Businesses in Vietnam will not have to pay the new global minimum tax (GMT) until 2025, says Vu Tuan Anh, a member of the National Assembly’s Finance and Budget Committee.
The lawmaker was speaking at a Thursday press conference of the National Assembly Office held to provide a preview the parliament’s next (sixth) meeting.
Addressing the issue of the parliament not having GMT on the agenda for the coming session, Anh explained that as per the GMT scheme, firms have 12 months to declare any extra corporate income tax (CIT) payments and 18 months after the end of the fiscal year to file returns for taxable incomes.
As a result, firms will not have to pay additional tax per the GMT scheme in their home nations from 2024. The earliest date for firms in Vietnam to pay GMT would be 2025.
With such a timeline, the National Assembly will not discuss GMT content at its next meeting so that it has more time to learn the scheme in detail. The government has been asked to complete draft documents related to GMT, Anh said.
As the GMT is an important and unprecedented scheme, the National Assembly will check it carefully to ensure the country’s tax benefits, attractiveness to foreign investors, competitiveness and compliance with international law and practice, he added.
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, Prime Minister Pham Minh Chinh had said that the Vietnamese government will provide non-tax incentives to foreign-invested enterprises to offset any GMT disadvantage.
The PM also said in July that 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 new tax rule.
In order to offset disadvantages arising from deploying the GMT, the government submitted a draft resolution to National Assembly approval, aiming to incentivize high-tech investments.
The draft resolution says that tax breaks or direct subsidy payments from the state budget may be offered for workforce training, investments in fixed assets and public service infrastructure, production of high-tech goods, and research & development (R&D).
On October 17, the National Assembly, Vietnam’s highest legislative body, said it would not discuss approval of GMT at the upcoming session that begins October 23.
Bui Van Cuong, general secretary of the National Assembly, explained that the GMT bill had to be looked at in tandem with another bill that supported high-tech investments, but a draft for the latter was not yet ready for the parliament to discuss and approve.
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 mid-year session will also question top government officials directly; conduct a mid-term review of the nation’s 2021-2025 socioeconomic performance; and carry out a vote of confidence for top officials selected by the National Assembly.