Global minimum tax Vietnam 2026 implementation
In the context of global economic integration, ensuring fairness in taxation has become an urgent requirement for countries. Vietnam, as an attractive FDI investment destination, has just entered the phase of applying BEPS (Base Erosion and Profit Shifting) measures and the global minimum tax from January 1, 2024.
However, this new regulation also poses a difficult problem: the risk of FDI enterprises facing “double taxation” if there is no coordinated cooperation between Double Taxation Avoidance Agreements (DTAs) and the Global minimum tax Vietnam 2026 implementation.
1. Context and Content of BEPS Regulations in Vietnam
BEPS (Base Erosion and Profit Shifting) is a set of strategies used by multinational corporations to shift profits from countries with high tax rates to countries with low tax rates, thereby eroding the tax base of countries with high tax rates.
Vietnam has officially implemented two main mechanisms to ensure minimum tax levels for multinational corporations operating in the country:
Regulations on Minimum Domestic Supplementary Corporate Income Tax (QDMTT)
Regulations on Minimum Intake of Taxable Income (IIR)
These regulations apply to member companies of multinational corporations with a foreign ultimate parent company (UPE), provided that consolidated revenue reaches EUR 750 million or more in at least two consecutive years.
The objective of the mechanism is to ensure that the total effective tax rate on the profits of member companies is not less than 15% – the minimum level according to OECD standards. At the same time, this additional tax will be paid directly into the central government budget, representing a change from the current tax allocation mechanism.
Global minimum tax Vietnam 2026 implementation
If an FDI enterprise enjoys tax incentives under investment promotion policies (for example, a tax rate reduction to 10% or a period of tax exemption), then under the new regulations, the difference between the preferential tax rate and 15% will be subject to additional tax.
2. The risk of double taxation and its impact on FDI enterprises
The application of the global minimum tax mechanism aims to protect national tax revenue but poses risks to FDI enterprises, especially those enjoying tax incentives under investment promotion policies.
Vietnam has signed nearly 75 DTA agreements with international partners. However, with the adjustment of the tax mechanism under BEPS rules Vietnam update, these agreements may no longer be fully compatible with the new regulations. Without consistent interpretation and adjustment by the tax authorities, businesses may be taxed under both regimes: preferential rates under DTA and additional taxes under QDMTT/IIR.
Many FDI businesses currently enjoy preferential tax rates thanks to investment support policies and industrial park development. However, if the effective tax rate for these companies falls below 15% due to these incentives, they will have to pay additional taxes.
This leads to a situation of “double taxation,” reducing business efficiency and affecting the competitive advantage of businesses in the Vietnamese market.
For example, suppose an FDI business in the food processing sector in Vietnam enjoys a preferential corporate income tax rate of only 10% during its initial operating period. Under the BEPS mechanism, if a company’s profit is calculated at a preferential rate of 10%, the additional tax payable is the difference between 15% and 10% on the portion of profit exceeding a certain threshold.
Minimum tax impact Vietnam FDI incentives
As a result, the business not only has to pay tax at the initial preferential rate but also has to pay an additional tax to reach the minimum 15%.
3. Tax Filing Obligations and Safety Thresholds for Businesses
In the context of applying BEPS and global minimum tax rates, FDI businesses in Vietnam not only face the risk of “double taxation” but also have to comply with a rather complex system of tax filing obligations.
According to the Vietnam Tax Handbook 2024 by PwC Vietnam, businesses falling under the scope of the Global Minimum Tax Rate Regulations (QDMTT) and the IIR are required to file information declarations according to the global minimum tax rate regulations, supplementary corporate income tax returns, and an explanation of the differences between accounting and pillar two compliance Vietnam multinational companies.
The deadline for filing is 12 months from the end of the fiscal year for QDMTT, while for IIR it is 18 months for the first fiscal year and 15 months for subsequent years.
This regulation aims to ensure transparency and allow tax authorities to closely monitor the fulfillment of minimum tax impact Vietnam FDI incentives, while also creating a significant administrative burden for FDI corporations that already have strategies to optimize tax costs.
In addition, the resolution also introduces safety measures and mitigating circumstances during the transition period to reduce pressure on businesses.
In addition to adapting to the tax environment, FDI enterprises should also build sustainable relationships with tax authorities through dialogue and close cooperation.
Maintaining a regular information exchange channel not only helps businesses stay up-to-date on policy changes but also facilitates the resolution of tax disputes, if any.
In the long term, businesses that proactively adjust and optimize their tax strategies will have a greater competitive advantage, ensuring compliance with regulations while maintaining sustainable profits in a business environment increasingly dominated by global tax standards.
>>>Read more: Company registration vietnam – Tax reduction programs for FDI enterprises
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