At a conference on global minimum tax on June 14, Deputy Director-General of the General Department of Taxation Dang Ngoc Minh shared that Vietnam has been and is an "investment paradise", not a "tax paradise". in the eyes of world investors.
According to Mr. Minh, Vietnam's corporate income tax is currently 20%, higher than the proposed global minimum tax rate (15%). However, Vietnam is giving many preferential tax rates to foreign projects such as preferential tax rates of 5%, 10% up to 15 annually; tax exemption, and reduction for a limited time (up to 9 years)...
"According to the investigation, Vietnam's real tax on foreign businesses is about 12.3%. If the global minimum tax rate of 15% is imposed as proposed, our incentives will no longer exist," he said. Minh said.
Compared with some countries in the region, the leader of the General Department of Taxation pointed out that the actual tax revenue of Vietnam is higher than that of Thailand (9.5%). Singapore (7%), Indonesia (11.5%), and just below the Philippines (21.7%).
Another point, Vietnam's tax incentives are applied mainly to the group of 3% of large enterprises. Some large projects with long-term implementation, according to Mr. Minh, even receive preferential tax rates of about 2.75-5.95%.
According to Deputy Director General Dang Ngoc Minh, applying the global minimum tax will reduce the incentives for foreign investors in Vietnam. At the same time, the industry value chain, new businesses, satellite businesses will all consider when investing in our country.
"The thing that worries me most is that the balance of tax payments will be affected. This is because large and multinational enterprises will no longer prioritize storing foreign currency in Vietnam," emphasized Mr. Minh.
Dr. Can Van Luc recommends a number of policy solutions for Vietnam.
Discussing more about Vietnam's actual tax on foreign enterprises, Dr. Can Van Luc, BIDV Training and Research Institute stated that the increase from 12.3% to 15% is not much. He explained that very few FDI enterprises reported profits in reality.
Thinking that Vietnam should "accept the game", Mr. Luc recommended a number of policy-related issues for Vietnam to retain foreign investors.
"We need to give foreign businesses a choice, either they accept to remove all income tax incentives and accept a general tax rate of 15%, or they continue to enjoy the current incentives and pay the remaining tax in place. set up the parent company", the economist expressed.
Commenting, that multinational companies will follow the second option, in order to enjoy tax incentives in Vietnam, Dr. Can Van Luc suggested that the Government soon establish an interdisciplinary working group led by a Deputy Prime Minister. The purpose is to have synchronous and smooth solutions among ministries, departments and branches.
In addition, the Government should soon have policies, allowing businesses to increase some expenses such as depreciation costs for research, or high technology to reduce taxable levels. In addition, there are incentives for the clean land funds and accompanying social security policies.
Developing countries like Vietnam will be significantly affected by the global minimum tax.
On July 1, 2021, member countries of the Organization for Economic Co-operation and Development (OECD) agreed to impose a minimum tax rate on a global scale. The G20 Finance Ministers also approved this agreement in mid-July 2021.
In October 2021, a 15% tax rate was agreed upon by 139 countries.
Under the agreement, a minimum global corporate tax rate of 15% will be applied to companies with an income of 750 million euros or more. The 15% tax rate will not increase immediately, and small businesses are expected to be less affected.
Proponents of the global minimum tax idea want to reallocate more than $125 billion in profits from about 100 of the largest multinational companies on the planet, helping to reduce the need for countries to reduce taxes to attract investment. abroad, and at the same time limit the transfer of profits abroad.
However, the global minimum tax is considered to reduce the attractiveness of developing countries, including Vietnam, when attracting FDI.
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