Vietnam has set up a special panel to find ways to stay competitive for investors when new OECD cross-border tax rules take effect, its central bank said on Tuesday, amid concerns it could negate the benefits of its current tax incentives.
With its low labour costs, improving infrastructure and growing free trade access, Vietnam has become a regional manufacturing hub for global electronics makers that have been offered attractive tax rates.
The Organisation for Economic Cooperation and Development is shepherding what will from next year be the biggest overhaul of cross-border taxes in a generation, with 140 countries signing up to the plan, which seeks a global minimum corporate tax rate of 15%.
The rules would allow governments to apply a top-up tax to that level on any profits booked in a country with a lower rate.
Vietnam’s corporate income tax is set at 20%, but it can offer a rate as low as 5% as well as lengthy grace periods in “special cases” to attract foreign investors.
“The central bank will closely cooperate with the Ministry of Finance and the working group to work out supportive policies and measures to attract foreign investment while sticking to its international commitments,” the State Bank of Vietnam said in a statement.
Among the beneficiaries of Vietnam’s incentives has been Samsung Electronics, its largest single foreign investor, which employs 160,000 people locally.
Deputy central bank governor Pham Thanh Ha on Tuesday met Samsung Vietnam’s chief executive, Choi Joo Ho, to discuss the new tax rules, the SBV statement said.
Choi presented “some measures for Vietnam to maintain the competitiveness of its investment environment,” it said, without elaborating.
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