Vietnam to impose global minimum tax from January 1, 2024

Delegates at the meeting - Photo: GIA HAN

On the morning of November 29, with 462 delegates participating in the vote (accounting for 93.52%), the National Assembly passed a resolution on applying additional corporate income tax according to regulations against global tax base erosion.

What global minimum tax will apply?

With this resolution, Vietnam will apply a global minimum tax from January 1, 2024. The tax rate will be 15% for multinational enterprises with a total consolidated revenue of 750 million euros (about 800 million USD) or more in 2 of the 4 most consecutive years.

Taxable investors will be required to pay global minimum tax in Vietnam.

This tax rate does not apply to government organizations; international organizations; non-profit organizations; pension funds; investment funds that are ultimate parent companies; real estate investment organizations that are ultimate parent companies.

According to the General Department of Taxation, there are about 122 foreign corporations investing in Vietnam that are affected by the global minimum tax. If the countries with parent companies all apply the tax from 2024, these countries will collect an additional tax difference of about more than VND 14,600 billion next year.

However, the imposition of a global minimum tax will directly affect the interests of foreign-invested enterprises during the tax exemption period, with an actual tax rate lower than 15%.

The Government proactively has appropriate solutions and handling plans if disputes or complaints arise.

In an explanation and acceptance report before the National Assembly pressed the button, Chairman of the Finance and Budget Committee Le Quang Manh said that businesses that have to pay global minimum tax in Vietnam may file a lawsuit if they want to pay this tax back to their home country.

Therefore, in addition to issuing resolutions, the Government needs to proactively prepare, have appropriate solutions and handling plans if disputes and complaints arise to ensure the investment environment.

The Government is assigned to prepare conditions and roadmap for implementing multilateral cooperation activities with other countries and organizing domestic apparatus to ensure implementation capacity for tax authorities and taxpayers when Vietnam collects this tax from the beginning of 2024.

Faced with many concerns about ensuring the investment environment when there are no suitable incentive solutions when implementing the global minimum tax, the National Assembly Standing Committee said that on November 15, the Government reported on the development of the draft resolution on applying additional corporate income tax and the draft resolution on piloting support policies in the high-tech sector. Among them, there is a proposal to establish a fund to implement investment support measures.

But at the 6th session, the National Assembly did not issue a separate resolution on investment support policy but included it in the general resolution of the session.

The National Assembly agreed in principle and assigned the Government in 2024 to develop a draft decree on the establishment, management and use of an investment support fund from global minimum tax revenue and other legal sources to stabilize the investment environment, encourage and attract strategic investors, multinational corporations and support domestic enterprises in a number of areas requiring investment incentives.

The Government is also requested to conduct a comprehensive review to complete and synchronize the system of policies and laws on investment incentives to meet the requirements of national development in the new situation.

According to the resolution, the taxable payment below the minimum effective from January 1, 2025 will be included in the amended Law on Corporate Income Tax.

The National Assembly assigned the Government to promptly develop a draft Law on Corporate Income Tax (amended) and add it to the 2024 law and ordinance making program so that it can be applied from fiscal year 2025.

This is to ensure that Vietnam retains the right to tax payments below the minimum tax rate under the global minimum tax rules.

From January 1, 2024, the global minimum tax policy initiated by the Organization for Economic Cooperation and Development (OECD) will take effect.

To date, 142/142 member countries, including Vietnam, have agreed with this tax policy. Large corporations and companies with a global consolidated revenue of 750 million euros or more must pay a minimum tax of 15%.

According to TTO

Source: https://tuoitre.vn/viet-nam-se-ap-thue-toi-thieu-toan-cau-tu-1-1-2024-20231129085330509.htm

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