JavaScript is off. Please enable to view full site.

Vietnam set to raise effective tax rate on multinationals as part of global deal

Vietnam set to raise effective tax rate on multinationals as part of global deal

Monday, November 27, 2023, 13:25 GMT+7
Vietnam set to raise effective tax rate on multinationals as part of global deal
Samsung centre building is seen in Hanoi Vietnam May 29, 2023. Photo: Reuters

HANOI -- Vietnam's parliament is set to approve on Wednesday a top-up tax for multinationals, which will raise the effective rate of the corporate levy to 15% from January in line with a global agreement.

Vietnam had initially planned to combine the approval of the tax with measures to partly compensate large foreign investors affected by the higher levy, including South Korean electronics giant Samsung Electronics Co Ltd and U.S. chipmaker Intel Corp, but the separate resolution is not on the parliament's agenda.

In a sign of how controversial the new tax is, as it could reduce Vietnam's appeal among foreign companies if not matched with accompanying subsidies, the parliament had initially ruled out a vote in its current session, the last of the year.

But it has eventually added it back to its schedule, with the vote on the tax expected now at the last day of its month-long session.

It is unclear whether additional incentives for some foreign investors could be adopted in this session in separate legislation, without passing a specific resolution on that. The parliament could in any case adopt the incentives resolution in a later session.

Under the new rules being shepherded through by the Organisation for Economic Cooperation and Development (OECD), companies paying less than 15% in a low-tax jurisdiction will face a top-up levy either in that jurisdiction or in their home country from next year.

Vietnam's corporate income tax is already set at 20%, but the country has offered for years effective rates as low as 5% and lengthy zero-tax periods to large foreign investors.

With the new top-up tax, 122 foreign companies will face a steep increase in their tax costs in Vietnam, according to a document prepared by the Vietnamese government which estimated the additional intake for the state at VND14.6 trillion ($601.05 million) a year.

Reuters

More

Read more

;

Photos

VIDEOS

‘Taste of Australia’ gala dinner held in Ho Chi Minh City after 2-year hiatus

Taste of Australia Gala Reception has returned to the Park Hyatt Hotel in Ho Chi Minh City's District 1 after a two-year hiatus due to the COVID-19 pandemic

Vietnamese woman gives unconditional love to hundreds of adopted children

Despite her own immense hardship, she has taken in and cared for hundreds of orphans over the past three decades.

Vietnam’s Mekong Delta celebrates spring with ‘hat boi’ performances

The art form is so popular that it attracts people from all ages in the Mekong Delta

Vietnamese youngster travels back in time with clay miniatures

Each work is a scene caught by Dung and kept in his memories through his journeys across Vietnam

Latest news