Vietnam’s parliament asks gov’t to adjust draft Investment Support Fund decree

The government should adjust its draft decree on the Investment Support Fund, the National Assembly Standing Committee has requested.

The order followed a meeting of the legislative body earlier this month to discuss the draft decree.

In its latest decision, the National Assembly Standing Committee asked the Government to consider details related to fair access to the fund for domestic and foreign businesses and for foreign businesses coming form different nations.

At the previous meeting, the National Assembly Standing Committee gave its nod to the establishment of the fund, given the Global Minimum Tax (GMT) context.

However, Le Quang Manh, Chairman of the National Assembly’s Finance and Budget Committee, pointed out that the draft decree will focus on supporting high-tech investments and the beneficiaries are mainly multinational and foreign companies.

The support for domestic firms is unclear and domestic firms are unlikely to meet the requirements set in the draft decree, he noted.

Other latest requests of the National Assembly Standing Committee are the harmony between the decree and other legal frameworks, the correlations between the fund beneficiaries and their contributions, and mechanisms for inspection and supervision.

The committee also demanded that the draft decree should facilitate prioritized sectors and support the attraction of strategic investors.

The GMT, agreed to by G7 countries in June 2021, is a measure to prevent tax avoidance by multinational corporations. Multinational companies with revenues of EUR750 million ($800 million) or more are subject to a minimum global tax rate of 15%.

Vietnam’s current general CIT is 20%, basically higher than the GMT and fulfilling the initiative. However, some foreign-invested enterprises are subject to tax exemptions or low tax rate policies, hence their practical rates are lower than 15%.

In November 2023, the National Assembly, the country's highest legislative body, passed a resolution on the GMT which became effective on January 1, 2024. However, tax payments per the scheme will be applied from the fiscal year 2025.