Enforcement plan for Global Minimum Tax to be submitted to NA for approval in October

Speaking at the 15th meeting of the Inclusive Framework on the Base Erosion and Profit Shifting (BEPS), organized by the Organization for Economic Cooperation and Development (OECD) in France from July 10-12, Deputy Director of the General Department of Taxation (GDT) Dang Ngoc Minh noted that the Vietnamese Government will submit a proposal to the National Assembly (NA) in October this year on approving the enforcement of the Global Minimum Tax (GMT) in Vietnam, starting from January 1, 2024.

The NA will issue legal documents on the application of the GMT, including regulations on the Income Inclusion Rule (IIR) and the Qualified Domestic Minimum Top-Up Tax (QDMTT), according to Mr. Minh.

These regulations will be internalized in Vietnam to ensure compliance with model rules and guidelines under the BEPS.

The draft regulations will be sent to the business community and relevant ministries and agencies for feedback before their submission to the NA in October, he said.

Figures from the GDT show that some 120 FDI corporations with over 1,000 enterprises investing in Vietnam are likely to be affected by the GMT if it is applied from 2024.

The GMT rate is a key element of the program to combat tax base erosion and profit shifting, initiated by the OECD and now embraced by more than 140 countries and territories.

Under the mechanism, multinational corporations with revenue of €750 million or more will be subject to a minimum tax rate of 15 per cent. Thus, when a company invests in a foreign country but pays corporate income tax of less than 15 per cent in that country, it will have to pay the difference in the country where it is headquartered.

The GMT is scheduled to take effect from January 1, 2024.