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Saturday, June 15, 2024

Vietnam approves global minimum tax

The Saigon Times

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HCMC – Vietnam will embrace a global minimum tax from January 1, 2024 as over 93.5% of deputies present at the sixth National Assembly (NA) sitting voted in favor today, November 29, the final day of the NA meeting.

The global minimum tax is an international effort to combat the common practice of multinational corporations shifting their profits to countries and territories with lower tax rates for tax evasion.

Under this policy, a tax rate of 15% will be applied to multinational enterprises with a combined annual revenue of 750 million euros, roughly equivalent to US$800 million.

The application of this tax is expected to result in an additional VND14.6 trillion in budget revenue for Vietnam next year, originating from 122 foreign-invested enterprises operating within Vietnam.

Given the direct impact of the global minimum tax on foreign-invested enterprises, some NA deputies recommended that the Government devise appropriate investment incentives and clarify tax incentive policies for newcomers to Vietnam.

To facilitate the effective management and utilization of the investment support fund, which will be sourced from the global minimum tax and other avenues in 2024, the NA directed the Government to draft a decree outlining the fund’s establishment and operations.

This strategic move aims to create a stable investment environment, attract more strategic investors and multinational corporations, and provide support to domestic enterprises operating in key sectors.

The UK, Japan, South Korea, and the European Union, among others, are also planning to implement the global minimum tax policy in the coming year.

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