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Wednesday, June 26, 2024

Global minimum tax impact on Vietnam requires thorough assessment

By N. Tan

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HCMC – The Government has requested the Ministry of Finance to evaluate the impact of a global minimum effective corporate tax on the nation’s budget revenue and foreign investment attraction, and on foreign investors.

Multinational corporations with sales of over 750 million euro would be subject to a global minimum effective corporate tax rate of 15%. This tax has been approved by nearly 140 countries.

The Government Office of Vietnam recently issued Notice 120 regarding a conclusion by Deputy Prime Minister Le Minh Khai following a meeting on the global minimum tax and its impacts on Vietnam.

According to Deputy PM Khai, the Ministry of Finance needs to analyze and assess the global minimum tax’s negative impacts on those investors enjoying Vietnam’s tax incentives and the business environment in Vietnam.

He underlined the need to review and learn from other relevant countries, especially those with the same conditions as Vietnam’s, to thoroughly evaluate the global minimum tax and come up with coping measures.

The ministry will collect feedback to complete its report in the incoming time, which will focus on major issues, including the formulating process and nature of the global minimum tax, the pros and cons of Vietnam’s imposition of the global minimum tax and the overall review of its impacts on the economy.

Over the years, the Vietnamese Government has used low tax rates as an effective measure to attract many foreign investors to the country, creating a lot of jobs for Vietnamese people, contributing to increasing State budget revenue, and facilitating tech transfers.

There is concern that the 15% global minimum tax might help increase State budget revenue but foreign investors might walk away from Vietnam.

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