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HANOI: Vietnam should hasten steps to adopt the global minimum corporate income tax from the beginning of next year as the country’s major investors apply the Organisation for Economic Co-operation and Development’s (OECD) initiative starting from 2024, deputy director of the General Department of Taxation Dang Ngoc Minh says.
The global minimum tax is not compulsory but would have a significant impact on foreign capital recipients like Vietnam, which were offering tax incentives to multinational enterprises (MNEs) as a major tool to attract capital inflows, whether the country adopted the global minimum tax or not.
The OECD’s global anti-base erosion rules imposed a minimum effective level of taxation of 15% for MNEs that meet the €750mil threshold.
Ngoc said that Singapore, Japan and South Korea were adopting the global tax policy from next year, allowing these countries to collect top-up taxes on MNEs, which were enjoying tax rates of below 15% for their investments.
He said that applying the global minimum tax would be essential for Vietnam to collect the top-up taxes.
Although the standard corporate income tax rate was 20%, higher than the global minimum tax level, the country was offering preferential policies for foreign investors, such as tax exemptions and tax reductions, which made the actual rate on MNEs below 15%, Ngoc said.
The Finance Ministry has drafted a resolution for the adaptation of the global minimum tax, paving the way for the global minimum tax to be introduced in Vietnam from next year, he added.
To remain attractive to foreign capital, Vietnam would improve the legal framework to create a favourable investment climate for MNEs, including mechanisms for non-tariff zones, incentives on land, infrastructure of industrial zones and export-processing zones, and exemption of indirect taxes.
He said there were 407 industrial parks across the country, attracting 11,200 foreign-invested projects with a total registered capital of US$231bil. — Viet Nam News/ANN
