Vietnam has passed a resolution to align its corporate tax rate with the global minimum levy of 15% on multinational companies.
Key Takeaways
- Vietnam has passed a resolution to align its corporate tax rate with the global minimum levy of 15% to prevent a race-to-the-bottom competition for attracting multinational companies.
- The new tax rule aims to bring Vietnam’s investment environment closer to international standards and will come into effect in January 2024.
- To offset the added tax burden, Vietnam is considering providing financial support to high-tech manufacturing and research and development activities through direct payments or tax deductions.
Currently, Vietnam taxes corporate income at 20%, but with tax holidays and rebates, the effective rate can be as low as 10% for large international firms. The new tax rule aims to bring Vietnam’s investment environment closer to international standards and will come into effect in January.
Vietnam is considering ways to offset the added tax burden on corporations, including providing financial support or tax deductions for high-tech manufacturing and research companies. The government is also planning to establish a fund with money from the global minimum tax revenue to support strategic investors and multinational corporations. The global minimum tax agreement is estimated to potentially affect 122 foreign companies investing in Vietnam, adding around 14.6 trillion dong to state tax revenue next year.
