[Vietnam Biz – Part 20] Are you ready for global tax compliance? Key corporate income tax risks and countermeasures in Vietnam (Part 1)

As the implementation of Global Tax (Global Minimum Tax) accelerates worldwide, corporate income tax compliance for companies operating in Vietnam is becoming increasingly complex. Are you facing unexpected challenges related to local tax incentives, reporting obligations, and tax management across your corporate group?

For example, many companies express concerns such as: “We have not been able to keep up with the latest tax law amendments”; “Communication with our local accounting firm is not smooth, and we are worried about filing errors”

In this article, we explain common risks that companies often overlook when addressing Vietnam’s corporate income tax requirements under the Global Tax framework, along with practical measures that should be taken immediately. Real-world examples are included to illustrate key points.

If you would like to gain a deeper understanding of Vietnam’s tax system and its practical implementation, or learn best practices and know-how to avoid costly mistakes, this article is highly recommended.

Recommended for

• ・Corporate personnel who are considering or preparing to enter the Vietnamese market and are concerned about corporate income tax and Global Tax compliance.
• ・Executives and managers of companies that already have operations in Vietnam and wish to reassess tax risks and their readiness for new tax regulations.

What you will learn

• ・The latest developments in Vietnam’s corporate income tax regime under the Global Tax framework and the practical issues that require attention.
• ・How to leverage local support services with Japanese-language assistance, along with concrete strategies to mitigate tax risks that can be implemented immediately.

1. Is your Vietnam corporate income tax strategy fully prepared for global tax compliance?

For Japanese companies considering expansion into Vietnam or those that already operate local subsidiaries, compliance with Global Tax rules has become an unavoidable issue. Since the introduction of the 15% Global Minimum Effective Corporate Tax Rate in 2024, market-entry strategies that rely solely on traditional tax incentives have become significantly riskier.

In this chapter, we first review the basic structure of the Global Tax system, then examine its implementation in Vietnam and its impact on Japanese companies. Finally, we discuss the practical areas that companies should reassess without delay. Let’s begin by understanding the overall picture.

• ・The basic mechanism of Global Tax
• ・Vietnam’s implementation status and its impact on Japanese companies
• ・Key areas companies should review immediately

1.1. The basic mechanism of global tax

Global Tax refers to a set of internationally coordinated taxation rules designed to prevent tax base erosion and profit shifting by multinational enterprises, particularly through the use of tax havens and low-tax jurisdictions. A key component of this initiative is the establishment of a global minimum corporate tax rate, often referred to as the Global Minimum Tax. Under the OECD-led BEPS 2.0 agreement reached in 2021, a minimum tax rate of 15% was adopted as one of its central pillars.

Under this framework, not only major technology companies but also manufacturing companies and other multinational businesses are required to pay at least a minimum level of corporate tax regardless of where they operate. In addition, the broader Global Tax initiative includes measures such as: Digital taxation, Coordinated taxation of high-net-worth individuals, Other mechanisms aimed at enhancing international tax fairness and strengthening the fiscal foundations of participating countries.

As a result, traditional tax-saving strategies that rely solely on local tax incentives are becoming less effective. Companies must now reassess their tax strategies and governance structures from a group-wide perspective.

1.2. Implementation status in Vietnam and its impact on Japanese companies

Vietnam introduced the Global Minimum Tax with a minimum effective corporate tax rate of 15% in January 2024. The rules apply to Vietnamese subsidiaries and other entities that belong to multinational enterprise groups with consolidated annual revenues exceeding EUR 750 million.

Previously, companies that met certain conditions related to location, industry, or investment scale were eligible for tax incentives that allowed them to maintain an effective tax rate below 15%. Many Japanese companies actively benefited from these preferential tax regimes. However, under the new system, the advantages of such incentives have been significantly reduced, and in some cases, companies may become subject to additional tax liabilities through top-up taxation.

As a result, tax incentives are becoming a less significant factor in investment decisions, prompting companies to reassess their investment strategies and operational footprint in Vietnam. Furthermore, the increased administrative burden associated with tax management cannot be overlooked, as companies must now verify group-wide revenue thresholds and comply with new reporting requirements.

Going forward, companies should pay attention not only to tax policies but also to non-tax incentives, such as infrastructure development initiatives and government subsidies, which may play a greater role in attracting and supporting foreign investment.

1.3. Key areas companies should review immediately

For companies with operations in Vietnam, the first step in preparing for Global Tax compliance is to determine whether their group-wide revenue exceeds the relevant threshold and whether their Vietnamese subsidiary falls within the scope of the new rules. Companies should also assess whether the tax incentives they currently enjoy will continue to provide meaningful benefits and whether there is any potential exposure to additional taxation.

At the same time, strengthening tax compliance frameworks has become increasingly important. Companies should review their group-level reporting obligations, reassess their transfer pricing policies, and ensure that their tax governance systems are capable of meeting the new requirements. It is also advisable to closely monitor developments regarding new investment support measures and infrastructure projects being considered by the Vietnamese government. By taking these factors into account, businesses can redesign their market entry and operational strategies based on a broader range of considerations beyond taxation alone.

Given the likelihood of increasing tax risks and administrative burdens, enhancing local operational capabilities and establishing a robust Japanese-language support structure may also become critical components of an effective compliance strategy.