MPI has consulted with the Ministry of Justice (MOJ) on a resolution on applying an investment support policy on a trial basis when applying the global minimum tax.

The proposal is made at the same time with the proposal on an National Assembly resolution on applying additional corporate income tax in accordance with the Global Anti-Base Erosion Rules (GloBE) that Vietnam plans to participate in next year (2024).

MPI’s documents show the possible impact of the global minimum tax application on Vietnam’s investment environment. It also stressed that changes in the approach, and supplementation of incentives and new investment support methods in the context of the global minimum tax implementation will be a necessity to ensure the competitiveness and the attractiveness of Vietnam's investment environment.

MPI proposed that the National Assembly’s draft resolution set the investment support policy to be applied to four groups of enterprises.

These include enterprises which have investment projects in the fields of technological product manufacturing, hi-tech enterprises, and enterprises with projects utilizing hi-tech that have projects with capital of over VND12 trillion or revenue of over VND20 trillion a year.

As for enterprises running projects at R&D (research and development) centers, the capital must be over VND3 trillion.

The four investment support modes include support for training, developing human resources; support for R&D; support for investment in fixed assets and costs for making hi-tech products.

Regarding the investment support model, the compilation agency proposed that the investment support items be deducted from enterprises’ tax obligations or be paid directly by state budget.

According to MPI, the method comes in line with recommendations by OECD (the Organisation for Economic Co-operation and Development) during the process of building a mechanism to support the investment once the global minimum tax is applied.

These are the investment support modes being applied by other countries in the region. Meanwhile, in Vietnam, the support modes have not been legalized.

Regarding the support level, in principle, there are two options, either the ceiling support of total investment or ceiling support of total revenue.

However, MPI believes that both the solutions won’t bring effects in controlling the budget, and they may even restrict the investment attraction or cannot give support to the right subjects.

The ministry suggested the third solution – the state would include the expenditure on investment support policies when designing annual budget estimates. 

Luong Bang