On June 27, the leadership of the General Department of Taxation (GDT) under the Ministry of Finance engaged in discussions regarding the allocation of resources to assist foreign-invested enterprises (FIEs) affected by the forthcoming GMT, set to be implemented in early 2024.

Dang Ngoc Minh, deputy director general of the GDT, disclosed that Vietnam has successfully attracted foreign direct investment (FDI) from 142 countries and territories across the globe.

Vietnam's major foreign partners predominantly hail from East Asia, including South Korea, Japan, and Singapore. As a nation, Vietnam relies on FDI inflows to bolster its economy.

Sharing his perspective on the GMT, Minh emphasised the need to establish support mechanisms that can offset the adverse effects of this regulatory measure on FIEs, according to local media Laodong.

Accordingly, the implementation of these support measures will be tailored to suit the unique characteristics of each type of enterprise, compensating them for the tax incentives that have been impacted by the GMT regulation.

As quoted by Laodong, Minh further explained, "This support will be administered through registration procedures after the enterprises fulfils its tax obligations, including the payment of the minimum additional tax. Consequently, the Vietnamese government anticipates no obstacles in sourcing financial reserves or executing subsequent support procedures."

To secure the requisite financial resources for the aforementioned support initiatives, he emphasised the importance of safeguarding taxation rights by implementing the Domestic Minimum Additional Tax (DMAT) framework.

Under this framework, if enterprises comply with the 15 per cent tax rate as per the DMAT guidelines in Vietnam, the country will have adequate financial resources to assist enterprises with various expenses, such as research and development costs, investment in equipment, and high-tech production expenditures. As an illustration, India has implemented a supportive policy entailing a specified amount for each product manufactured.

This support policy will be universally applicable to all enterprises, ensuring that the support provisions align with the unique characteristics, nature, and standards of each business type. This approach adheres to non-discrimination regulations and complies with the GMT rule (Pillar 2) within the comprehensive framework of the Base Erosion and Profit Shifting action plan.

Dr. Can Van Luc, a member of the National Financial-Monetary Policy Advisory Council, opined that proactive participation in implementing the GMT will bolster Vietnam's international integration efforts, ensure tax system reforms in line with global practices and standards, and contribute to the nation's economic and social development.

Source: VIR