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Global minimum tax helps increase budget revenue

Based on the 2022 CIT finalization data, about 122 of these corporations will be affected if the global minimum tax policy is applied in 2024.


The Ministry of Finance of Vietnam is collecting comments on the Outline of the Draft Resolution related to the application of the Additional Corporate Income Tax by the regulation to prevent the erosion of the global tax base. In this outline, the Ministry of Finance proposes two key policies, including the Qualified Minimum Inland Additional Tax Regulation (QDMTT) and the Integrated Minimum Taxable Income Regulation (IIR).



The Ministry of Finance of Vietnam is collecting comments on the Outline of the Draft Resolution related to the application of the Additional Corporate Income Tax by the regulation to prevent the erosion of the global tax base. In this outline, the Ministry of Finance proposes two key policies, including the Qualified Minimum Inland Additional Tax Regulation (QDMTT) and the Integrated Minimum Taxable Income Regulation (IIR).


The Ministry of Finance proposes to apply a standard minimum additional tax policy (QDMTT), to increase budget revenue from additional corporate income tax (CIT) for businesses that are enjoying incentives. tax investors in Vietnam, when their actual tax amount is less than the minimum (15%). This helps to contribute more to the national budget from the CIT portion of these enterprises.


Specifically, up to now, Vietnam has attracted investment from 142 countries and territories around the world, with about 335 projects with registered investment capital of over 100 million USD and enjoying preferential treatment. CIT is less than 15%.


Based on the 2022 CIT finalization data, about 122 of these corporations will be affected if the global minimum tax policy is applied in 2024.


If other countries apply the Global Minimum Tax starting from 2024 and Vietnam does not, the countries that own the parent companies of these businesses will face paying an additional tax difference is expected to be about 14,600 billion VND.


For the policy of the Minimum Taxable Combined Income Regulation (IIR), if Vietnam applies it to offshore-investing enterprises with a consolidated turnover of at least EUR 750 million, it is also possible to contribute to the State budget.


Vietnam now also has overseas investors. For example, for Viettel, the corporate income tax rate in investment countries is over 15%, except in Viettel East Timor. If Vietnam applies the Global Minimum Tax (IIR) policy while East Timor does not apply the CIT policy, it is possible to collect additional CIT on the difference between these two rates.


However, for the Vietnam National Oil and Gas Group (PVN), the group's offshore investment projects are mainly projects in the oil and gas sector, where the CIT rate or equivalent in those countries is quite high, from 30% to 60%. Therefore, currently, the application of the Global Minimum Tax policy does not affect PVN's offshore investment activities.


According to Luu Duc Huy, Director of the Policy Department (General Department of Taxation), the application of global minimum tax regulations will open new opportunities for Vietnam, including increasing state budget revenue from additional tax collection, strengthening international integration and reforming the tax system in line with international standards through amendments to corporate income tax policy and related laws. At the same time, this also helps to reduce tax evasion, tax avoidance, and transfer pricing.


The introduction of preferential CIT policies by countries to attract foreign investment has created conditions for tax evasion, tax avoidance, and transfer pricing to take place increasingly complex. Businesses took advantage of the opportunity to shift profits from countries with high tax rates to countries with lower tax rates, causing tax revenue loss. Therefore, the application of the Global Minimum Tax will create a common tax environment for all countries, reduce tax competition between countries and stabilize tax revenue.


The Ministry of Finance proposes to apply the Standard Minimum Additional Tax (QDMTT) and the Regulation on Summary of Minimum Taxable Income (IIR) to increase budget revenue and deal with transfer pricing and tax evasion. a new step for Vietnam in international integration and tax system reform. This will create opportunities for Vietnam to increase state budget revenue from additional tax revenue, attract investment and enhance international integration.

(Cong Ly)


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