Vietnam’s refusal to subsidize the global minimum tax companies have to pay is causing many large foreign investors to go elsewhere, according to the Ministry of Planning and Investment.
According to its recent report to the government, after Vietnam started applying the global minimum tax of 15% in January, many multinationals operating or planning to enter the country sought financial incentives since their profits would be affected, but did not receive it and so shifted to other countries.
Austrian semiconductor firm AT&S planned to invest in Vietnam and even carried out a survey of the country, but eventually shifted to Malaysia as Vietnam did not offer incentives or had the required number of skilled workers.
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The ministry also said the expansion of some big high-tech projects has gone to the back burner while waiting for the subsidy.
Some large companies have intended suspending new investment or expansion plans if the Government does not offer financial assistance while also levying the global minimum tax.
They include a medical devices manufacturing project worth between US$500 million and $1 billion in the southern Dong Nai Province by SMC of Japan, and expansion by Foxconn, Compal and Quanta of Taiwan to produce equipment for Apple, IBM and Cisco.
The ministry said without a subsidy or other similar policies, the application of the global minimum tax rate would detract from the effectiveness of corporate income tax incentives, and the country would no longer be attractive enough for foreign investors.
It urged the Government to take immediate measures to prevent a wave of relocation out of Vietnam by major investors. It proposed the establishment of an investment support fund to provide direct financial support to businesses meeting certain criteria.
Source: vnexpress
