Implementing global minimum tax, Vietnam considers cash support for investors

The Ministry of Planning and Investment (MPI) has issued a document requesting the Ministry of Justice 's appraisal opinion on the proposal to develop a Resolution on piloting investment support policies when applying global minimum tax.

Implementing the conclusion of the Government Standing Committee at the meeting on the application of global minimum tax and mechanisms and policies to support non-tax investment, the Ministry of Planning and Investment has drafted a document to the Government proposing the development of a National Assembly Resolution on the pilot application of investment support policies according to simplified procedures.

This submission was prepared in parallel with the submission of the Ministry of Finance , proposing to develop a National Assembly Resolution on applying additional corporate income tax (CIT) in accordance with the regulations against global tax base erosion, which Vietnam is expected to join next year (2024).

Accordingly, the report assesses the impact of global minimum tax on Vietnam's investment environment.

Implementing global minimum tax, Vietnam considers providing cash support to investors. (Photo: Hoang Ha)

The Ministry of Planning and Investment said that changing the approach and adding new forms of incentives and investment support in the context of implementing global minimum tax is necessary to ensure the competitiveness and attractiveness of the investment environment in Vietnam in the coming time.

The Ministry of Planning and Investment proposed the content of the draft Resolution of the National Assembly to pilot the application of investment support policies to 4 groups of enterprises.

Specifically, enterprises with investment projects in the field of technology product manufacturing, high-tech enterprises, and enterprises with high-tech application projects must have projects with capital scale of over 12,000 billion VND or achieve revenue of over 20,000 billion VND/year.

For enterprises investing in research and development center projects, capital scale is required to be over 3,000 billion VND.

Four forms of investment support include: support for training and human resource development; support for research and development; support for fixed asset investment costs and support for high-tech product production costs.

Regarding the method of investment support, the drafting agency proposed that investment support amounts be deducted from the tax obligations of enterprises or paid directly with money from the state budget.

The reason for proposing this method, according to the Ministry of Planning and Investment, is in line with the recommendations of the Organization for Economic Cooperation and Development (OECD) in the process of building mechanisms and policies to support investment when the global minimum tax is applied.

These are forms of investment support that other countries in the region are applying, while in Vietnam they are not specifically regulated in legal documents.

Regarding investment support level, there are two solutions proposed: ceiling support on total investment level and ceiling support on revenue.

However, the Ministry of Planning and Investment believes that both of the above solutions are not very effective in controlling the budget, but can also limit investment attraction or not support the right subjects that need encouragement, reducing the effectiveness of investment attraction policies.

Therefore, the Ministry proposes the option of "State budget allocated in the annual budget estimate to implement investment support mechanisms and policies".

At the same time, the Government is assigned to specify in detail the support levels, procedures and order for applying the forms of investment support prescribed in the resolution.

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