Which entities are exempt from the global minimum tax in Vietnam?

Which entities are exempt from the global minimum tax in Vietnam?

Based on the provisions of Clause 1, Article 2 of Resolution 107/2023/QH15 regarding taxpayers as follows:

Taxpayers

1. Constituent entities of a multinational group with consolidated financial statement revenue of the ultimate parent company of at least 750 million euros (EUR) or more for at least 2 out of the 4 immediately preceding fiscal years, except for the following cases:

a) Government organizations;

b) International organizations;

c) Non-profit organizations;

d) Pension funds;

dd) Investment funds as the ultimate parent company;

e) Real estate investment organizations as the ultimate parent company;

g) Organizations owning at least 85% of asset value directly or indirectly through organizations specified from points a to e of this clause.

2. The Government of Vietnam specifies details of this Article.

Thus, the entities that are exempt from the global minimum tax include:

- Government organizations;

- International organizations;

- Non-profit organizations;

- Pension funds;

- Investment funds as the ultimate parent company;

- Real estate investment organizations as the ultimate parent company;

- Organizations owning at least 85% of asset value directly or indirectly through the above-mentioned organizations.

Which entities are exempt from the global minimum tax in Vietnam? (Image from the Internet)

Vietnam: What is the deduction rate of tangible assets and salaries according to the global minimum tax for each year?

During the transitional period starting from 2024, the deduction rate of tangible assets and salaries as stipulated in the global minimum tax regulations for each year is as specified in the annex attached to Resolution 107/2023/QH15. Specifically:

Tangible asset values and salaries deducted for each year during the transitional period

Can constituent entities opt to use a simplified calculation method to determine the criteria for exemption from additional tax liability on taxable income in Vietnam?

Based on Clause 7, Article 6 of Resolution 107/2023/QH15 on declaration, tax payment, and tax management when applying additional corporate income tax under the global minimum tax regulations:

Tax Declaration, Payment, and Management

...

4. Additional corporate income tax under the global minimum tax regulations is paid to the central government budget.

5. The foreign exchange rate for determining the revenue threshold, income specified in Articles 2, 4, 5, and 6 of this Resolution is the average central exchange rate of December of the year immediately preceding the year of generated revenue, income as referenced and published by the State Bank of Vietnam.

6. Transitional phase liability reductions for fiscal years before December 31, 2026, but excluding fiscal years ending after June 30, 2028, are specified as follows:

a) During the transitional period, additional tax in a country for a fiscal year will be considered as zero (0) when meeting one of the following criteria:

a.1) In the fiscal year, the multinational group has a compliant country report with total revenue of less than 10 million EUR and pre-tax profit of less than 1 million EUR or a loss in that country;

a.2) In the fiscal year, the multinational group has a simplified actual tax rate in that country of at least 15% for 2023 and 2024; 16% for 2025; and 17% for 2026;

a.3) The pre-tax profit (or loss) of the multinational group in that country is equal to or less than the income reduction associated with tangible assets and labor calculated according to the global minimum tax regulations for constituent entities residing in that country according to the country report;

b) During the transitional period, no administrative penalties on tax violations will be imposed for violations regarding declaration and filing of information forms under the global minimum tax regulations and additional corporate income tax returns along with explanations due to differences between financial accounting standards.

7. Constituent entities can opt to use a simplified calculation method to determine criteria for liability reduction on additional taxable income, average revenue and income, and actual tax rate.

8. Additional corporate income tax paid under this Resolution is offset when determining the corporate income tax payable in Vietnam corresponding to the income received from foreign investments.

9. Based on the provisions of this Article, the Law on Tax Administration and relevant legal provisions, the Government of Vietnam regulates the content related to tax management of additional corporate income tax under the regulations against global tax base erosion.

Thus, when applying additional corporate income tax under the global minimum tax regulations:

Constituent entities can opt to use a simplified calculation method to determine the criteria for liability reduction on additional taxable income, average revenue and income, and actual tax rate.