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Experts believe that tax incentives are not the main motivator for multinational companies to decide to invest, and Vietnam can provide solutions to offset any potential impact. Since the beginning of this year, Vietnam has imposed the Global Minimum Tax (GMT). The applicable tax rate is 15%, with multinational companies with a combined total revenue of at least 750 million euros (about 800 million USD) over the two most recent consecutive years subject to this tax in Vietnam.
Some investors have expressed concerns that the application of this tax regime could affect the inflow of FDI, limiting Vietnam's ability to offer tax incentives to attract investors.
"However, we are not concerned about this issue," said Mr. Michael Kokalari, Director of Macro Economic Analysis and Market Research at VinaCapital.
According to Mr. Kokalari, tax incentives are not the main motivator for multinational companies to invest in a developing country. Research from the World Bank and other institutions indicates that multinational companies consider various factors such as costs, labor quality, infrastructure quality, and the business environment when deciding to invest. In developed countries, these factors are almost equivalent, making
The Ministry of Planning and Investment is studying the proposal for an "Investment Support Fund" (ISF) to diversify forms of incentives, support businesses and projects in the high-tech sector, and support potential domestic enterprises through employee training costs, research, and development (R&D) costs.
Mr. Hoang Thuy Duong, Deputy General Director of KPMG Vietnam, added that many business groups, especially in the high-tech or electric vehicle and green energy sectors, are very interested in other support from the Government to encourage investment. Even businesses planning to expand their investment are looking forward to new incentive policies.
"When applying tax incentives based on income may no longer be effective, Vietnam should shift to support through costs, such as investment costs, labor costs, land costs, or research and development costs," commented the Deputy General Director of KPMG Vietnam. For new projects, Vietnam can support costs related to fixed asset investments. For existing businesses in Vietnam, support for labor costs, research, and development costs would be more helpful.
Building policies, according to KPMG Vietnam's leadership, must also take into account encouraging both new and existing investors. At the same time, according to him, it is necessary to select targets in the long-term development strategy such as high technology, electric vehicles, etc. "This policy is a 'key card' for the FDI eagle group to evaluate the investment environment in Vietnam," Mr. Duong said.
Mr. Luu Duc Huy, Head of Tax Policy Department (General Department of Taxation), said in a workshop last year, citing a survey of businesses, that only 28% of businesses are interested in tax incentives.
"Tax incentives in many developed countries are considered outdated. The current trend is to shift from income to cost incentives," said Mr. Huy.
Global minimum tax is not an international requirement for countries to apply. However, according to the Head of the Tax Policy Department, if Vietnam does not apply it, it still has to accept the tax collection rights of the investing company's home country in Vietnam. Therefore, Vietnam cannot stand outside this trend. Imposing a global minimum tax helps Vietnam increase its budget revenue, avoid profit transfer pricing, and prevent the loss of tax collection rights to other countries.
According to statistics from the General Department of Taxation, about 120 companies with revenues over USD 750 million are operating in Vietnam and are expected to be affected if the global minimum tax is applied.
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