Samsung and LG asking Vietnamese Government to react to Global Minimum Tax [Report]

Big foreign companies doing business in Vietnam, comprises of Samsung and LG. Now the companies have asked the Vietnamese government to revert with respect to the commencement of a global minimum corporate tax, as per the report.

Notably, the 15 percent global minimum tax will be going apply to those multinational companies whose annual revenue is more than 750 million euros. This policy has been applied from the coming year 2024. This system is intended designed to prevent multinationals from paying less tax. And setting up subsidiaries in countries with lower corporate tax rates.

In parallel with this move, Vietnam also decided to have a global minimum tax system. The action will substantially increase rates for large foreign companies in Vietnam. While those rates have been enormously lowered due to multiple tax breaks in Vietnam.

Since Vietnam relies much on foreign investment to accelerate its economy. Therefore, it is the point to worry that the commencement of the minimum charge will impact large foreign companies. And that might become the reason to leave.

“If this issue is not fully resolved, it will undermine Vietnam’s competitiveness,” said Hong Seon, chairman of the Korean Chamber of Commerce in Vietnam, adding that Korean investors are particularly sensitive to such changes.

Additionally, Korea has invested tens of billions of dollars in Vietnam. Whereas, Samsung is the title to be the largest foreign investor. It employing something 160,000 manpower, out of the same 25 percent are belongs to Vietnam. In terms of making then more than 50 percent of Samsung’s smartphones are produced in Vietnam respectively.

As reported by local media, in Vietnam Samsung’s corporate tax rates vary on the basis of region. In the year, 2019, they ranged from 5.1 percent to 6.2 percent in two provinces whereby they produced smartphones.

As per some local sources, it has been revealed that companies that make large investments in Vietnam will be offered tax rebates for research and development. “It will amount to at least US$200 million a year,” the source said. “The total amount will be almost the same as the tax Vietnam will impose on large foreign companies.”

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