Global minimum tax not on agenda as Vietnam parliament meets

The National Assembly, Vietnam’s highest legislative body, will not discuss approval of the global minimum tax (GMT) at its meeting that begins October 23.

Bui Van Cuong, general secretary of the National Assembly, revealed this Tuesday at a meeting of the parliament's Standing Committee.

He explained that the GMT bill had to come in tandem with another that supported high-tech investments, but a draft for the latter bill was not yet ready for the parliament to discuss and approve.

The National Assembly's latest move is a major setback for the government's efforts to implement the GMT in Vietnam.

In July, Prime Minister Pham Minh Chinh said the government would submit GMT resolutions to the National Assembly for approval in October. Minister of Justice Le Thanh Long was tasked with drafting a resolution to add the GMT to the National Assembly’s legislative agenda this year. The Ministry of Finance was asked to draft a report on the GMT implementation and the Ministry of Planning and Investment to draft non-tax support policies for investors to offset losses deriving from the tax rule.

Regarding the agenda, Cuong said the upcoming parliament session would have two phases: October 23-November 10, and November 20-November 29.

Key topics on the agenda will include a resolution on a pilot scheme to resolve bottlenecks in construction of road traffic projects; the government’s report on the progress made in approving the UK joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP); site clearance and resettlement related to the construction of the Long Thanh International Airport in the southern province of Dong Nai.

The semiannual gathering will also embrace questions & answers with top government officials; mid-term review of 2021-2025 socioeconomic performance; and vote of confidence for top officials elected by the National Assembly.

The GMT, agreed to by G7 countries in June 2021 as a measure to prevent tax avoidance by multinational corporations, will become effective January 1, 2024 in many OECD countries. The GMT under OECD Pillar Two is a once-in-a-lifetime global tax reform that will apply to multinational companies with revenues of EUR750 million ($800 million) or more. Such companies will be subject to a minimum global tax rate of 15%.

In April, PM Chinh said that the Vietnamese government will provide non-tax incentives to foreign-invested enterprises to offset the GMT.

In order to offset disadvantages arising from deploying the GMT next year, the government has drafted a resolution, subject to National Assembly approval, to support high-tech investments. According to the proposed resolution, tax breaks or direct subsidy payments from the state budget might be offered for workforce training, investments in fixed assets and public service infrastructure, production of high-tech goods, and research & development (R&D).