1. Extension of the reduced 8% VAT rate to 30 June 2024
On 28 December 2023, the Government issued Decree 94/2023, guiding the implementation of the 2% VAT rate reduction from 1 January to 30 June 2024.
This follows the approval of the Vietnam National Assembly in Resolution 110/2023/QH15 on 29 November 2023 on the extension of the 2% VAT rate reduction for another six months from 1 January 2024.
The scope of the extended 2% VAT reduction for the first six months of 2024 is the same as the scope of the 2% VAT reduction already applicable in 2023 (i.e. under Decree 44/2023) provided to a majority of goods and services currently subject to 10% VAT rate, except for certain sectors including telecommunications, financial services, banking, securities, insurance, real estate trading, metal and products made from prefabricated metal, mining products (except for coal mining), coke mining, refined petroleum, chemical products, goods and services subject to special consumption tax, and information and technology as provided under the Laws on Information and Technology laws.
Other implementation guidance remains similar to the guidance for the previous VAT reduction. Please refer to our earlier notes regarding the reduced VAT rate: https://www.dfdl.com/insights/legal-and-tax-updates/vietnam-introduces-a-reduced-vat-rate-from-1-july-2023/
2. Resolution on Global Minimum Tax became effective on 1 January 2024
Resolution 107/2023/QH15 regarding the Global Minimum Tax passed by the Vietnam National Assembly on 29 November 2023 came into effect on 1 January 2024 and applies from tax year 2024.
Taxpayers subject to Global Minimum Tax rules include multinational enterprises with consolidated annual revenues of EUR 750 million and above for at least two out of four preceding years (with certain exclusions).
The Resolution introduced a Qualified Domestic Minimum Top-up Tax [QDMTT] and an Income Inclusions Rule [IRR], which are broadly in line with the OECD’s Global Anti-Base Erosion rules (i.e., GlOBE rules).
The Global Minimum Tax Rate is 15%. If the effective tax rate is below the 15% minimum tax rate, a top-up corporate income tax will be imposed in Vietnam.
To facilitate the implementation of the Resolution, the Vietnamese Government plans to amend and supplement the Law on Corporate Income Tax. Furthermore, the Vietnam Government is planning a Decree in 2024 for an Investment Support Fund for the global minimum tax revenue.
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The information provided in this email is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.