The Ho Chi Minh City National Assembly delegation held an important seminar on Monday to discuss the revision of the Corporate Income Tax Law and the Special Consumption Tax Law. This discussion not only has an important impact on the domestic business environment in Vietnam, but also provides new perspectives and opportunities for international companies looking to expand their business in the Vietnamese market.
Special Consumption Tax Law: Challenges and Countermeasures
At the seminar, lawyer Zhang Thi Ho of the Ho Chi Minh City Bar Association pointed out that although the Special Consumption Tax Law has been revised several times in the past 16 years, it still has some key deficiencies compared with similar laws in other countries. For example, the law lacks tax refund provisions, which poses challenges to companies in actual operation. Especially for multinational companies, this deficiency may increase operational complexity and have a negative impact on their profitability in the Vietnamese market.
Phan Li Minh, deputy director of the General Department of Customs of Ho Chi Minh City, further proposed that the drafting committee should amend certain clauses when defining taxpayers’ obligations. He suggested that certain specific product categories should be exempted from special consumption taxes, including “raw materials imported for processing by foreign enterprises or for production activities of exporters”, “products produced in Vietnam and temporarily exported to other countries for research and development and then imported back to Vietnam”, and “products imported only as samples and not for sale or consumption”. These adjustments will be particularly beneficial to international companies that rely on Vietnam as a production and R&D base, reducing their tax burden and enhancing global competitiveness.
Corporate Income Tax Act: Dual Considerations of Simplification and Fairness
Nguyen Duc Nghia, a representative of the Ho Chi Minh City Business Association, stressed in the discussion that in order to ensure the effectiveness of the corporate income tax preferential policy, the policy design should focus on simplicity and fairness. However, the current bill is too complicated, which brings unnecessary difficulties to corporate tax compliance. For international companies, this complexity may hinder their investment decisions in the Vietnamese market.
Nguyen Duc Nghia proposed that the preferential corporate income tax rate should be set at a minimum of 15% (instead of 10% in the bill), and suggested setting up three tax rate levels: 15%, 17% and 20%. He believes that such adjustments will not only promote the healthy development of enterprises, but also align with international tax practices and ensure that Vietnam has stronger competitiveness in attracting foreign investment. At the same time, extending the tax exemption period for specific industries will also provide enterprises with greater policy stability and predictability, helping them to better plan long-term development strategies in the Vietnamese market.
Expert interpretation: The global impact of tax law reform and response suggestions
1. The background of Vietnam’s tax law reform and the interaction with globalization trends
Vietnam has become increasingly important in the global economy in recent years. As one of the economic growth engines in Southeast Asia, its market potential has attracted a large number of international investors. However, Vietnam’s tax policy is also gradually being improved and adjusted to adapt to the rapidly changing global economic environment. The tax law reform discussed in Ho Chi Minh City is an important measure taken by the Vietnamese government to further optimize the business environment and attract more foreign investment.
From a global perspective, the adjustment of tax policies not only reflects the changes in Vietnam’s domestic economic development needs, but is also closely related to the trend of international tax cooperation and competition. Experts believe that behind Vietnam’s tax law reform, it reflects Vietnam’s strategic intention to occupy a more advantageous position in the process of reshaping the global supply chain. By adjusting tax policies, Vietnam is trying to create a more attractive investment environment in the global market, especially in the context of the current reconstruction of the global supply chain. Such policy adjustments will help Vietnam attract more multinational companies to transfer their production and R&D bases to the country.
2. Impact of the Special Consumption Tax Law on Companies’ Global Supply Chain Management
The revision of the Special Consumption Tax Law was one of the focuses of the discussion. The current law lacks tax refund provisions, which makes companies face unnecessary tax burdens in practice, especially for multinational companies, which may affect their overall operational efficiency in Vietnam.
Experts pointed out that the adjustment of the special consumption tax law, especially the tax exemption measures for export-oriented enterprises, will directly affect the global supply chain management of enterprises. For multinational companies that use Vietnam as a production and R&D base, being able to enjoy tax incentives when importing raw materials and exporting products will greatly reduce operating costs and improve the competitiveness of products in the global market.
The introduction of such tax incentives will encourage more multinational companies to set up factories or R&D centers in Vietnam, thereby promoting Vietnam’s position in the global value chain. At the same time, it will also make Vietnam a strategic node for more international companies and further integrate into the global supply chain network.
3. Simplification of corporate income tax law and enhancement of international tax competitiveness
The simplification and adjustment of the corporate income tax law also has far-reaching international impact. The current complex tax system may cause enterprises to encounter obstacles in compliance operations, increasing their operating costs and tax risks. Experts emphasize that simplifying the tax rate structure and providing clearer tax guidance will help enhance Vietnam’s international tax competitiveness.
Setting a reasonable tax rate range can not only ensure the stability of government tax revenue, but also provide a more attractive tax environment for enterprises. Experts suggest that setting the minimum preferential tax rate at 15% is a reasonable choice in line with international practice, which can not only attract more foreign investment, but also provide the government with necessary financial support. Extending the tax exemption period for specific industries provides enterprises with greater policy stability and helps them better plan long-term investment in the Vietnamese market.
Through these reforms, Vietnam can not only attract more manufacturing investment, but also attract more high value-added industries to enter, thereby promoting the upgrading of the industrial structure. This is a very positive signal for international companies that hope to expand their business in the Southeast Asian market.
4. The strategic significance of tax reform for long-term investment in the Vietnamese market
Experts further interpreted that Vietnam’s tax law reform is not only a response to current market demand, but also a strategic layout for future economic development. The Vietnamese government realizes that only through stable and transparent tax policies can it attract and retain high-quality foreign-invested enterprises. For multinational companies, the stability and predictability of the tax environment is one of the key factors in determining investment decisions.
As global economic uncertainty increases, companies are paying more attention to risk management when making cross-border investments. If Vietnam’s tax reform is successfully implemented, it will make it more attractive in the international market, and companies can make long-term investments with more confidence. In particular, companies that want to establish regional production or operation centers in Southeast Asia will find Vietnam a strategic choice.
At the same time, experts also reminded that the actual effect of tax law reform depends on the implementation and transparency of the policy. When entering the Vietnamese market, companies still need to pay close attention to the progress of policy implementation and adjust their strategies in time to cope with possible changes.
Summary of views: New opportunities and challenges brought by tax law reform
The tax reform discussed in Ho Chi Minh City not only reflects the Vietnamese government’s emphasis on optimizing the business environment, but also provides new opportunities for international companies to expand in the Vietnamese market. By understanding and adapting to these changes, companies can better conduct business in the Vietnamese market and achieve the goal of globalization.
Experts believe that the core of tax law reform lies in balancing the tax burden of enterprises with the fiscal needs of the country, which requires not only the improvement of laws, but also the continuity and transparency of policies. For multinational companies, Vietnam’s tax law reform may bring short-term uncertainty, but in the long run, this reform will help build a fairer and more competitive business environment.
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