Vietnam sets out to ease foreign business community's concerns about GMT impacts

Vietnam’s efforts to ease the foreign business community's concerns about new global minimum tax impacts.

Director General of the Ministry of Planning and Investment’s (MPI) Foreign Investment Agency, Do Nhat Hoang, at the Vietnam-RoK Business Forum held in late June announced that Vietnam is currently working on new mechanisms and policies to attract giant foreign-invested enterprises (FIEs) in the context that global minimum tax (GMT) will be applied from early 2024.

As many as 100 major FIEs will be subject to it.

“It is expected to submit to the National Assembly (NA) in October the measures to harmonize the interests of businesses and the state, and align them with international commitments,” Hoang said.

“Along with that, we still enforce special investment incentive mechanisms for projects in innovation, research and development (R&D), semiconductors, clean energy, and high-tech agriculture,” he added.

Hoang Viet Tien, Deputy Secretary general of the Vietnam Digital Communication Association, added, “This announcement is necessary and important, showing the strong determination of Vietnam to facilitate investors and to keep its attraction amid announcements about GMT actions from regional markets.”

Vietnam sets out stall on GMT impacts
Vietnam sets out stall on GMT impacts.

Singapore, Malaysia, Thailand, and Hong Kong all have their own declarations on the application of GMT, namely the qualified domestic minimum top-up tax (QDMTT), through budget plans or statements of Government agencies.

They also announced that there will be new preferential and supportive policies to continue to maintain and increase foreign investment attraction. For instance, Thailand announced that it will regulate 50-70 per cent of the additional tax revenue from the QDMTT to transfer it to a fund to support businesses that the country encourages investment from.

At a meeting with Republic of Korea's President Yoon Suk-yeol, who paid an official visit to Hanoi in late June, NA Chairman Vuong Dinh Hue said it has asked the Government to review and check issues related to GMT. As planned, the NA will consider the issue at its session at the end of the year.

At present, the Ministry of Finance is working with the MPI and other ministries on building supporting policies. They are expected to include increasing investment in infrastructure directly in industrial zones where these businesses are located; supporting human resource training; and supporting them in R&D, as well as having other policies in line with Vietnam’s commitments.

While waiting for details of solutions and measures, investors and businesses from many nations are looking forward to better understanding the orientation of GMT in Vietnam, to assess possible impacts as well as devise appropriate plans.

Many Korean giants are making expansion plans in Vietnam. At the business forum, Samsung Vietnam announced that it is planning to expand the supply source from Vietnamese enterprises to ensure a stable supply chain for its manufacturing complexes.

Meanwhile, Doosan Group is interested in large-scale gas and wind power development projects, a company representative said at the Forum.

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Bich Thuy
(Source: VIR)