VIETNAM approved today a global minimum tax on multinationals, pushing more than 100 foreign companies including electronics giant Samsung to pay a higher rate.

In 2021, more than 130 nations that account for 90% of the world economy agreed to bring in a global minimum tax rate of 15% to end big corporations shopping for low rates.

Vietnam’s corporate income tax is already 20%, but it currently offers preferential rates to large foreign investors.

Today, almost 94% of lawmakers in Vietnam’s national assembly agreed to introduce the new rate of 15%.

Le Quang Manh, head of the finance and budget committee, warned the country would need to introduce new incentives to remain an attractive destination for foreign companies.

“It is necessary to have new investment support policies ... so companies can feel safe about the investment environment in the country,” Manh said, according to the national assembly’s official website.

Vietnam’s tax bureau data showed around 122 foreign-invested multinational groups in the country would be affected by the increase, which is scheduled to come into force at the beginning of next year.

Vietnam has become an increasingly important destination for some of the world’s top companies – including Samsung and Apple supplier Foxconn – as concerns mount over tensions between the United States and China.

Many have expanded into the country as part of a “China plus one” strategy.

The introduction of a global minimum corporate tax rate is expected to generate an additional US$220 billion (RM1 trillion) in annual revenues for governments, the Organisation for Economic Cooperation and Development said earlier this year. – AFP, November 29, 2023.