Ensuring Vietnam's taxing rights

According to Minister Ho Duc Phoc, to ensure its legitimate rights and interests, Vietnam needs to affirm the application of global minimum tax.

On the morning of September 28, at the 26th session, the National Assembly Standing Committee gave opinions on the draft Resolution of the National Assembly on applying additional corporate income tax according to regulations against global tax base erosion.

Ensuring Vietnam's taxing rights

Presenting the Government's proposal, Minister of Finance Ho Duc Phoc said that to combat tax base erosion, the OECD initiated and the G20 approved the initiative to combat tax base erosion and profit shifting. Accordingly, two pillars were implemented, of which Pillar 2 sets a global minimum corporate tax rate of 15% for multinational companies to prevent these companies from shifting profits to countries with low tax rates to avoid tax evasion.

“The global minimum tax is not an international treaty, not an international commitment, and does not require countries to apply it. However, if Vietnam does not apply it, it must still accept that other countries apply the global minimum tax, and have the right to collect additional taxes on enterprises in Vietnam (if applicable) that enjoy an actual tax rate in Vietnam lower than the global minimum of 15%, especially enterprises with foreign investment capital,” said Mr. Ho Duc Phoc.

Minister of Finance Ho Duc Phoc

According to Minister Ho Duc Phoc, to ensure its legitimate rights and interests, Vietnam needs to affirm the application of global minimum tax. The application of global minimum tax regulations brings new opportunities to Vietnam, such as increasing budget revenue from additional tax sources; enhancing international integration; minimizing tax evasion, tax avoidance, transfer pricing, and profit transfer.

“To focus on gaining taxing rights, limit the transfer of taxes to other countries, and at the same time ensure the implementation of the global minimum tax in countries around the world , Vietnam needs to apply the minimum aggregate taxable income (IIR) regulation and the standard domestic minimum supplementary tax (QDMTT) regulation from 2024,” Minister Ho Duc Phoc emphasized.

It is necessary to issue legal documents to create a basis.

Presenting the opinion of the auditing agency, Chairman of the Finance and Budget Committee Le Quang Manh said that the regulations on the application of the Global Minimum Tax (TTTC), abbreviated as the GloBE regulations, were proposed by the OECD and will be applied from the 2024 corporate income tax period. Currently, many countries have internalized these regulations to apply from the 2024 corporate income tax period.

“If Vietnam does not internalize the regulations on corporate income tax, countries exporting investment capital will be able to collect additional corporate income tax (up to the full level of 15%) from multinational companies with foreign investment projects in Vietnam that are currently enjoying an actual tax rate of less than 15%,” according to Mr. Le Quang Manh.

Therefore, to ensure Vietnam's taxing rights, the Standing Committee of the National Assembly agreed that it is necessary to issue legal documents to create a basis for foreign-invested enterprises subject to GloBE regulations to declare and pay additional corporate income tax and feel secure about the legal environment in Vietnam.

bao dam giu quyen danh thue cua viet nam hinh anh 2

Chairman of the Finance and Budget Committee Le Quang Manh

Tax-related issues must be regulated in the Law on Corporate Income Tax. However, in the context that the Government has not yet implemented a plan to amend and supplement the law, the majority of opinions in the Standing Committee of the National Assembly's Tax Committee agreed that it is necessary to temporarily issue a (pilot) Resolution of the National Assembly on the application of additional corporate income tax according to the OECD's regulations on preventing global tax base erosion.

The auditing agency also requested the Government to clearly report the plan and time for amending and supplementing the Law on Corporate Income Tax and the expected effective date to ensure that tax contents must be consistently regulated in the law.

Regarding the scope of tax collection, the draft resolution stipulates: collection of standard domestic minimum supplementary corporate income tax (QDMTT) and total minimum taxable income (IIR). Compared with the provisions on applying global minimum tax, the examining agency found that the draft resolution does not stipulate the collection of tax on payments subject to tax below the minimum rate (UTPR). The UTPR amount to retain the right to collect tax in the case of a subsidiary of the group in Vietnam is divided the right to collect tax on income not subject to global minimum tax in the parent company's country and other countries with subsidiaries.

According to vov.vn

Source