26.7 C
Ho Chi Minh City
Sunday, July 21, 2024

Global minimum tax to go before National Assembly

The Saigon Times

Must read

HCMC – The Government plans to send the global minimum tax policy to the National Assembly for discussion.

At a forum organized by the Organization for Economic Cooperation and Development (OECD) on July 11, Dang Ngoc Minh, deputy general director of the General Department of Taxation, shared Vietnam’s roadmap for implementing the global minimum tax policy.

Minh said that the Ministry of Finance submitted a report to the Government in June, outlining the application of global minimum tax regulations in Vietnam. The Government aims to seek approval from the National Assembly (NA) in October, with the tax slated to take effect from the beginning of 2024.

Should the proposal be endorsed, the NA will enact policies on the global minimum tax, including the income conclusion rule and the qualified domestic minimum top-up tax.

The qualified domestic minimum top-up tax is designed to ensure that profitable corporations pay a minimum amount of tax equivalent to OECD regulations. Its primary objective is to prevent foreign direct investment companies from incurring additional taxes in countries where their holding companies are headquartered.

Vietnam plans to internalize certain regulations under this policy while ensuring compliance with international standards outlined in the Global Anti-Base Erosion and Profit Shifting (BEPS) Program.

The draft proposal will undergo extensive feedback from the business community, ministries, and relevant sectors before being submitted to the NA.

According to statistics from the Ministry of Finance, Vietnam currently hosts 1,015 foreign direct investment enterprises with holding companies subject to taxation. Over 70 of these enterprises are expected to be affected by the global minimum tax once it is enforced in 2024.

The ministry also said that if all countries where these holding companies are based implement the global minimum tax, they could collect over VND12 trillion in additional tax revenue in 2024.

Data from the General Department of Taxation showed that 335 projects operating in the manufacturing and processing industry, located in economic and industrial zones, and with registered capital exceeding US$100 million, benefit from a corporate income tax rate lower than 15%.

Companies like Samsung, Intel, LG, Bosch, Sharp, Panasonic, Foxconn and Pegatron fall into this category. Their registered investment capital accounts for nearly 30% of total FDI in Vietnam, totaling US$131.3 billion, making them likely to be impacted by the global minimum tax.

The global minimum tax was initially agreed upon by the G7 countries, including the U.S., Canada, United Kingdom, Germany, France, Italy, and Japan, in June 2021. It imposes a minimum tax rate of 15% on multinational enterprises with consolidated revenue exceeding 750 million euros over two of the past four consecutive years.

More articles

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest articles