Legal News

[Taxation] Recent Developments in Global Minimum Taxation in Vietnam

2024/08/20

As per our December 2023 newsletter, the Government of Vietnam has issued Resolution 107/2023/QH15 on Global Minimum Taxation. This resolution is effective as of January 1, 2024 and pertains to fiscal year 2024 and beyond. An update on the current status will be provided.

1. issuance of detailed regulations regarding Resolution 107/2023/QH15
The Ministry of Finance has now designated the Directorate General of Taxation as the responsible agency to develop detailed regulations on Resolution 107/2023/QH15. The deadline for submitting the draft regulations to the government is October 31, 2024, and they will be officially issued upon approval by the government. The detailed regulations are expected to be officially issued around the end of this year, and companies will not be able to take concrete actions until then.

2. Measures to be taken until the detailed regulations are issued
Some local tax bureaus have sent guidelines to companies regarding the application of the resolution, and information is being collected. Based on this, the following measures are required.

(1) Vietnamese corporations should share with the group final parent company early that the Vietnamese tax authorities will implement additional CIT taxation policy from FY2024, so that the final parent company can grasp the information.

(2) The final parent company shall review the information regarding gross receipts in its consolidated financial statements to determine whether it is subject to this resolution in FY2024.

※This resolution includes subsidiaries of multinational corporations that have had gross receipts of at least EUR 750 million (equivalent to VND20 trillion based on Vietcombank’s current exchange rate of 1 EUR/VND=26,800) for at least two of the last four years in the final parent company’s consolidated financial statements.

(3) A Vietnamese corporation is subject to this resolution if the gross receipts of the ultimate parent company satisfy (2) above. In that case, the following actions should be taken

・The company should contact the Tax Department and provide the necessary information in accordance with the guidelines. Currently, some companies have already received information collection documents from the Tax Department requesting them to provide information on sales, expenses, taxes, etc. of group companies and Vietnamese corporations. The information collection documents are for the purpose of assessing the impact of this resolution, and instructions on how to officially declare and submit documents will be issued as soon as the detailed regulations are promulgated.

According to this resolution, if there is only one Vietnamese corporation in the applicable corporate group, that corporation will be responsible for filing the additional corporate income tax return from FY2024. If there is more than one Vietnamese corporation in the group, the ultimate parent company shall designate one representative subsidiary (Vietnamese corporation) and notify the Department of Taxation that the said corporation is in charge of the declaration within 30 days from the end of the fiscal year.

・The deadline for declaration and payment of additional CIT is 12 months from the end of the fiscal year. For example, if an enterprise whose fiscal year ends in December 2024 is subject to this resolution, the deadline for declaration and payment of additional CIT is December 31, 2025. In addition, the additional corporate tax return package shall include a. a return containing the information required under the global minimum tax rules (i.e., a document containing information on the ultimate parent company and its subsidiaries, etc.), b. an additional corporate tax return, and c. an explanatory document regarding the differences in accounting standards.

 

References
Resolution 107/2023/QH15