Finance Minister Ho Duc Phoc speaks at a conference to discuss the implications of the  global minimum tax, Hanoi, April 18, 2023.

Participants suggested that Vietnam work out timely solutions including incentives to support foreign-invested businesses to ensure tax collection while maintaining an attractiveness of its investment environment. 

“There are more than 1,000 foreign-invested businesses in Vietnam whose parent companies are subject to the global minimum tax. More than 70 of these businesses will be affected when the tax is applied from 2024," said Finance Minister Ho Duc Phoc.

"If countries which house the parent companies apply global minimum tax, they will collect additional 500 million USD in 2024. As a result, Vietnam’s tax incentives will be less effective, affecting the competitiveness of our investment climate,” he noted. 

Nearly 140 countries have agreed to apply a minimum tax rate of 15% on multinationals by committing to a top-up tax on profits booked in countries that have lower rates.

The tax reform, initiated by the Organization for Economic Cooperation and Development (OECD) aims to update decades-old rules on cross-border tax for the digital age where tech giants can profit in low-tax countries.