The European Union (EU) has exempted Vietnam from tax and non-tax defensive measures due to the Asian country’s recent accession to the Multilateral Competent Authorities Agreement (CbC MCAA) for exchanging country-by-country reports.
Vietnam Aligns with International Standards
On January 3, 2025, Vietnam’s Minister of Finance, Nguyen Van Thang, signed the CbC MCAA Declaration. Subsequently, on February 7, five notifications were issued under the Organization for Economic Cooperation and Development (OECD) model to activate the information exchange mechanism with partner countries. These actions reflect Vietnam’s commitment to the guidelines of Deputy Prime Minister Bui Thanh Son and commitments made at the OECD Global Forum on Base Erosion and Profit Shifting (BEPS).
Benefits of Tax Information Exchange
Accessing the CbC MCAA enables Vietnam to meet its international obligations, which facilitates automatic tax information exchange and includes data on revenues, profits, taxes paid, and assets of multinational groups, providing tax authorities with tools to assess Transfer Pricing and tax evasion risks.
Implications for Vietnamese Companies
This agreement signing will require parent companies located in Vietnam to file the CbC report to the tax authorities, according to the OECD standards, by which the Vietnamese tax authority will automatically inform the signatory countries. Companies whose parent groups are located abroad will not need to file the report if the country of residence of the parent company also belongs to the agreement.
Positive Effects on Vietnam’s Reputation
This initiative enhances Vietnam’s international reputation and creates a favorable business environment. In addition, it guarantees the implementation of the global minimum tax to align the country with international tax practices and strengthen its position in the global economy.
Conclusion
The EU’s exemption of defensive tax measures testifies to Vietnam’s commitment to transparency and international cooperation in tax matters. Vietnamese businesses should keep up to date and comply with the new obligations to take advantage of the opportunities offered by this exemption.
Keep informed and ensure compliance with your tax obligations!
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Source: Vietnam Plus