Vietnam Implements Global Minimum Tax: A Comprehensive Update for Multinational Enterprises

Executive Summary

Vietnam has officially implemented the Global Minimum Tax regime through Resolution No. 107/2023/QH15 of the National Assembly, effective from January 1, 2024, with detailed implementation guidance provided under Decree No. 236/2025/ND-CP, effective from October 15, 2025. This landmark legislation represents Vietnam's commitment to the OECD's Base Erosion and Profit Shifting (BEPS) Pillar Two framework and introduces significant compliance obligations for qualifying multinational enterprise groups operating in Vietnam.

The new regime comprises two primary mechanisms: the Qualified Domestic Minimum Top-up Tax (QDMTT) applicable to Vietnamese constituent entities of multinational groups, and the Income Inclusion Rule (IIR) applicable to Vietnamese parent companies with low-taxed foreign subsidiaries. These measures collectively ensure that multinational enterprises face an effective tax rate of at least 15% in each jurisdiction where they operate.

GMT is designed to ensure that low-taxed MNEs pay at least a 15% effective tax rate.

Scope of Application and Affected Entities

Qualifying Multinational Enterprise Groups

The Global Minimum Tax regime applies to multinational enterprise groups that meet specific revenue thresholds and structural criteria. A multinational enterprise group falls within the scope if its ultimate parent entity's consolidated financial statements reflect annual revenue of at least EUR 750 million in at least two of the four fiscal years immediately preceding the relevant fiscal year. This threshold applies consistently regardless of whether the group is newly formed, provided it has operated for at least two years and meets the revenue criteria.

For newly established multinational groups with less than four years of operation, the EUR 750 million threshold applies if the group has achieved this revenue level in at least two of its operating years. The revenue threshold calculation includes several technical adjustments for fiscal years other than twelve months, merger and acquisition scenarios, and group restructuring situations, ensuring comprehensive coverage of qualifying entities.

Constituent Entities Subject to Tax

Constituent entities of qualifying multinational enterprise groups include ultimate parent entities, intermediate parent entities, partially-owned parent entities, and any other companies, organizations, units, or business establishments belonging to the group. The determination of constituent entity status follows established international tax principles and encompasses both direct and indirect ownership structures within the multinational enterprise group.

Excluded Entities

The legislation provides specific exclusions for certain types of entities that are not subject to the Global Minimum Tax regime. Excluded entities include governmental organizations, international organizations, non-profit organizations, pension funds, investment funds and real estate investment trusts serving as ultimate parent entities. Additionally, entities with at least 85% of their asset value owned directly or indirectly through excluded entities benefit from exclusion, subject to specific ownership and operational criteria.

The Decree provides enhanced clarity on exclusion criteria, specifying that entities with at least 95% ownership by excluded entities (except pension service organizations) qualify for exclusion if their activities consist primarily of holding assets or making investments for the benefit of excluded entities, or if they perform only ancillary activities for excluded entities or third parties owned by excluded entities.

Qualified Domestic Minimum Top-up Tax (QDMTT)

Application and Principles

The Qualified Domestic Minimum Top-up Tax represents Vietnam's domestic implementation of the minimum tax framework, ensuring that Vietnamese operations of multinational enterprise groups face an effective tax rate of at least 15%. QDMTT applies to constituent entities or groups of constituent entities of qualifying multinational enterprise groups that conduct business activities in Vietnam and are tax resident in Vietnam.

For multinational enterprise groups with multiple constituent entities in Vietnam, the filing responsible entity determines the QDMTT obligation for all Vietnamese entities and has discretion to allocate the additional tax liability among the constituent entities. The QDMTT regime does not apply to constituent entities without determinable country of residence, permanent establishments without determinable country of residence, or investment entities under specific circumstances.

Calculation Methodology

The QDMTT calculation follows a precise formula: QDMTT Amount = (Top-up Tax Rate × Excess Profit) + Current Year Adjusted Top-up Tax (if any). The top-up tax rate represents the difference between the minimum tax rate of 15% and the effective tax rate in Vietnam, rounded to four decimal places. If the top-up tax rate exceeds the minimum tax rate due to negative effective tax rates, the multinational enterprise group applies a 15% top-up tax rate.

The effective tax rate in Vietnam is calculated as the total covered taxes in Vietnam adjusted for the fiscal year divided by the net GloBE income in Vietnam for the fiscal year. Covered taxes include taxes recorded in accounting records related to income or profits of constituent entities and other taxes of similar nature, subject to specific adjustments and exclusions detailed in the implementing regulations.

Excess profit is determined by subtracting the substance-based income exclusion from net GloBE income. The substance-based income exclusion initially equals 5% of the average annual tangible asset value plus 5% of total payroll costs for all Vietnamese constituent entities, with these percentages decreasing over a transitional period according to the schedule specified in the Resolution's appendix.

Safe Harbor Provisions

The QDMTT amount equals zero for a fiscal year if the constituent entity or group of constituent entities in Vietnam simultaneously meets specific de minimis criteria. These criteria require average GloBE revenue in Vietnam below EUR 10 million and average GloBE income in Vietnam below EUR 1 million or at a loss. Constituent entities may elect to apply or not apply the zero QDMTT amount, though QDMTT will not equal zero if post-filing adjustments cause average income and revenue to exceed the specified thresholds.

Income Inclusion Rule (IIR)

Application Framework

The Income Inclusion Rule requires Vietnamese parent companies to pay additional tax on income of low-taxed foreign constituent entities within their multinational enterprise group. IIR applies to ultimate parent entities, partially-owned parent entities, and intermediate parent entities in Vietnam that directly or indirectly hold ownership interests in low-taxed foreign constituent entities.

The obligation involves filing and paying tax equal to the allocated portion of additional tax from low-taxed foreign constituent entities, except where such additional tax has already been paid in another country with qualifying income inclusion rules that take priority. The priority application order for IIR is specifically regulated, beginning with partially-owned parent entities resident in Vietnam, followed by ultimate parent entities, and finally intermediate parent entities. 

Calculation of Additional Tax

The total additional tax in a country is calculated using the formula: Total Additional Tax = (Top-up Tax Rate × Excess Profit) + Current Year Adjusted Top-up Tax (if any) - Qualified Domestic Minimum Top-up Tax (if any). The calculation methodology mirrors that used for QDMTT, ensuring consistency across the Global Minimum Tax framework.

The effective tax rate in a foreign country is calculated similarly to the Vietnamese effective tax rate, considering all covered taxes and net GloBE income in that jurisdiction. Covered taxes in foreign countries include taxes recorded in books related to income or profits, similar corporate income taxes, taxes on distributed profits, retained earnings, and equity. Specific exclusions apply for certain tax types, including additional taxes paid by parent companies under qualifying IIR regimes.

Allocation and Safe Harbor

The tax amount allocated to Vietnamese parent companies from the additional tax of low-taxed constituent entities is determined based on the allocation ratio for the parent company relative to the low-taxed constituent entity. Safe harbor provisions similar to those applicable to QDMTT apply to IIR calculations, providing relief where foreign operations meet specified de minimis thresholds for revenue and income.

A comparative overview of two mechanisms of GMT regime.

Transitional Relief and Safe Harbor Provisions

International Business Development Phase Relief

Vietnam provides specific relief for multinational enterprise groups in the early stages of international business development. Additional tax under QDMTT in Vietnam is determined as zero during the international business development phase for qualifying multinational enterprise groups. To qualify, the multinational enterprise group must have constituent entities in no more than six countries at any time during the fiscal year and the total book value of tangible assets of all constituent entities in all foreign countries must not exceed EUR 50 million.

This relief does not apply to fiscal years beginning more than five years after the first day of the first fiscal year when the multinational enterprise group initially falls within the scope of GloBE rules. For multinational enterprise groups within scope from the 2024 fiscal year, the five-year period begins from the start of fiscal year 2024.

Implemented QDMTT Relief

Where QDMTT in a foreign country meets the conditions for implemented QDMTT relief according to the list published by the Inclusive Framework on Base Erosion and Profit Shifting, the additional tax for that country in Vietnam is determined as zero. However, this relief does not apply if the multinational enterprise group is not subject to QDMTT in that country or if the tax authority in that country does not collect QDMTT.

Transitional Country-by-Country Reporting Safe Harbor

During the transitional period covering fiscal years beginning on or before December 31, 2026, but not including fiscal years ending after June 30, 2028, additional tax in a country is considered zero when meeting specified criteria. These criteria include having qualifying Country-by-Country Reporting with total revenue below EUR 10 million and profit before income tax below EUR 1 million or at a loss, maintaining a simplified effective tax rate of at least 15% for 2023 and 2024, 16% for 2025, and 17% for 2026, or meeting substance-based exclusion thresholds.

General Safe Harbor Provisions

The legislation establishes comprehensive safe harbor provisions that set additional tax at zero when meeting criteria related to routine profits, revenue and minimum income thresholds, or effective tax rates. Constituent entities may elect to use simplified calculation methods to determine compliance with these criteria, providing operational flexibility while maintaining the integrity of the minimum tax framework.

Filing and Compliance Obligations

Registration and Notification Requirements

Multinational enterprise groups or their designated constituent entities must submit notification of the filing responsible constituent entity and list of constituent entities using Form 01/TB-DVHT to tax authorities within 30 days of the end of the reporting fiscal year. Changes to this information require resubmission by the deadline for filing information returns and additional corporate income tax returns under GloBE rules for the fiscal year in which changes occur.

Registration requirements apply to designated filing responsible constituent entities of multinational enterprise groups and joint ventures subject to QDMTT. These entities receive 10-digit tax identification numbers for direct filing and payment of additional corporate income tax. Initial tax registration must be completed within 90 days of the end of the reporting fiscal year, with specific provisions for the 2024 fiscal year and subsequent years.

Filing Documentation

QDMTT compliance requires submission of GloBE information returns, additional corporate income tax returns, explanatory statements of differences, multinational enterprise group GloBE information returns, and financial data reports for individual constituent entities. IIR compliance involves similar documentation requirements along with consolidated financial reports of ultimate parent entities.

Constituent entities are not required to submit ultimate parent entity GloBE information returns to Vietnamese tax authorities if such returns have already been filed in countries with information exchange agreements with Vietnam. This provision reduces duplicative compliance burdens while ensuring appropriate information sharing among tax authorities.

Filing and Payment Deadlines

QDMTT returns and payments are due within 12 months after the end of the fiscal year. IIR obligations have differentiated deadlines: 18 months after the fiscal year end for the first year a multinational enterprise group falls within scope, and 15 months for subsequent years. General information returns and notifications regarding foreign filing are due within 18 months for the first applicable year and 15 months for subsequent years.

Currency and Payment Provisions

Information returns and explanatory statements may be filed in the currency used for preparing consolidated financial statements of the ultimate parent entity. Additional corporate income tax returns and payments must be made in Vietnamese Dong, though entities may elect to file and pay in the consolidated financial statement currency if different from Vietnamese Dong.

Additional corporate income tax under GloBE rules is paid to the central budget and may be offset against Vietnamese corporate income tax obligations corresponding to income received from foreign investments. Excess tax payments, late payment interest, and penalties are subject to offset or refund procedures under applicable tax administration regulations.

Exchange Rate Determination

The legislation establishes specific exchange rate mechanisms for threshold and income determinations. Where consolidated financial statements of the ultimate parent entity are prepared in Vietnamese Dong, calculations use the average central exchange rate or average cross-rate for December of the year immediately preceding the year in which revenue or income arises, as published by the State Bank of Vietnam.

For non-Vietnamese Dong functional currencies, calculations reference average exchange rates for December of the year immediately preceding the year in which revenue or income arises as published by the European Central Bank. Where the European Central Bank does not publish relevant rates, the calculation uses average rates from the central bank in the ultimate parent entity's country of residence.

Conclusion and Recommendations

Vietnam's implementation of the Global Minimum Tax regime represents a significant development in international tax compliance for multinational enterprise groups operating in Vietnam. The comprehensive framework requires careful assessment of organizational structures, effective tax rate calculations, and substantial compliance infrastructure development.

Multinational enterprise groups should immediately assess their qualification under the EUR 750 million threshold and begin preparing compliance systems for QDMTT and IIR obligations. Given the complexity of the calculations and the significant compliance requirements, early engagement with qualified tax advisors and implementation of appropriate tax technology solutions are essential for successful compliance.

The transitional relief provisions provide important opportunities for qualifying groups to reduce immediate compliance burdens, though careful analysis is required to determine eligibility and optimal election strategies. Organizations should also prepare for enhanced information sharing requirements and potential examination activities as Vietnamese tax authorities develop expertise in Global Minimum Tax administration.

We recommend that affected multinational enterprise groups conduct comprehensive impact assessments, develop appropriate governance frameworks for Global Minimum Tax compliance, and establish regular monitoring procedures to ensure ongoing compliance with these significant new obligations.

This update is provided for informational purposes only and does not constitute legal or tax advice. Organizations should consult with qualified professionals regarding their specific circumstances and compliance obligations under Vietnam's Global Minimum Tax regime.