The Ministry of Planning and Investment is gathering comments on a draft decree to establish a fund that will use part of Global Minimum Tax (GMT) revenues to support investors in priority sectors.
The fund aims to help stabilize the investment environment, and attract both foreign and domestic investment in prioritized sectors, helping offset the loss of preferential policies for investors as a result of instituting the GMT.
The fund will also tap other sources including state budgets and donations, the ministry said.
Under the draft decree, the fund will be managed either by the Ministry of Planning and Investment or the Ministry of Finance.
Per the draft decree, the fund will support businesses investing in producing high-tech product and those using high-tech applications. Such firms must have investments of at least VND12 trillion ($492.3 million) or revenues above VND20 trillion a year, and their investment disbursement must exceed VND12 trillion in the first three years after receiving their investment certificates.
It will also support firms with research and development (R&D) activities as long as they have disbursed at least VND1.5 trillion ($61.5 million) in the first three years after receiving investment certificates.
The fund will also provide cash support for workforce training, R&D costs, fixed asset investments, production of high-tech products, and social infrastructure investments.
For workforce training, the support is up to 50% of firms’ payments for training Vietnamese people via short-term and long-term courses, including fees for hiring experts, testing and accommodation; and training costs like expenditure on learning facilities and materials.
R&D support will include reimbursement of 20-50% for R&D investments of at least VND120 billion ($4.9 million) a year.
For fixed asset investments, the reimbursement will be between 10% and 40% depending on various factors including investment size and scale of business.
Support for high-tech production will be 0.5% of the added value for products with prices of at least VND4 million ($164.1) per unit. A special support of 1.5% will be available for firms with similar products, but their revenue must exceed VND200 trillion ($8.2 billion) a year, have a workforce of over 10,000 people, and added value accounting for at least 30% of the prices.
For social infrastructure, the support can go up to 50% of investments in healthcare, culture, sports, public services, trees and parks.
The National Assembly, Vietnam’s highest legislative body, passed a resolution on GMT in November that will take effect on January 1, 2024. However, tax payments under the scheme will be applied from fiscal year 2025.
The government has been tasked with drafting amendments to the Law on Corporate Income Tax (CIT) for inclusion in the National Assembly’s lawmaking agenda for 2024.
As the resolution does not contain details related to tax declaration, payment location and solutions for non-compliance, the government has been asked to draft a decree on GMT implementation.
As the GMT is set to negate some of Vietnam’s preferential policies for foreign investors, the government has been asked to draft a decree on establishing a fund that uses GMT revenues and other resources to build support for investors, especially in prioritized sectors.