The National Assembly's Standing Committee has issued a resolution on adjusting the 2023 law-building program, adding the drafting of two important resolutions to the National Assembly’s 2023 law-building program. The resolutions will be submitted to the National Assembly for consideration and approval at the sixth session.

One of them is the National Assembly’s resolution on applying additional corporate income tax in accordance with global anti-base erosion model rules. The other is a resolution on VAT cuts. The government has proposed a continued 2 percent VAT reduction to be applied to goods and services being taxed 10 percent (the new tax rate would be 8 percent) in the first six months in 2024.

Economists said these are important resolutions to develop the economy, stimulate  domestic demand and attract foreign investment. Of these, the resolution on the additional corporate income tax in accordance with global anti-base erosion model rules plays a decisive role in consolidating foreign investors’ confidence and attracting new investors.

The global minimum tax, initiated by OECD, is expected to begin in the 2024 corporate income taxation period. Many countries have internalized the rules for application.

If Vietnam doesn’t internalize the regulations on the global minimum tax, investment capital export countries will have the right to collect tax arrears (the total tax enterprises will have to pay is equal to 15 percent) from multinationals which have investment projects in Vietnam which enjoy real tax rates of below 15 percent.

The resolution, when ratified by National Assembly, will allow foreign invested enterprises subject to the global minimum tax to make declarations and pay additional taxes and feel secure about the legal environment in Vietnam.

The Ministry of Finance has estimated that there are 335 projects with registered capital of over $100 million in the fields of processing and manufacturing industry in export processing zones and industrial zones.

The projects enjoy corporate income tax rates of below 15 percent, and most are operating in high-tech fields, such as Samsung, Intel, LG, Bosch, Sharp, Panasonic, Foxconn and Pegatron.

The number of projects of this kind just account for one percent of total foreign invested projects, but their investment capital accounts for 30 percent of total FDI capital in Vietnam ($131.3 billion).

The General Department of Taxation (GDT), after analyzing the corporate income tax finalization in 2022, estimated that 122 foreign investors will be affected by the global minimum tax if it is applied from 2024.

Manh Ha