The Government has proposed adding nearly 30 draft laws, ordinances, and resolutions to the law-making program in 2023 and 2024 but the list does not include draft laws that are more urgent.
Amending the Corporate Income Tax Law (CIT Law) should be made a top priority as it should be aligned to the global minimum tax set to take effect early next year. The global minimum tax would have tremendous impact on investment activity, especially foreign direct investment, in many countries, including Vietnam. When this tax takes effect, multinational corporations (MNCs) would have to pay a higher tax in countries where they are headquartered. As such, the tax incentives they are entitled to in the host country would no longer exist or be sharply cut. Investment incentives would be compromised in many instances. The global minimum tax will even have adverse impacts right now, rather than from the moment it takes effect. It is because investors will have to take into account the new tax right now when mulling their investment projects for this year and next.
This reality requires Vietnam to urgently consider amending and improving its tax incentive programs to maintain the competitiveness of its business environment. Issues relevant to the global minimum tax need to be codified in the amended CIT Law so that the law can be duly applied for fiscal 2024. However, among the draft laws proposed by the Government for the law-making program in 2023 and 2024, the draft of the amended CIT Law is nowhere to be found.
“This law must by all means be there!” National Assembly Chairman Vuong Dinh Hue stressed at a session last week of the NA Standing Committee on the 2023-2024 law-making program. According to the NA leader, dealing with the global minimum tax is of paramount importance now. If the Government does not make a proposal, the National Assembly should conceive a legislative initiative on this issue.
In response to the concern, Minister of Justice Le Thanh Long said the Government has assigned the Ministry of Finance to consider amending the CIT Law, and the latter is collecting feedback on the issue. Long asserted his ministry would submit the draft of the amended law to the Government in June this year and forward it to the National Assembly at the sitting in October 2023. However, only days earlier, it was covered in local media that it is not until next year before the Ministry of Finance submits the draft to the Government, and seeks the National Assembly’s opinion on the draft in October 2024 before it could be passed by lawmakers in 2025.
Not only the absence of the draft of the amended CIT Law in the 2023-2024 law-making program as proposed by the Government is inexplicable. Other laws under the tax reform program including the drafts of the special consumption tax and the value added tax are not proposed by the Government either, though the Party Central Committee and the NA Standing Committee have asked the Government to review these laws, propose amendments and include them in the 2023-2024 legislative program. The Government has also made a report on its legislative research and review as entrusted, which underlines the need to urgently revise some important tax laws. However, the Government to date has not submitted proposals to include supplements and amendments to those tax laws in the 2023-2024 legislative program.
Most common to the people is the Personal Income Tax Law. It is still not included in the list of laws subject to revision this year and next, though the provisions on income deductions have become outdated, making the tax burden heavier on income earners. The need to amend the Law on Health Insurance has also become more striking to do away with long-persisted inadequacies in implementing the law on one hand and to ensure its alignment with other provisions in the Law on Medical Examination and Treatment on the other hand. Still, the Government has not proposed amending the law. Similarly, the Government has not opined on 22 prevailing laws related to land use and management to ensure their consistency with the amended Land Law once this law is passed by the NA.
In proceeding with the legislative program, the Government can propose adding new draft laws. However, the absence of draft laws seen as badly needed for the people and businesses is quite incomprehensible.
Policymaking can be likened to medical examination and treatment. If the patient (which means the economy, the business community and the people) is not examined or diagnosed with the right treatment, health risks to the patient would worsen.
