Topped-up corporate income taxes under the Global Anti-Base Erosion (GloBE) rules are new for Vietnam and not yet regulated by the Law on Corporate Income Tax. It is therefore necessary to create an additional legal framework for the implementation of such taxes. While application would contribute more financial resources to the State budget, it would also reduce Vietnam’s attractiveness as an investment environment.
A draft resolution on topped-up corporate income taxes was put up for discussion at the 15th National Assembly (NA)’s 6th session on November 20.
According to Document No. 618 submitted by the government to the NA on November 10 for clarification of the draft resolution and the verification report on the draft resolution from the NA Committee for Financial and Budgetary Affairs, the Global Minimum Tax (GMT) is an initiative from OECD member countries agreed upon by 142 countries and territories at the Base Erosion and Profit Shifting (BEPS) Forum.
During discussions, a majority of NA deputies noted that the application of the GMT will be beneficial to Vietnam, earning more financial resources for the State budget, intensifying the country’s international integration, and preventing tax evasion and avoidance as well as profit and price shifting.
According to calculations from some deputies, Vietnam may earn an additional VND14.6 trillion ($576 million) each year from topped-up corporate income taxes under GloBE rules.
Many NA deputies also spoke of the negative impact of the application of the GMT, making Vietnam’s investment environment less appealing to foreign investors, especially multinational corporations subject to the GMT.
Almost all NA deputies expressed their support for the draft resolution, however.