Payments

• If overdue but not yet penalized, businesses should immediately pay the outstanding tax amount to avoid further penalties.
• Submit supplementary tax declarations if there were errors in previous filings.

4.2. Submit a Request for Tax Payment Extension

• If facing financial difficulties, businesses can submit a request for tax payment extension under Circular No. 156/2013/TT-BTC.
• The tax authority will review the case and determine whether an extension can be granted.

4.3. Establish an Internal Tax Management System

• Assign a dedicated tax accounting team to track tax deadlines.
• Utilize electronic tax management software to receive automatic reminders for tax payments.

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