Vietnam should prepare for global minimum tax

	Global minimum tax rules pose many challenges for Vietnam
	It is necessary to carefully assess the impact of the global minimum tax rate on Vietnam
	Ensure policies to attract investment when implementing global minimum tax

Ms. Nguyen Thy Nga, Director of the Institute of Policy and Strategy Administration

The global minimum tax rule is expected to come into effect from April 1, 2024. What do you think about Vietnam's policy-making to apply this rule?

First of all, I think that internal lawmaking must provide all scientists and businesses whose partners are related to multinational corporations will full information to have opinions or exchange with direct partners.

To develop policies associated with the practice, it is necessary to expand information to the business community. Currently, the business community has not received complete information about the global minimum tax, as well as when the Government will allow businesses to contribute opinions.

In the current process of linking databases, information that is not within the scope of national secrets and information related to policies that businesses are beneficiaries and affected must be transparent.

How can we learn from the experience of some countries in the region such as Thailand, Singapore or India in developing internal policies to apply a global minimum tax?

To date, 142 countries have agreed to join the global minimum tax rate. 42 of 142 countries have given certain answers that they will join the global minimum tax rate and confirm the time of application such as Korea joins in 2023, and others will participate from 2024, 2025.

Some countries said that based on OECD research and policy promotion for each region, they will have the answer. Each country will have certain advantages, so there is no one lesson for all countries because this is a new issue.

In my opinion, we should participate at the same time to show the spirit of integration, and, this is also an opportunity to promote Vietnam to actively associate with countries in the ASEAN region to form a unified ASEAN bloc rather than a competition to the bottom when each country is setting an own tax rate.

What should Vietnam note in the policy-making process to join the global minimum tax rule?

Vietnam should make preparations in all aspects for the actual presence of Pillar 2 in the context that many countries will apply the global minimum tax policy from 2024. The policies to respond to Pillar 2 should be built in the short term as well as the long term. In the short term, the adoption of a standard minimum domestic tax regime to win the right to collect taxes should be considered early, which should be checked with the OECD regulations as well as the issue of benefits and costs upon the implementation.

In the long term, the tax system and tax incentives should also be considered for reform to limit the negative impacts of Pillar 2, to ensure the attraction of substantial investment, and to limit activities of tax base erosion and profit shifting. We also note that the promulgation of any new policies or mechanisms should be carefully considered to ensure fairness for businesses that are covered and not covered by Pillar 2, ensuring consistency with regulations on investors' interests under the prevailing Investment Law, as well as not violating international commitments and regulations of the OECD to which Vietnam has acceded.

For supporting multinational corporations affected by Pillar 2, new cost-based forms of investment incentives, especially monetary incentives, should be considered against certain advantages of income-based investment.

Vietnam should consider reforming the tax incentive system to adapt to the new situation, along with consulting the OECD, as well as policies being implemented by other countries. Vietnam should also continue to research and promote the development of other investment attraction factors besides tax incentives such as infrastructure, quality of labor resources, legal system and factors that help improve the ranking of Vietnam's business environment.

Urgently prepare a scenario to apply principles of global minimum tax

In addition, the Prime Minister's Special Working Group on the global minimum tax rate should soon conduct an impact assessment and research and develop a domestic legal framework related to the application of the global minimum tax rate to ensure that preferential policies for foreign investors in Vietnam are effectively implemented.

Thank you ma'am!