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Photo courtesy of Yonhap News |
[Alpha Biz= Kim Jisun] Seoul, October 12 — The Vietnamese government will officially implement the Global Minimum Tax (GMT) regime starting October 15, introducing a mandatory 15% corporate tax floor on multinational enterprises (MNEs). The measure, aligned with the OECD’s Pillar Two framework, is expected to substantially raise the effective tax burden for major Korean corporations such as Samsung Electronics and LG Electronics, which have so far benefited from preferential tax rates of just 5–10% in Vietnam.
Under Decree No. 236, announced on August 29, Vietnam will begin collecting the top-up tax from fiscal year 2024. The rule applies to multinational groups with consolidated annual revenues exceeding €750 million (approximately ₩1 trillion) in at least two of the past four fiscal years. This includes most Korean conglomerates operating in Vietnam, such as Samsung, LG, and Doosan.
The new decree introduces two main mechanisms:
Qualified Domestic Minimum Top-up Tax (QDMTT) — allowing Vietnam to directly collect the shortfall between a company’s current tax rate and the 15% minimum; and
Income Inclusion Rule (IIR) — enabling parent companies to pay additional taxes in their home countries on low-taxed foreign income.
For Korean companies, the QDMTT is expected to have the greatest financial impact.
Although Vietnam has been granted “Transitional Safe Harbor” status by the OECD — ensuring that taxes paid under the QDMTT will prevent double taxation by the home country — industry insiders note that the sudden rise in tax costs will still pressure foreign investors. To offset this, the Vietnamese government plans to establish a dedicated investment support fund, though local subsidiaries remain skeptical about whether it can fully compensate for lost tax benefits.
For years, Vietnam has attracted foreign investment through aggressive tax incentives. While the official corporate tax rate is 20%, high-tech and large-scale investors have enjoyed up to four years of tax exemption and a 50% reduction for the following nine years. Samsung operates major factories in Bac Ninh and Thai Nguyen, while LG Electronics, LG Display, and LG Innotek are concentrated in Hai Phong — all of which have effectively paid 5–10% in taxes, according to local estimates.
However, the GMT framework will end these incentives. Reflecting the new regime’s financial impact, Samsung Electronics has set aside ₩430 billion, LG Electronics ₩49.8 billion (including ₩19.1 billion from LG Innotek), and Samsung SDI ₩2.8 billion in tax provisions related to the global minimum tax. Doosan Enerbility has also reported an additional ₩2.42 billion in expected top-up taxes across multiple regions, including Saudi Arabia, Egypt, Ireland, and Vietnam.
Industry analysts warn that the higher tax burden may prompt some firms to scale back investment or consider relocating operations to countries with more favorable tax regimes.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
