Vietnam will work with investors to discuss and seek appropriate measures to adapt to the impact of a global minimum corporate tax, according to Deputy Minister of Planning and Investment Nguyen Thi Bich Ngoc.

The global minimum tax rate is a key element of a program to combat tax base erosion and profit shifting, initiated by the Organization for Economic Cooperation and Development (OECD) and now embraced by more than 140 countries and territories.

Under the mechanism, multinational corporations with revenue of €750 million ($870 million) or more will be subject to a minimum tax rate of 15 per cent. Thus, when a company invests in a foreign country but pays corporate income tax of less than 15 per cent in that country, it will have to pay the difference in the country where it is headquartered.

Speaking at a conference on March 20 on the impact of the global minimum tax on foreign investment attraction, Deputy Director of the Foreign Investment Agency at the Ministry of Planning and Investment Do Van Su said tax incentives in countries receiving investment can be nullified and will no longer be a competitive advantage in investment attraction.

Deputy Minister Ngoc said the country’s Law on Investment has regulated the principle of stabilizing incentives for investors, including tax incentives. However, when joining the global minimum tax mechanism, Vietnam will have to fulfill its international commitments. Together with supporting investors, it hopes that investors also express their responsibility for the host country, she said.

In August 2022, the government established a special working group to study and propose solutions relating to the OECD’s global minimum tax rate. The group is working to build a legal framework for corporate income tax related to the application of the global minimum tax so that preferential policies for foreign investors are implemented effectively.

Relevant ministries and agencies will propose measures to the Prime Minister to help harmonize the interests between the country and investors, ensure a stabilized business and investment environment, encourage investors to maintain and expand investment in Vietnam, and continue to draw key investment projects in line with the socio-economic development strategy.