Vietnam to Adopt Policies to Respond to Global Minimum Tax Impacts

In order to actively respond to the impacts of the global minimum tax, the Ministry of Finance is currently working with the Ministry of Planning and Investment and other relevant ministries and branches to propose solutions, including amendments to regulations on 15% corporate income tax (CIT) according to the OECD's Qualified Domestic Minimum Top-up Taxes (QDMTT).

Vietnam has many competitive advantages other than tax incentives to attract high-quality capital flows 

The Ministry of Finance said that it is currently coordinating with the Ministry of Planning and Investment and other relevant bodies to work out solutions to actively respond to the impacts of the global minimum tax. Accordingly, it is working to supplement CIT regulations in accordance with the global minimum tax regulation (reaching the 15% standard - according to the OECD's DQMTT regulations) to cope with the global minimum tax of countries that invest in Vietnam and apply from January 1, 2024.

In addition, it is adding global minimum tax regulations, including the income inclusion rule (IIR) and the undertaxed profits rule (UTPR), to apply them to Vietnamese companies that invest in foreign countries and other companies that are subject to the global minimum tax to collect the difference (if any).

However, according to the Ministry of Finance, to limit the impacts of the global minimum tax on investment attraction in Vietnam, it is necessary to have solutions on direct or indirect financial support for businesses but not violate global minimum tax rules, stay in line with international commitments and practices, make this support public and transparent, and minimize adverse impacts on the investment environment.

The legal ground for the Ministry of Finance to come up with solutions to this global minimum tax is Resolution 07-NQ/TW dated November 18, 2016 of the Politburo that states “Completing the budget revenue policy, coupled with restructuring budget revenue sources by embracing all revenue sources and expanding revenue bases, especially new revenue sources, in line with international practices.”

Besides, Resolution 50-NQ/TW dated August 20, 2019 of the Politburo on orientations on perfecting institutions and policies and improving the quality and effect of foreign investment cooperation to 2030 states the main tasks and solutions on perfecting institutions and policies on investment attraction. Specifically, the resolution writes “Building superior institutions, internationally competitive incentive policies and offering favorable business conditions to attract large national key projects and high-tech projects, interest strategic investors and multinational corporations to invest, locate and establish research and development (R&D) centers and innovation centers in Vietnam.”

The Ministry of Finance also reviewed international treaties and agreements that Vietnam joined or signed to ensure that response solutions are appropriate.

To study and propose solutions regarding the OECD's global minimum tax, the Government issued Decision 55/QD-TTg dated August 4, 2022 on the establishment of a Special Working Group of the Government led by Deputy Prime Minister Le Minh Khai and Decision 22/QD-TCTDB dated April 14, 2023 on the regulations on organization and operation of the Special Working Group of Prime Minister on research and proposal of solutions to OECD global minimum tax. In February 2023, the Ministry of Finance established a working group to assist this special working group led by a Deputy Finance Minister.

Many seminars and conferences on global minimum tax have been organized since February 2023. On April 18, 2023, the ministry hosted a workshop on Global Minimum Tax Rules: Applied experiences of countries, expected impacts and recommended solutions for Vietnam. Most recently, Deputy General Director of the General Department of Taxation Dang Ngoc Minh informed 63 provincial/municipal tax departments on policies on this tax in 2023-2024 and later. She also told the approaches of the Vietnamese Government to foreign investment attraction and business support measures to local tax authorities and helped them understand this global minimum tax to inform and advise provincial leaders on appropriate response policies, particularly in provinces and cities with large multinational corporations such as Hanoi, Ho Chi Minh City, Hai Phong, Thai Nguyen, Bac Ninh and Vinh Phuc.

By Le Hien, Vietnam Business Forum