This Update highlights recent tax and customs developments in Vietnam.
Global Minimum Tax (GMT) Introduction & Potential Tax Reforms
Vietnam’s National Assembly has officially passed Resolution 107/2023/QH15 dated 29 November 2023 (“Resolution“) to pave a way for the future implementing tax regulations to impose a top-up tax in line with Global Anti-Base Erosion (“GloBE“) model rules. Companies currently paying less than 15% tax would potentially be subject to a top-up tax from 1 January 2024.
The GloBE rules are designed to ensure large multinational enterprise groups (“MNE Groups“) pay a minimum level of tax on their income in respect of every jurisdiction where they operate. These rules require in-scope MNE Groups to calculate their income, and the taxes on that income, on a jurisdictional basis. Where this calculation results in an effective tax rate (ETR) that is below 15%, the rules require the MNE Group to pay a top-up tax that will bring the total amount of tax on the MNE Group’s excess profits in that low-tax jurisdiction up to the 15% rate.
Double Tax Agreement between Vietnam and Singapore (“DTA“) – Application to Capital Share Transfer in Vietnam Entity
The General Department of Taxation (“GDT“) has recently provided guidance on the application of the DTA between Vietnam and Singapore on capital share transfers in Vietnam entities via ruling No. 5865/TCT-HTQT, dated 22 December 2023.
Supplements to Vietnam’s Customs Regulations for Period 2022 – 2027 under Regional Comprehensive Economic Partnership (“RCEP“)
Vietnam Government issued Decree 84/2023/ND-CP dated 1 December 2023 providing supplements to Vietnam’s preferential tariff for the period from 2022- 2027 under the RCEP. Myanmar and the Philippines have been added to the list of enabling countries for the preferential tariff from 4 March 2022 and 2 June 2023, respectively. This preferential tariff is issued for every calendar year.
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