Vietnam Considering Tax Breaks For Samsung And Other Tech Giants

A report from a source involved in the talks, Samsung and other foreign companies are pushing Vietnam to implement a multimillion-dollar reform that would compensate them for higher levies they will face beginning next year as part of a global overhaul of tax rules.

The discussions come ahead of the implementation of a 15% minimum tax rate for large multinational corporations beginning in January, as part of a landmark global reform led by the Organisation for Economic Cooperation and Development (OECD).

Vietnam has agreed to comply with the OECD rule, effectively raising the tax rate to 15% for many multinational corporations operating in the country, which are currently taxed at a much lower rate due to various sweeteners.

Companies that pay less in a low-tax jurisdiction must pay a top-up levy in their home country, according to the global rule.

A top-up levy means that foreign companies may withdraw valuable foreign exchange from Vietnam to comply with the rule, and Hanoi's decision to implement the higher 15% tax rate and compensation plans are intended to prevent this.

The Southeast Asian country, which heavily relies on foreign investment to fuel its economy, is concerned that the cross-border rule will make it less appealing to large multinational corporations.

"If this is not fully resolved, Vietnam's competitiveness will fade," Hong Sun, chairman of the Korea Chamber of Business in Vietnam, said, noting that South Korean investors were especially sensitive to the changes.

In a meeting with government officials in April, Korean tech giants Samsung Electronics and LG Electronics, U.S. chipmaker Intel and Germany's Bosch were among half a dozen large investors who pushed for compensations, the source who attended the meeting said.