Support policies needed for attractive investment environment if GMT enacted: lawmakers

The application of the global minimum tax (GMT) will reduce the attractiveness of Vietnam’s investment environment, so the National Assembly should issue a resolution on preferential support policies for businesses, especially foreign ones, said legislators.

Speaking at a Monday discussion on a draft resolution on the GMT as part of the legislature’s ongoing session, Vu Tien Loc, a National Assembly deputy from Hanoi, emphasized the need to approve the resolution during this session to ensure national interests.

At the same time, it is necessary to issue policies to encourage new investments to ensure fairness among all businesses, he noted.

He said the promulgation of this GMT resolution will reduce the attractiveness of the business and investment environment in Vietnam, especially for strategic investors, in the context of fierce competition for foreign investment.

“To minimize adverse impacts, the National Assembly needs to issue additional resolutions on preferential and supportive policies to maintain an attractive investment environment. It also aims to promote quality investment capital flows in line with the economic development strategy set by the Party and State while not violating international commitments or going against the integration trend," he analyzed.

Meanwhile, a deputy Nguyen Quang Huan from the southern province of Binh Duong, stated that once the GMT resolution is in place, Vietnam can collect VND14.6 trillion ($600 million) of tax differences between the country’s current tax scheme and the GMT in the first year of enforcement.

“The timely issuance of the resolution is also a way to help Vietnam retain manufacturers and create jobs for workers, thus fulfilling its international obligations,” he stressed.

Echoing Loc, he said that in addition to conducting a comprehensive assessment of the impacts, the government should consider support policies, especially for supporting industries.

Tran Hoang Ngan, a representative from Ho Chi Minh City, held that the resolution's adoption will ensure transparency and fairness in foreign investment attraction between countries.

“The GMT application will help Vietnam ensure its legitimate rights and interests through collecting a large amount from tax differences; ensure fairness between domestic and foreign-invested enterprises; and show progress and transparency in the tax management system,” he said.

To continue attracting foreign investors to Vietnam, it is necessary to invest more in improving the national socio-economic infrastructure system, especially transport infrastructure to reduce logistics and production costs for businesses; support human resources training to meet the needs of foreign invested enterprises, particularly in the fields of high technology and green economy; and streamline administrative procedures, he noted.

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 Organisation for Economic Cooperation and Development (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%.