The National Assembly Standing Committee has just issued a Resolution to adjust the Law and Ordinance Development Program for 2023. Accordingly, the National Assembly Standing Committee resolved to add to the Law and Ordinance Development Program for 2023 to submit to the National Assembly for comments and approval at the 6th session (October 2023) according to the procedure at one session with 2 important draft resolutions.
One is the National Assembly Resolution on the application of additional corporate income tax under the provisions against global tax base erosion.
Second is the National Assembly's Resolution on reducing value-added tax. Specifically, the Government proposes to continue reducing the value-added tax rate by 2%, applicable to groups of goods and services currently subject to a tax rate of 10% (to 8%), in the first 6 months of 2024.
These are considered two very important resolutions in economic development, stimulating demand and attracting foreign investment in the coming time.
In particular, the Resolution on the application of additional corporate income tax under the regulations against global tax base erosion plays a decisive role in strengthening foreign investors' confidence and attracting new investors to Vietnam.
The regulations on the application of the global minimum tax were proposed by the Organization for Economic Cooperation and Development (OECD) and will be applied from the 2024 corporate income tax period. Many countries have internalized these regulations to apply from the 2024 corporate income tax period.
If Vietnam does not internalize the global minimum tax regulations, capital exporting countries will be able to collect additional corporate income tax (up to 15%) from multinational companies with foreign investment projects in Vietnam that are currently enjoying an effective tax rate of less than 15%.
Therefore, when this Resolution is passed by the National Assembly, it will create a basis for foreign-invested enterprises subject to global minimum tax to declare and pay additional corporate income tax and feel secure about the legal environment in Vietnam.
According to statistics from the Ministry of Finance, there are currently about 335 projects with registered investment capital of over 100 million USD operating in the processing and manufacturing industry in economic zones and industrial parks. These projects are enjoying corporate income tax incentives of less than 15%, often in the high-tech sector of enterprises such as Samsung, Intel, LG, Bosch, Sharp, Panasonic, Foxconn, Pegatron... Although accounting for only about 1% of the total number of projects, the total registered investment capital of these types of projects accounts for nearly 30% of the total FDI capital in Vietnam (reaching about 131.3 billion USD). According to the 2022 corporate income tax settlement data, the General Department of Taxation has preliminarily calculated that about 122 foreign corporations investing in Vietnam will be affected by the Global Minimum Tax if applied from 2024 (after excluding cases that do not have to apply). If other countries also apply the Global Minimum Tax from 2024, countries with parent companies will collect an additional tax difference in 2024 estimated at over VND 14,600 billion. |
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