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Vietnam's trends toward application of international minimum tax (global minimum tax) from 2024


On November 8, 2023, the Directorate General of Taxation submitted to the National Assembly a draft resolution on the application of international minimum taxation (global minimum taxation) in accordance with tax treaty-related measures to prevent base erosion and profit shifting. The resolution would apply a universal minimum corporate tax rate of 15% to multinational companies whose ultimate parent company’s consolidated financial statement revenues amounted to €750 million or more in at least two of the preceding four years.
Countries such as Switzerland, the United Kingdom, South Korea, Japan, Singapore, Indonesia, and Australia also announced in press releases that they will officially apply the global minimum tax from fiscal 2024.

Even if Vietnam does not apply the global minimum tax, Vietnamese companies or foreign Vietnamese group companies (if applicable) with an effective tax rate lower than the minimum tax rate of 15% will not be required to collect additional taxes on other countries that have introduced this system. In Vietnam, in order to protect domestic rights and interests, a resolution is scheduled to go into effect on January 1, 2024, with a plan to be applied from FY2024.

In the near future, the General Administration of Taxation will be able to request companies to provide specific information as follows:
-Business model and ownership structure information
-Information on current accounting standards
-Information on revenue, accrued taxes, tangible asset amounts, salaries, etc. necessary to estimate the impact of applying global minimum taxation

Companies should cooperate appropriately with the General Administration of Taxation, as providing information in a timely manner will help protect the company’s rights and interests, as well as avoid errors in tax returns and payments. Currently, detailed guidance on determining the actual tax rate has not been formally issued. We plan to share additional information when official legal documents come into effect.

*This article was translated by Yarakuzen.