Hanoi (VNA) – The NationalAssembly (NA) on November 10 listened to the proposal on a draft resolution onthe imposition of top-up corporate income tax under the Global Anti-Base Erosion(GloBE) rules, and a verification report on this draft.

Submitting the draft resolution on behalfof the Government, Minister of Finance Ho Duc Phoc said the global minimum tax (GMT) is not an international treaty or international commitment, and also notcompulsory for countries.

However, even if Vietnam does notapply this tax, other countries that impose the GMT have the right to collect this tax from businesses in Vietnam (if the firms aresubject to the tax) that pay a tax rate lower than the global minimum tax of15%, especially foreign invested ones, he noted.

Inthat context, to ensure its rights and legitimate interests, Vietnam shouldapply the global minimum tax, Phoc said, citing the guidance by theOrganisation for Economic Cooperation and Development (OECD) as saying that thenature of this tax is top-up corporate income tax and countries should properlyinclude it in their legal systems.

Delivering the verification report,Chairman of the NA Committee for Financial and Budgetary Affairs Le Quang Manh saidmost members of the committee shared the view on the need to issue a legaldocument to create a legal basis for the foreign invested companies subject tothe GMT to make top-up corporate income tax declarations inVietnam, instead of letting them pay the top-ups in their parent countries.

Besides, the early issuance of theresolution will clearly reflect Vietnam’s determination to apply the globalminimum tax, thus enhancing investors’ trust in the country’s legalenvironment, he went on.

Manhsaid that as the Government hasn’t moved to include regulations on this tax in theLaw on Corporate Income Tax, most committee members agreed on the necessity forthe NA to temporarily issue a pilot resolution on the imposition of top-up corporateincome tax under the GloBE rules before amending this law in order to guaranteeVietnam’s tax collection right in accordance with the international trend andnorms.

The NA Committee for Financial andBudgetary Affairs asked the Government to report its plan to revise the Law onCorporate Income Tax to ensure consistency among regulations of the law, theofficial continued.

He also cited experts as perceivingthat the GMT application will open up opportunities forVietnam to review and assess its current tax incentives.

Manhsaid that according to the Government’s impact assessment report based on the2022 statistics, 122 foreign businesses in the country will be subject to theresolution, with the top-ups totalling 14.6 trillion VND (600.3 million USD).

Meanwhile, six Vietnamese firms willbe covered by the resolution, and they will have to pay about 73 billion VND intop-up corporate income tax on their overseas investments if host countries donot impose the global minimum tax, the Government estimated in its report.

The GMT, agreed to by G7 countries in June 2021 as a measure to prevent tax base erosion and profit shifting by multinational corporations, will become effective on January 1, 2024 in many OECD countries. The GMT under OECD Pillar Two is a once-in-a-lifetime global tax reform that will apply to multinational companies with revenues of 750 million EUR (800 million USD) or more./.