How to keep the "eagle"?

Along with the implementation of the global minimum tax from 2024, it is necessary to further study the return support policy so that the "eagles" can confidently invest in Vietnam.

Along with the implementation of the global minimum tax from 2024, it is necessary to study more support policies so that the 'eagles' can feel secure in investing in Vietnam. (Source: Investment Newspaper)

Common rules, cannot be avoided

After Minister of Finance Ho Duc Phoc, on behalf of the Government, submitted the Draft Resolution on applying additional corporate income tax in accordance with the regulations on preventing global tax base erosion, earlier this week, National Assembly Chairman Vuong Dinh Hue continued to chair a meeting to discuss the issue of global minimum tax. And the unified viewpoint was once again emphasized that it is necessary to issue a Resolution and implement global minimum tax from 2024, because it is a "common rule of the game" that cannot be avoided. Implementing global minimum tax is also a way for Vietnam to proactively gain the right to levy taxes and create confidence for foreign investors.

Mr. Le Quang Manh, Chairman of the National Assembly 's Finance and Budget Committee, also emphasized this when examining the Draft Resolution. "The early issuance of the Resolution will clearly demonstrate Vietnam's determination to implement the global minimum tax from January 1, 2024, creating confidence for investors in the legal environment in Vietnam," Mr. Le Quang Manh emphasized.

Agreeing with this opinion, delegate Ta Thi Yen ( Dien Bien ) also said that applying a global minimum tax from 2024 is necessary, because if we do not collect taxes, other countries will also collect additional taxes.

“Vietnam needs to apply a global minimum tax to ensure its legitimate rights and interests,” said Ms. Yen.

However, in implementing a global minimum tax, the issue is not just about making a declaration of its application, but how will the additional tax be collected and used?

According to the Ministry of Finance, about 122 foreign corporations in Vietnam will be affected by the global minimum tax policy, with the tax difference, calculated based on the 2022 tax settlement, possibly reaching more than VND14,600 billion/year.

According to Ms. Nguyen Van Chi, Vice Chairwoman of the National Assembly's Finance and Budget Committee, the Draft Resolution stipulates that the payment be made to the Central budget, but there are also opinions suggesting that it be paid to a separate fund to be used for infrastructure development, industrial zones or to provide support to improve investment efficiency and create favorable conditions for businesses.

"The Government needs to consider and provide further guidance on this issue," said Ms. Nguyen Van Chi.

Delegate Tran Hoang Ngan (Ho Chi Minh City), when discussing the use of additional tax revenue, cited the case of Thailand, which has completed a plan to transfer this revenue source to a business support fund to re-support investors through other channels, to recommend that, "Vietnam also needs to study this solution."

To attract and retain “eagles”

How to use the additional tax revenue is also an issue that foreign corporations, economic experts and delegates are interested in.

According to Mr. Vu Tuan Anh, Standing Member of the National Assembly's Finance and Budget Committee, along with the global minimum tax mechanism, it is necessary to study more support policies to reassure businesses in their investments.

Delegate Ta Thi Yen also had many concerns about this issue. According to Ms. Yen, applying a global minimum tax will directly affect the interests of foreign investors who are in the period of enjoying tax incentives, with the actual corporate income tax rate enjoyed being lower than 15%.

“The Government and ministries, sectors and localities need to find new economic levers, including other incentives or new non-economic solutions that are appropriate, effective and comprehensive...”, said delegate Yen, adding that this is to ensure that the process of shifting investment capital into Vietnam continues smoothly, especially when investing in high-tech and new energy industries, bringing jobs and income to the people and development to the country.

In fact, regarding this issue, the Ministry of Planning and Investment is being assigned to complete the Draft Resolution of the National Assembly on piloting investment support policies in the high-tech sector. The draft is not currently being submitted to the National Assembly for approval at this session.

However, Mr. Le Quang Manh said that during the review of the Draft Resolution on applying additional corporate income tax according to regulations against global tax base erosion, there were opinions disagreeing with the issuance of this resolution individually; there were opinions suggesting the early issuance of a resolution on additional support policies to retain old investors and avoid consequences if these investors leave Vietnam.

“If Vietnam collects additional taxes, it also needs to study additional incentive and support policies. This will show investors that if they no longer enjoy tax incentives, there will be other incentives to help reduce costs,” said delegate Hoang Van Cuong (Hanoi).

According to Mr. Hoang Van Cuong, the Draft Resolution has not yet given this signal. Therefore, there needs to be a move to let investors know that they will enjoy other support policies when applying the global minimum tax.

Although agreeing with the need for additional incentive policies, the opinions of National Assembly deputies and experts all emphasized the need for caution, because it is necessary to comply with international commitments, not violate OECD regulations, as well as avoid unnecessary complaints, because sometimes, tax incentives for investors have been specifically stated on the project's investment certificate.

From another perspective, Ms. Nguyen Van Chi also said that the Government needs to speed up the amendment of the Law on Corporate Income Tax to specify issues related to the application of global minimum tax, instead of just stipulating it in the pilot resolution.

“The longer we delay amending the Corporate Income Tax Law, the more problems there will be for new investors,” said Ms. Nguyen Van Chi.

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