HANOI : The Organisation for Economic Cooperation and Development told Vietnam last week that handouts to big firms to offset higher levies under a global overhaul of tax rules would be problematic, a person familiar with the discussions said.
Vietnam's plan is the first reported attempt worldwide to find a partial workaround to the new global rules, but other countries are considering similar moves, the person familiar with the talks said, noting the OECD warned of risks these arrangements may pose, potentially"compromising the ultimate purpose" of the reform.
Hanoi wants to introduce a top-up tax, but fears that without some sort of compensation, the higher levy could make it less attractive to large multinationals, which have been asking for compensation in private talks. In 2019, Samsung paid as little as 5.1 per cent in tax in one province.
However, he said if one country compensates a multinational with"targeted benefits, for example in the form of grants or tax credits" it would no longer be able to raise revenues from a top-up tax. That would benefit companies facing higher levies due to the global tax reform, but also firms which are not impacted by the overhaul, another source familiar with the separate talks between companies and the Vietnamese government told Reuters.
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