Vietnam’s recently passed top-up tax, a response to the Global Minimum Tax, should not impact how attractive Vietnam is to foreign firms, according to Raphaël Cecchi, an analyst with European credit insurer, Credendo. It may, however, “slightly hit Vietnam’s reputation” as a low-tax jurisdiction for foreign firms, he says. He lists the following reasons for this assessment:
- Neighbouring countries are also expected to raise their rates next year;
- Additional government revenue will be redirected to an investment support fund (eds note: this is unconfirmed);
- Geopolitical tensions with China driving diversification in supply chains is likely to continue; and
- Its political stability and business-friendly environment–rated by Credendo as C on a scale of A to G in which A is the lowest risk and G is the highest risk–and its expropriation risk ranked 3 out of 7.
See also: Global Minimum Tax legislation passed in Vietnam, to start Jan 2024