Where is the place to submit the top-up CIT under Global Anti-Base Erosion (GloBE) rules in Vietnam?

Where is the place to submit the top-up CIT under Global Anti-Base Erosion (GloBE) rules in Vietnam?

Based on Clause 4, Article 6 of Resolution 107/2023/QH15 regarding tax declaration, payment, and management:

Tax Declaration, Payment, and Management

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3. The identification of constituent units for tax declaration and payment is stipulated as follows:

a) A multinational group with a single constituent unit in Vietnam will have that unit submit tax returns and pay the additional corporate income tax according to the GloBE rules;

b) If a multinational group has more than one constituent unit in Vietnam, within 30 days from the end of the financial year, the group must notify in writing to appoint one of the constituent units in Vietnam to submit tax returns and pay the additional corporate income tax of the group as per the GloBE rules.

If the 30-day period from the end of the financial year lapses without a notification by the multinational group to appoint a constituent unit in Vietnam to submit tax returns and pay tax, then within 30 days from the expiration of the notification period, the tax authority shall appoint a constituent unit in Vietnam to submit tax returns and pay tax;

c) In the event of an occurrence leading to a change in the constituent unit responsible for submitting tax returns and paying tax, the multinational group must notify the tax authority within 10 days from the date of the event. If the group fails to notify within the mentioned period, then within 10 days from obtaining information, the tax authority will notify the appointment of the constituent unit responsible for submitting tax returns and paying tax;

d) If the tax authority has notified the appointment of a constituent unit to submit tax returns and pay tax under the provisions of point b or c of this clause and later obtains information about an event leading to a change in the responsible constituent unit, the tax authority shall notify the appointment of another constituent unit to submit tax returns and pay tax within 10 days from obtaining such information.

4. The additional corporate income tax according to the GloBE rules is remitted to the central budget.

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The additional corporate income tax according to the GloBE rules is remitted to the central budget.

Wherein, the GloBE rules, also known as the global base erosion rule, is defined in Clause 1, Article 3 of Resolution 107/2023/QH15 as the provisions in Resolution 107/2023/QH15 and the regulations of the Government of Vietnam aligned with the set of GloBE ruless of the Inclusive Framework on Base Erosion and Profit Shifting (BEPS) which Vietnam is a member of.

Where is the place to submit the top-up CIT under Global Anti-Base Erosion (GloBE) rules in Vietnam? (Image from the Internet)

How to determine the effective tax rate and additional current top-up tax in Vietnam?

Article 4 of Resolution 107/2023/QH15 provides regulations on the Qualified Domestic Minimum Top-Up Tax (QDMTT) as follows:

Constituent units or groups of constituent units of multinational groups as defined in Article 2 of Resolution 107/2023/QH15 engaging in production or business activities in Vietnam during the fiscal year must apply the domestic supplementary minimum corporate income tax in compliance.

In cases where constituent units or groups of constituent units in Vietnam show an income subject to the GloBE rules and the effective tax rate in Vietnam is below the minimum tax rate, then the supplementary domestic minimum corporate income tax in Vietnam is determined as per provisions in Clauses 2 and 9, Article 4 of Resolution 107/2023/QH15.

Wherein:

- The supplementary domestic minimum corporate income tax is determined by the following formula:

Supplementary domestic minimum corporate income tax = (Supplementary tax rate x Taxable supplement profit) + Adjusted supplementary tax for the current year (if any).

- The supplementary tax rate is determined by the following formula:

Supplementary tax rate = Minimum tax rate - effective tax rate.

- The minimum tax rate is 15%.

- The effective tax rate in Vietnam is calculated on a yearly basis and determined by the following formula:

effective tax rate in Vietnam = Total corporate income tax payable in Vietnam subject to application adjusted in the financial year of constituent units in Vietnam / Net income in Vietnam in the fiscal year under the GloBE rules

- Taxable supplement profit is determined by the following formula:

Taxable supplement profit = Net income under the GloBE rules - Deductible value of tangible assets and wages under the GloBE rules.

- Net income under the GloBE rules is determined by the following formula:

Net income under the GloBE rules = Income under the GloBE rules of all constituent units - Loss under the GloBE rules of all constituent units.

What are 07 entities not subject to global minimum tax?

Based on Article 2 of Resolution 107/2023/QH15, it clearly specifies that the entity subject to the Global Minimum Tax is a constituent unit of a multinational group with consolidated financial statements of the ultimate parent company showing revenue of at least 750 million euros (EUR) for at least two of the four consecutive years preceding the fiscal year.

And, from January 1, 2024, 07 entities are not subject to the Global Minimum Tax according to Resolution 107/2023/QH15, including:

- Government organizations;

- International organizations;

- Non-profit organizations;

- Pension funds;

- Investment funds as ultimate parent companies;

- Real estate investment organizations as ultimate parent companies;

- Entities with at least 85% of the asset value directly or indirectly owned through the aforementioned organizations.