The National Assembly Standing Committee gives opinions on applying additional corporate income tax.

Examining the draft Resolution of the National Assembly on the application of additional corporate income tax (CIT) according to the regulations against global tax base erosion, Chairman of the National Assembly's Finance and Budget Committee Le Quang Manh said that the regulations on the application of the Global Minimum Tax (GBT), abbreviated as the GloBE regulations, were proposed by the OECD and will be applied from the 2024 CIT period. Currently, many countries have internalized these regulations to apply from the 2024 CIT period.

“If Vietnam does not internalize the regulations on TTTC tax, countries exporting investment capital will be able to collect additional corporate income tax (up to the level of 15%) for multinational companies with foreign investment projects (FIEs) in Vietnam that are currently enjoying an effective tax rate of less than 15%. Therefore, to ensure Vietnam's taxing rights, the Standing Committee of the Finance and Budget Committee (FCB) agreed that it is necessary to issue legal documents to create a basis for FIEs subject to GloBE to declare and pay additional corporate income tax and feel secure about the legal environment in Vietnam,” said Chairman of the FCB Committee Le Quang Manh.

In the context that the Government has not yet implemented the plan to amend and supplement the Law on Corporate Income Tax to stipulate in the Law the contents related to the TTTC, the majority of opinions in the Standing Committee of the National Assembly's Committee for Tax Administration agreed that it is necessary to temporarily issue a Resolution (pilot) of the National Assembly on the application of additional corporate income tax according to the OECD's regulations on preventing global tax base erosion before amending the Law. At the same time, it is requested that the Government clearly report the plan and time to amend and supplement the Law on Corporate Income Tax and the expected time of implementation to ensure that tax contents must be uniformly stipulated in the Law.

The Standing Committee of the National Assembly basically agrees with the Government's Proposal on the objectives and viewpoints of drafting the Resolution in ensuring Vietnam's taxing rights are consistent with international tax practices and trends being implemented by other countries and meeting the requirements of a number of large foreign-invested corporations operating and wishing to declare and pay additional TTTC in Vietnam, applicable from the 2024 corporate income tax period.

Regarding the proposal to continue maintaining current preferential corporate income tax policies, the Standing Committee of the Tax Administration Committee believes that the issuance of the Resolution only meets the immediate requirements, and is "temporary" (to have a mechanism for immediate application in the 2024 tax period), when the Corporate Income Tax Law has not been comprehensively amended. The system of corporate income tax exemption and reduction incentives to attract foreign investment in Vietnam will no longer be effective and suitable for the context of implementing the TTTC tax. Therefore, when amending the Corporate Income Tax Law, at the same time as legalizing the TTTC tax regulations stipulated in this Resolution, the current system of preferential corporate income tax exemption and reduction policies needs to be comprehensively assessed and improved, suitable for the new context and situation, and applied uniformly to domestic and foreign investors, current investors as well as future investors.

Proposing solutions to implement the Resolution, Chairman of the National Assembly's Committee for Finance and Accounting Le Quang Manh said that the Government's Proposal has proposed a number of solutions to implement the draft Resolution. However, there is still a lack of necessary content on the work of collecting and synthesizing annual information and data related to revenue, profit... of member organizations of multinational corporations with the parent company located abroad, foreign member organizations of domestic multinational corporations, as a basis for determining the subjects within the scope of application of annual TTTC tax.

“We request that the drafting agency report more clearly on the preparation and implementation of these contents to ensure the necessary conditions for the implementation of the Resolution. In addition, we request that the drafting agency promptly participate in the OECD's Multilateral Agreements on Automatic Information Exchange to be able to access and exploit information on corporations subject to the TTTC tax,” said Chairman of the TCNS Committee Le Quang Manh.

The Draft Resolution regulates the collection of TTTC tax in Vietnam and is also directly related to the content of the division of international tax rights for multinational corporations subject to regulation by many related countries. Therefore, when implemented, it may lead to the possibility of problems and complaints about tax collection rights, about the calculation of tax payable, etc. of enterprises that are members of multinational corporations. Therefore, it is recommended that the Drafting Agency report more clearly on solutions to ensure the smooth implementation of the provisions of the Resolution, avoiding the emergence of international conflicts and disputes such as the Information Exchange Mechanism or coordination to resolve problems arising during the implementation process with related countries or enterprises, etc.

The Standing Committee of the National Assembly believes that the draft Resolution has basically met the conditions for submission to the National Assembly to be added to the 2023 law-making program and submitted to the National Assembly for consideration and comments at the 6th Session in October 2023 for approval under the simplified procedure in one session. At the same time, it is requested that the Government fully accept and explain the opinions stated in the preliminary review report of the Standing Committee of the National Assembly to complete the draft Resolution and submit it to the National Assembly according to regulations.