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Vietnam adjusting policies to adapt to global minimum corporate income tax: Official

Vietnam is studying and adjusting its investment policies to adapt to the global minimum corporate income tax which is scheduled to be applied from 2024, said Deputy Minister of Planning and Investment Nguyen Thi Bich Ngoc.
Vietnam adjusting policies to adapt to global minimum corporate income tax: Official ảnh 1Illustrative image (Photo: vneconomy.vn)

Hanoi (VNA) - Vietnamis studying and adjusting its investment policies to adapt to the globalminimum corporate income tax which is scheduled to be applied from 2024, saidDeputy Minister of Planning and Investment Nguyen Thi Bich Ngoc.

The global minimum corporate income tax is part of the ActionPlan on Base Erosion and Profit Shifting (BEPS), which involves theparticipation of 141 member countries. Accordingly, largecompanies with annual global consolidated revenue of at least 750 million EUR (806million USD) over at least 2 years of the preceding 4-year period will besubject to a minimum tax rate of 15%. If they are currently paying a tax ratelower than 15% in the country where they are investing, they will have to paythe remaining "shortfall" at a tax rate of 15% to the country wherethey have their headquarters.

According to economists, investment exporting countries’ applicationof the global minimum tax in 2024 poses significant challenges for recipientcountries, also known as investment importing countries, including Vietnam.

While the standard tax rate is 20% in Vietnam, the actualtax rate for FDI companies during the average incentive period is 12.3%, withsome large corporations being taxed at only a few percent.

However, Chairman of the Korea Chamber of Business inVietnam Hong Sun said if the global minimum tax is applied by countries in2024, big Korean companies investing in Vietnam will have to pay the tax reduced in Vietnam back to the Republic of Korea, thus hurting Vietnam’scompetitiveness to attract investment.

Vietnam adjusting policies to adapt to global minimum corporate income tax: Official ảnh 2Illustrative image (Photo: VNA)

Permanent member of theNational Assembly’s Economic Committee Phan Duc Hieu said it is necessary toquickly evaluate the level of its impacts, including both opportunities andnegative effects. At the same time, the current preferential policy regulationsneed to be reviewed in their entirety, thereby determining the scope and levelof impacts by sector.

DeputyMinister Ngoc suggested the Vietnamese ministries and agencies concerned askcompetent authorities to consider timely and appropriate adoption ofmeasures to harmonise interests between the State and investors, encourageinvestors to maintain and expand operations in Vietnam, and continue attractingkey projects aligned with the national socio-economic development strategy inthe new period./.

VNA
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