Amend Corporate Income Tax to implement Pillar 2 of global minimum tax

The drafting agency proposed amending and supplementing 10 groups of corporate income tax policies to remove difficulties for businesses and improve the business investment environment. Photo: H.Anh

The Ministry of Finance has just submitted a proposal to the Ministry of Justice to evaluate the proposal to develop the project Law on Corporate Income Tax (amended). According to the content of the report, the drafting agency proposed amending and supplementing 10 groups of policies to remove difficulties for businesses, improve the business investment environment, and ensure stable revenue sources for the state budget.

The Law Project plans to amend and supplement 15 articles, including regulations on taxpayers, taxable income, tax-exempt income, determination of taxable income, deductible and non-deductible expenses when determining taxable income, tax rate, tax calculation method, tax payment place, tax rate incentives, tax exemption period incentives, tax reduction, loss transfer, the appropriation of Science and Technology Development Fund of Enterprises, conditions for applying tax incentives, enforcement and implementation instructions. At the same time, in order to implement Pillar 2 on global minimum tax, based on the results of implementing the National Assembly's resolution on the application of additional corporate income tax according to regulations on preventing global tax base erosion being submitted to the National Assembly at October 2023 session. In the draft Law, a chapter is expected to be added regulating this issue. Simultaneously, relevant provisions of current law will be reviewed to ensure consistency with this supplement (including regulations on taxpayers, deductible expenses, taxable income, and tax rates, etc).

According to the content of the report, the Ministry of Finance has proposed 10 specific groups of policies in amending the Corporate Income Tax Law. Accordingly, policy group 1 is about improving regulations related to taxpayers. The policy's goal is to expand the tax base, in accordance with international practices, domestic and international development trends; ensure Vietnam's taxing rights when participating in international economic integration. This policy adjusts regulations related to corporate income tax payers by amending the concept of permanent establishment in the current corporate income tax law accordingly.

Policy group 2 aims to improve regulations related to the determination of income subject to corporate income tax to ensure coverage of taxable income of taxpayers arising in practice, contributing to expanding the tax base. Ensuring the transparency and stability of corporate income tax policy on the basis of legalizing a number of regulations in Government decrees that have been implemented stably over the past time without any problems and have been proven to be appropriate in reality. In this policy group, the Ministry of Finance proposes to amend and supplement regulations related to taxable income in Article 3 of the current Law on Corporate Income Tax to suit development trends and practical requirements.

Policy group 3, completing regulations on income exempt from corporate income tax. According to the drafting agency, during the implementation process, a number of new fields and occupations have arisen whose income from these industries and occupations also need to be considered and included in the corporate income tax exemption to receive higher incentives. Or some areas need clearly defined criteria to ensure transparency in the implementation process. Therefore, the amendments and supplements to this group of policies will ensure that tax exemption is consistent with practice, associated with activities that really need to encourage investment and promote development according to the Party and Government's orientation; clearly stipulate criteria for tax-exempt income to ensure transparency in the implementation process.

Policy group 4, the drafting agency completes regulations related to the determination of taxable corporate income. Accordingly, this policy will amend and supplement a number of regulations on determining corporate income tax in the current Corporate Income Tax Law to suit the practical situation.

Policy group 5 will complete regulations on determining deductible and non-deductible expenses when determining taxable income. According to the drafting agency, this policy legislates regulations in Government decrees that have had a stable and problem-free implementation period to ensure transparency and higher legality of the policy. Ensure compliance with international practices.

Policy group 6 will adjust corporate income tax rates for some groups of subjects to be compatible with new requirements and contexts. Accordingly, the policy amends and supplements a number of regulations on corporate income tax rates, including: regulations on corporate income tax rates for oil and gas search, exploration, and exploitation activities; corporate income tax rates apply to small-scale enterprises.

Policy group 7 will complete regulations on tax calculation methods (amend and supplement a number of regulations on current corporate income tax calculation methods).

Policy group 8 completes regulations on where to pay corporate income tax to ensure uniformity and consistency of the legal system.

Policy group 9 will complete regulations on corporate income tax incentives by amending and supplementing a number of regulations on corporate income tax incentives (tax rates and duration of tax exemption, reduction, and loss transfer); Amend and supplement regulations on principles and conditions for corporate income tax incentives.

Policy group 10 supplements regulations related to corporate income tax policy to implement Pillar 2 on global minimum tax in order to have appropriate solutions to retain taxing rights for Vietnam in the context that countries all around the world are implementing.

The drafting agency said that the specific goal of amending the Corporate Income Tax Law will contribute to creating conditions to promote and support businesses to expand production and business; Review and rearrange tax incentive policies to encourage and attract investment to develop priority industries, fields and areas according to the Party and State's orientation; There is a preferential corporate income tax policy for small-scale enterprises, and a policy to encourage business households to convert into enterprises to nurture and create a stable source of revenue in the future.