A government resolution to support hi-tech investments, subject to National Assembly approval, seeks to offset any disadvantage that arises from deploying the global minimum tax (GMT) in 2024.
The government says in a report to the National Assembly that the move aims to maintain the country’s attractiveness for foreign direct investment (FDI).
The Ministry of Planning and Investment has clarified that hi-tech investments are now subject to a lower corporate income tax rate than the GMT mandated 15%, nullifying an important advantage presented by Vietnam.
In July, Prime Minister Pham Minh Chinh had said that the government will submit GMT resolutions to the National Assembly, the country's highest legislative body, for approval in October. The GMT is scheduled for deployment in January 2024.
To offset the negated incentives, 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).
The government report points out that the recent upgrade of Vietnam-U.S. ties to that of a comprehensive strategic partnership will generate hi-tech opportunities for Vietnam in line with America’s friendshoring strategy.
The new support will also fortify Vietnam’s cooperation with global tech giants like Samsung, LG, Intel, Canon, and motivate them to continue operations in the country instead of relocating to greener pastures, the report says..