The Government has requested the Ministry of Finance to evaluate the impact of a global minimum effective corporate tax on the nation’s budget revenue and foreign investment attraction, and on foreign investors.

Businesses in Vietnam want preparations to be intensified for the upcoming introduction of a global minimum corporate tax rate.

Vietnam is studying and adjusting its investment policies to adapt to the global minimum corporate income tax which is scheduled to be applied from 2024, said Deputy Minister of Planning and Investment Nguyen Thi Bich Ngoc.

Vietnam will adjust investment policies to adapt to the global minimum tax rate and remain an attractive destination for investment.

As many countries plan to adopt the Global Minimum Tax Rate (GMTR) in 2024, experts are concerned that the entry into force of the rate would discourage foreign companies from locating their operations in low-tax countries.

The introduction of the global minimum tax will reduce competition in attracting investment in developing countries, which mainly rely on tax incentives to attract foreign direct investment (FDI).

The global minimum corporate income tax, initiated by the Organisation for Economic Cooperation and Development (OECD), means enterprises with annual revenues of 750 million euros

Vietnam will have to solve a difficult problem: How to raise the minimum tax rate to 15% but still keep the FDI inflows into Vietnam.

A special working group of the Prime Minister will be established to deal with issues related to the global minimum tax.

The fact that rich countries want to impose a global minimum tax of 15 percent has put Vietnam in an awkward situation. Vietnam would be able to collect bigger taxes but this could discourage multi-national enterprises.