The issue was raised at a talk on the global minimum corporate tax – prospects and challenges in FDI attraction in HCMC held on March 29 by the Vietnam International Arbitration Center, HCMC Center of International Integration Support and HCMC Institute for Development Studies.
The global minimum corporate tax at 15% will adversely impact most of multinational companies, including those investing in Vietnam.
If the global corporate minimum tax is applied in 2024, at least 1,015 foreign direct investment enterprises in Vietnam will have their tax rates adjusted to comply with the policy.
Some corporations in Vietnam are now entitled to tax incentives ranging from 2.75% to 5.95%, much lower than the global minimum corporate tax rate of 15% to be imposed in 2024.
Though the corporate income tax rate is 20%, the actual rate for FDI businesses in Vietnam is estimated at 12.3%, according to Phan Duc Hieu, member of the National Assembly Economic Committee.
The execution of the above tax mechanism would generate more revenue for the country from tax collection but this would adversely affect Vietnam’s FDI attraction policy and business environment as tax and land price incentives are now chiefly used by Vietnam as tools to lure foreign investors, added Hieu.
Given that Vietnam’s current investment attraction policy would become less attractive to big corporations when the global minimum corporate tax is applied, the country needs to build an investment policy to attract strategic foreign investors.
The global corporate minimum tax policy is a challenge but an opportunity for Vietnam to improve its business environment, said the experts.