A top-up tax has been approved by Vietnam’s National Assembly and will see corporate income taxes raised to a minimum of 15 percent in the country, Reuters is reporting. This will take effect from January 1 next year. Legislation set to provide alternative benefits to corporate firms operating in the country will remain on hold. It’s estimated the top-up tax will contribute an additional 14.6 trillion dong ($601 million) a year to state coffers.
The last minute passage of this legislation caps a confused and somewhat chaotic process. Tax incentives have been a big driver of foreign direct investment in Vietnam–tax ‘holidays’ and reduced tax rates for periods of four to eight years have commonly been on offer to foreign firms who have saved millions, probably billions in tax dollars. As a result, Vietnamese authorities have been reluctant to adopt a top-up tax.
See also: Global Minimum Tax Tracker