The government and legislature of Vietnam should check and issue solutions related to the global minimum tax (GMT), Samsung Electronics president and CFO Hark Kyu Park has said.
The executive made the request at a Thursday meeting in Seoul with Nguyen Anh Tuan, chief of Bac Ninh province's Party Committee, as part of the provincial leader's visit. Park also called on Vietnam to provide more incentives for made-in-Vietnam goods and corporate income tax (CIT) in the future.
For his part, Tuan asked Samsung to share a mutual understanding with Vietnam related to GMT. He also proposed Samsung expand its investment and refine its production in Vietnam in line with smart and green production. Samsung should continue cooperating with Bac Ninh province and Vietnam’s Ministry of Industry and Trade to help local businesses, he added.
As South Korea is the biggest foreign investor in Bac Ninh province, and the two countries have elevated their bilateral ties to a comprehensive strategic partnership, Tuan expected Samsung-Bac Ninh ties to continue thriving.
The GMT, agreed to by G7 countries in June 2021 as a measure to prevent tax avoidance 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%.
Vietnam’s current general corporate income tax is 20%, basically higher than the GMT and fulfilling the initiative, said Luu Duc Huy, head of the General Department of Taxation’s policy department. However, some foreign-invested enterprises are subject to tax exemptions and low tax rate policies, hence their practical tax rates are lower than 15%.
A resolution on GMT is set to be discussed and put forward for approval at the National Assembly’s ongoing sitting.
The GMT is expected to be applied in Vietnam in early 2024, the General Department of Taxation's deputy general director Dang Ngoc Minh said at the 15th meeting of the Inclusive Framework on the Base Erosion and Profit Shifting (BEPS) organized by the Organization for Economic Cooperation and Development (OECD) in Paris on July 11.
Samsung's four subsidiaries in Vietnam made a total profit of KRW2,999 billion ($2.26 billion) in the first half of this year, down 11.2% year-on-year, according to the South Korean tech giant's interim business report.
In the same period, sales at the four subsidiaries, namely Samsung HCMC CE Complex (SEHC) in Ho Chi Minh City, Samsung Electronics Vietnam (SEV) and Samsung Display Vietnam (SDV) both in Bac Ninh province, and Samsung Electronics Vietnam Thai Nguyen (SEVT) in Thai Nguyen province, dropped 18.1% year-on-year to KRW38,690 billion ($29.18 billion).