What are regulations on the calculation of the global minimum tax in Vietnam?

What are regulations on the calculation of the global minimum tax in Vietnam?

Based on Article 4 of Resolution 107/2023/QH15, the calculation of the global minimum tax is prescribed as follows:

Minimum domestic supplemental corporate income tax = (Supplemental tax rate x Supplemental taxable profit) + Adjusted supplemental tax for the current year (if any).

Where:

- The supplemental tax rate is determined by the formula:

Supplemental tax rate = Minimum tax rate - Actual tax rate.

- The minimum tax rate is 15%.

- The actual tax rate in Vietnam is calculated for each fiscal year and is determined by the following formula:

Actual tax rate in a country for each fiscal year = Total corporate income tax in that country within the applicable scope adjusted in the fiscal year of the constituent entities in that country / Net income in that country for the fiscal year according to the Global Minimum Tax Provisions.

- Supplemental taxable profit = Net income according to the Global Minimum Tax Provisions - Value of tangible assets and wages deductible according to the Global Minimum Tax Provisions.

- Net income is determined by the formula:

Net income = Income according to the Global Minimum Tax Provisions of all constituent entities - Losses according to the Global Minimum Tax Provisions of all constituent entities.

What are regulations on the calculation of the global minimum tax in Vietnam? (Image from the Internet)

What is the current global minimum tax rate in Vietnam?

According to Resolution 107/2023/QH15, the global base erosion rules are defined within this Resolution and the regulations of the Government of Vietnam in line with the global minimum tax regulations of the Inclusive Framework on Base Erosion and Profit Shifting (BEPS) to which Vietnam is a member.

The global minimum tax is set at 15%, applied to multinational companies with total consolidated global revenue of at least 750 million EUR in at least two of the four most recent consecutive years, except for cases specified in Clause 1, Article 2 of Resolution 107/2023/QH15.

When the global minimum tax is applied, large multinational companies investing in Vietnam will have to pay the additional difference to meet the 15% tax rate to the country where the headquarters are located.

What are regulations on the determination of the constituent entity for declaring and paying the global minimum tax in Vietnam?

Pursuant to Clause 3, Article 6 of Resolution 107/2023/QH15, the declaration, payment, and management of tax are stipulated as follows:

- A multinational group with one constituent entity in Vietnam shall have that entity file the return and pay the supplemental corporate income tax according to the Global Minimum Tax Provisions;

- A multinational group with more than one constituent entity in Vietnam shall, within 30 days from the end of the fiscal year, submit a written notification designating one of the constituent entities in Vietnam to file the return and pay the supplemental corporate income tax of the group according to the Global Minimum Tax Provisions.

If the 30-day period post-fiscal year end passes without a designation notification, the tax authority will designate a constituent entity in Vietnam to file the return and pay the tax within 30 days from the end of the notification period;

- Upon an event resulting in a change of the designated entity for declaring the return and paying the tax, the multinational group must notify the tax authority within 10 days from the event. If the group fails to notify, the tax authority will inform the designated entity to fulfill the tax duties within 10 days of becoming aware of the information;

- If the tax authority has notified and designated an entity to file the return and pay tax per points b or c of Clause 3, Article 6 of Resolution 107/2023/QH15, and there is information about an event leading to a change in the designated entity, the tax authority will inform the new designated entity to file the return and pay tax within 10 days from receiving the information.