Global Minimum Tax (GMT) is a type of tax levied on large corporations, multinational companies with high revenues, but invest in countries with low tax rates in order to avoid taxes, posing potential risks of unhealthy competition.
The following issues need to be clarified regarding the GMT tax:
(1) The process of formation and content of the GMT tax rate;
(2) Clearly stating whether Vietnam needs or should participate in the GMT tax;
(3) Providing more clarity on our tax policies in recent times;
(4) Conducting a comprehensive analysis and evaluation of the impact of the GMT tax rate on Vietnam. This includes focusing on the impact on the state budget, investors, and attracting foreign investment to Vietnam;
(5) Developing Vietnam’s coping measures against the impact of the GMT tax rate, especially specific solutions for those affected parties, with a thorough analysis of the impact.
The “GMT tax agreement” brings benefits to Vietnam
The Chairman of VAFIE believes that if Vietnam has not implemented the mechanism to apply the GMT tax, we will lose a significant amount of tax revenue. Investors will also benefit from this tax. The GMT tax sets a minimum tax rate of 15% for multinational corporations with total revenue of 750 million euros or more. This is to prevent competition and attract foreign direct investment.
This regulation allows for the minimum tax collection from large companies investing abroad. Vietnam not only receives investment but also makes significant investments abroad. In the first 6 months of this year alone, Vietnamese enterprises invested 320.6 million USD overseas. The total foreign investment capital as of July 2023 is 22.1 billion USD. It can be seen that implementing the GMT tax will help increase the state budget revenue.
Building a policy to participate in global minimum tax
According to the guidance of the OECD, in order to apply the global minimum tax rate, it is necessary to stipulate it effectively in legal documents. The parliament is the authority to “regulate, amend or abolish taxes”. The Tax Department needs to build a tax dossier to report to the Ministry of Finance, the Government, and the Parliament.
Vietnam needs to apply a common global minimum tax rate of 15%. In addition, our country should also use financial support measures for businesses. To do this, the ministries need to coordinate to review support regulations. For example, support through infrastructure, initial investment, social insurance contributions…
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