A resolution on global minimum tax (GMT) is scheduled to be discussed for approval at the ongoing sitting of the National Assembly, Vietnam’s legislature.
The resolution, together with another on value added tax (VAT) cuts, has now been added to the 2023 law and ordinance building program by the parliament (NA).
Earlier, at an October 19 press conference on the scheduled agenda for the sixth session of the legislative body, Vu Tuan Anh, a member of the National Assembly’s Finance and Budget Committee, said that parliament would not include GMT on the session’s agenda because 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 would 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, he said. “A GMT is an important and unprecedented scheme, so the National Assembly will check it carefully to ensure the country’s tax benefits, attractiveness to foreign investors, competitiveness, and compliance with international laws and practices,” he added.
At the latest meeting of the NA Standing Committee in late September, Minister of Finance Ho Duc Phoc stressed the need to promulgate a resolution by the legislature on GMT.
To ensure its legitimate rights and interests, Vietnam needs to affirm the application of GMT, an additional corporate income tax, in accordance with the Organization for Economic Cooperation and Development’s (OCED) Global Anti-Base Erosion model rules, Phoc noted.
“The GMT application will bring new opportunities to Vietnam, such as increasing state budget revenue from the additional tax; enhancing international integration; and minimizing tax evasion, tax avoidance, transfer pricing and profit shifting,” he noted.
The GMT, agreed to by G7 countries in June 2021 as a measure to prevent tax base erosion and profit shifting by multinational corporations, will become effective on 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%.