Solutions to attract FDI when implementing the global minimum CIT

VCN - On March 29, the Vietnam International Arbitration Center (VIAC) and the Center for International Integration, the Ho Chi Minh City Institute for Development Studies, jointly held a seminar on Global Minimum Corporate Tax – outlook and challenges in attracting foreign investment (FDI) in Ho Chi Minh City.
Vietnam’s industrial, logistics property growing as more FDI expected Vietnam’s industrial, logistics property growing as more FDI expected
Da Nang revives FDI inflow Da Nang revives FDI inflow
Foreign direct investment projects go green Foreign direct investment projects go green
The seminar. Photo: T.D
The seminar. Photo: T.D

Vietnam cannot stay out of the game

Speaking at the seminar, Dr Tran Du Lich, Member of the National Financial and Monetary Policy Advisory Council and Vice Chairman of the VIAC, said that if Vietnam implements the global minimum corporate tax policy from 2024, about 1,015 FDI enterprises will be affected because Vietnam has used two tools of tax incentives and land prices to attract investment. However, 141 countries (accounting for 90% of global GDP) have participated in this game. Therefore, the problem for Vietnam is to develop policies to still attract strategic investors.

Mr Phan Duc Hieu, Member of the National Assembly's Economic Committee and VIAC arbitrator, assessed that the first impact of the global minimum tax could reduce the effectiveness of the preferential policies on foreign investment attraction. This policy will affect large FDI enterprises, with a global turnover of over EUR 750 million and small projects. Because of the principle of global and agglomeration, they may be small projects in Vietnam but belong to the company's global business network.

Vietnam has mainly used tools of tax incentives. That is the policy of 4 years exemption, 9 years reduction, incentives for 23 special areas, lower incentives for 7 areas, preferential treatment for industrial parks, economic zones, high-tech zones, etc. As a result, according to preliminary estimates, the actual tax on FDI in Vietnam currently is 12.3%, lower than the global minimum of 15%. There are even some large corporations that are only subject to a tax rate of 2.75%-5.95%.

However, Vietnam cannot stay out of the game. According to the Action Plan on Base Erosion and Profit Shifting(BEPS), if Vietnam does not collect a tax rate of less than 15%, the countries where multinational corporations and companies are located will have the right to collect the rest. Meanwhile, Vietnam creates all favourable conditions for investors, but the rest is paid to the countries where the multinational corporations and companies are located, Mr Phan Duc Hieu added.

Improve the investment environment

According to experts, in this game, we do not have the right to choose; we are forced to participate. But how to participate and how to respond to turn challenges into opportunities for Vietnam in general and Ho Chi Minh City in particular in attracting FDI.

According to Mr Do Thien Anh Tuan, Fulbright School of Public Policy and Management, there are challenges and many opportunities. Ho Chi Minh City is the bright spot to attract FDI in 2022, with a total investment of US$3.94 billion, rising 5.4% year-on-year; 11,273 projects are valid with a total investment of US$55.84 billion. FDI contributed more than 13% of the total investment capital of the whole society and contributed to the budget revenue of more than VND 78,000 billion, accounting for more than 17% of the total budget revenue of Ho Chi Minh City.

Ho Chi Minh City should change the mindset of approaching FDI attraction, remove the tax incentive approach in the FDI attraction strategy, and create a fair and equal competitive environment. In addition, it is to focus on investing in humans, improving the quality of infrastructure, the business investment environment and implementing green growth strategies.

Mr. Tran Viet Ha, deputy head of the Management Board of EPZs and I.Z.s in Ho Chi Minh City (Hepza), said that the tax incentives for investors are not a unique advantage. Ho Chi Minh City does not consider this a competitive advantage in attracting FDI. Currently, many new regulations affect investment projects, requiring the companion to remove difficulties for investors. For example, in the EPZs and I.Z.s in Ho Chi Minh City, there are separate plans, but when investors deploy planning larger than 6ha, they have to do 1/500 planning with complicated and unreasonable procedures such as consulting the residential community.

In addition, some businesses said that the transparency of tax policies, the risks of tax policies, and the reduction of administrative procedures, time and costs are of great concern to feel free to invest in Vietnam.

HCM City Customs make efforts in budget collection HCM City Customs make efforts in budget collection

VCN - Many goods imported through HCM City port in the first two months of the year ...

Mai Phong Lan, the representative of the Ho Chi Minh City Department of Planning and Investment, said that in the first three months of 2023, Ho Chi Minh City attracted about US$500 million FDI. So far, the total registered FDI capital has reached nearly US$80 billion, making a great contribution to the city's budget revenue. In addition to attracting new investment, Ho Chi Minh City is very interested in existing investors. Therefore, Ho Chi Minh City is urgently implementing policies to support foreign investors, focusing on creating a land fund for building new industrial zones, serving green growth areas and mitigating global climate change.

By Thu Diu/ Huyen Trang

Related News

Finding solutions to prevent fake goods, goods infringing intellectual property rights

Finding solutions to prevent fake goods, goods infringing intellectual property rights

VCN - Production activities and sales of counterfeit goods and goods infringing intellectual property rights will affect the reputation and prestige of the brand, change consumer perception of product quality and legitimate businesses.
Solutions to prevent fraud via QR payment

Solutions to prevent fraud via QR payment

VCN - Newly published information based on statistical data in the nationwide Payoo payment acceptance network shows that cashless payment activities continue to spread widely with the total value of cashless payments via Payoo increased 58% over the same period last year.
Minister of Finance: Efforts to increase revenue without affecting "health" of businesses

Minister of Finance: Efforts to increase revenue without affecting "health" of businesses

VCN - Minister of Finance Ho Duc Phoc stated that the Ministry of Finance has tried to find every solution to revenue without affecting the financial health and production and business of enterprises.
Increasing foreign investment resources from improving the business environment

Increasing foreign investment resources from improving the business environment

VCN - In the 2 years 2024-2025, the proportion of foreign invested enterprises (FDI) expected to expand production and business has decreased compared to previous years, reflecting a more cautious trend of FDI enterprises. due to the impact of the current unpredictable global economic context.

Latest News

Completing site clearance and accelerating disbursement of public investment in key transportation projects

Completing site clearance and accelerating disbursement of public investment in key transportation projects

VCN - By the end of April 2024, the total disbursed capital of nine important national projects in the transportation industry reached 17.6% of the assigned plan, reported by the Ministry of Finance.
Fed’s latest rate decision won

Fed’s latest rate decision won't have significant impact on Việt Nam

The dollar depreciation is also a good sign for Việt Nam’s import activities, with global raw material prices expected to decrease and inflationary fears for imports receding.
Enterprises expect the stock market to be upgraded by 2025

Enterprises expect the stock market to be upgraded by 2025

VCN - Vietnam is in the final stages of completing the remaining criteria for the stock market to be upgraded to an emerging market after nearly 10 years of starting the stock market upgrade process. According to assessments, the upgraded stock market to an emerging market will bring benefits in many aspects, especially in terms of reputation as well as the ability to attract foreign capital flows. Currently, enterprises are very hopeful about the market's upgrade ability in 2025.
Developing State budget estimates for 2025: carefully taking factors increasing, decreasing and shifting revenues into account

Developing State budget estimates for 2025: carefully taking factors increasing, decreasing and shifting revenues into account

VCN - The Ministry of Finance is developing a circular guiding the development of state budget estimates for 2025 and the 3-year state budget and financial plan for the 2025-2027 period; 5-year financial plan for the 2026-2030 period.

More News

Ministry of Finance proposes seven solutions for combating tax evation for e-commerce

Ministry of Finance proposes seven solutions for combating tax evation for e-commerce

VCN - Vietnam e-commerce will reach US$30.5 billion in 2035 hence according to Minister of Finance Ho Duc Phoc, it will pose challenges to the management of tax, quality of goods, and anti-fraud.
Banks are ready to deploy biometric authentication

Banks are ready to deploy biometric authentication

VCN - According to Decision No. 2345/QD-NHNN dated December 18, 2023 of the State Bank, which will take effect from July 1, money transfer transactions over 10 million VND/time or over 20 million VND/day will require facial authentication. Accordingly, banks are urgently preparing to be ready to implement new regulations within the set deadline.
Review the tax payment of sales livestream individuals

Review the tax payment of sales livestream individuals

VCN - The General Department of Taxation has just issued an official letter directing local tax departments to drastically manage e-commerce taxes and electronic invoices generated from cash registers.
13 cases subject to direct tax registration with Tax authority

13 cases subject to direct tax registration with Tax authority

VCN – The Ministry of Finance collects comments on a draft Circular guiding tax registration to replace Circular 105/2020/TT-BTC. According to the draft, if the National Population Database
Ministry of Finance: Focusing on improving independent audits

Ministry of Finance: Focusing on improving independent audits

VCN - According to Minister of Finance Ho Duc Phoc, in recent times, the Ministry of Finance has focused on improving the quality of independent audits through training, inspection, and examination.
Digitizing the process, banks actively lend online

Digitizing the process, banks actively lend online

VCN - Many banks promote online lending to save time and costs for both parties and creating conditions to promote credit growth.
The finance sector

The finance sector's firm stance on combating tax evasion in e-commerce

VCN - Addressing and clarifying some opinions raised by National Assembly deputies during the questioning session on issues related to the commerce and industry sectors on the afternoon of June 4, Minister of Finance Ho Duc Phoc stated that in the coming period, the finance sector would rigorously enforce tax collection on e-commerce to ensure fairness in the fulfillment of taxpayers' obligations.
Total State revenue managed by Tax sector is estimated at VND767,415 billion

Total State revenue managed by Tax sector is estimated at VND767,415 billion

VCN – The total state revenue in the first five months of 2024 managed by the Tax authority is estimated at VND 767,415 billion, meeting 51.6% of the target and 114.9% year-on-year.
Tax sector cooperate with Police agency to prevent fraud of tax invoice

Tax sector cooperate with Police agency to prevent fraud of tax invoice

VCN - Over the years, the acts of law violation on electronic tax invoices took place complicatedly with many different tricks. To prevent fraud, the tax sector has applied several drastic measures, including strengthening cooperation with the Police agency.
Read More

Your care

Latest Most read
Completing site clearance and accelerating disbursement of public investment in key transportation projects

Completing site clearance and accelerating disbursement of public investment in key transportation projects

VCN - By the end of April 2024, the total disbursed capital of nine important national projects in the transportation industry reached 17.6% of the assigned plan, reported by the Ministry of Finance.
Fed’s latest rate decision won

Fed’s latest rate decision won't have significant impact on Việt Nam

The dollar depreciation is also a good sign for Việt Nam’s import activities, with global raw material prices expected to decrease and inflationary fears for imports receding.
Enterprises expect the stock market to be upgraded by 2025

Enterprises expect the stock market to be upgraded by 2025

Vietnam is in the final stages of completing the remaining criteria for the stock market to be upgraded to an emerging market after nearly 10 years of starting the stock market upgrade process.
Developing State budget estimates for 2025: carefully taking factors increasing, decreasing and shifting revenues into account

Developing State budget estimates for 2025: carefully taking factors increasing, decreasing and shifting revenues into account

VCN - The Ministry of Finance is developing a circular guiding the development of state budget estimates for 2025 and the 3-year state budget and financial plan for the 2025-2027 period; 5-year financial plan for the 2026-2030 period.
Ministry of Finance proposes seven solutions for combating tax evation for e-commerce

Ministry of Finance proposes seven solutions for combating tax evation for e-commerce

Vietnam e-commerce will reach US$30.5 billion in 2035 hence according to Minister of Finance Ho Duc Phoc, it will pose challenges to the management of tax, quality of goods, and anti-fraud.
Mobile Version