Global Agreement on Minimum Corporate Income Tax
According to the results of the "Global Tax Issues 2022" survey, the global minimum tax rate is considered by multinational corporations as one of the outstanding tax topics in 2022.
In October 2021, the Organisation for Economic Co-operation and Development (OECD) designed a proposal to discourage tax-motivated profit shifting and tax base erosion by multinational enterprises (MNEs) : the Global Agreement on Minimum Corporate Income Tax.
The OECD envisioned the implementation of these new rules in 2023, but it will be delayed until 2024 because the plan requires many countries to agree, and then amend their tax laws.
This agreement established a two-pillar solution :
-the first establishes a fairer distribution between countries of the profits and taxing rights of large multinationals by reallocating tax rights distribution to where companies actually carry out their business activities ;
-the second imposes a global corporate minimum tax of 15% on large MNEs’ low-taxed foreign profits and income, to deter the use of offshore tax havens.
In August 2022, the Vietnamese government established a special working group to study, propose solutions and build a legal framework for corporate income tax in according to the OECD's global minimum tax rate.
Its implementation will directly affect Vietnam economy :
-it will help Vietnam reform its tax system in line with international practices and standards, regarding increased tax revenue, and reduce tax evasion and tax avoidance.
-however, Vietnam will be less competitive in attracting foreign direct investment (FDI). There will also be a risk of double taxation.
While intervening crises— war in Ukraine and global inflation—have diverted policymakers' attention and hindered the plan's progress, technical experts and diplomats continue their work to make the OECD proposal a reality.