For violations of submitting information declarations according to the Global Minimum Tax Regulations, are tax administrative violations sanctioned during the transition period?

What is the global minimum tax regulation?

According to the provisions of Clause 1, Article 3 of Resolution 107/2023/QH15, the Global Minimum Tax Regulations, also known as the Global Tax Base Erosion Prevention Regulations, are the provisions in this Resolution and the Government’s regulations in accordance with the set of global minimum tax regulations of the Joint Cooperation Forum on Preventing Tax Base Erosion and Global Profit Transfer of which Vietnam is a member.

When is the deadline for submitting the Information Declaration under the Global Minimum Tax Regulations?

Pursuant to Article 6 of Resolution 107/2023/QH15 on tax declaration, payment and tax management under the Global Minimum Tax Regulations:

Tax declaration, payment and management tax

1. For regulations on standard domestic minimum additional corporate income tax, the deadline for submitting the Information Declaration according to the Global Minimum Tax Regulations, the additional corporate income tax declaration accompanied by an explanation of differences due to differences between financial accounting standards and the deadline for paying additional corporate income tax is no later than 12 months after the end of the fiscal year.

2. For regulations on minimum taxable income, the deadline for submitting the Information Declaration according to the Global Minimum Tax Regulations, the Additional Corporate Income Tax Declaration accompanied by the Explanation of the difference due to the difference between financial accounting standards and the deadline for paying additional Corporate Income Tax is no later than 18 months after the end of the fiscal year for the first year the multinational corporation is subject to application; no later than 15 months after the end of the fiscal year for the following years.

Thus:

(i) For regulations on qualified minimum additional domestic corporate income tax (QDMTT), the deadline for submitting the Information Declaration under the Global Minimum Tax Regulations is no later than 12 months after the end of the financial year.

(ii) For regulations on minimum taxable income (IIR), the deadline for submitting the Information Declaration under the Global Minimum Tax Regulations is no later than 18 months after the end of the fiscal year for the first year of application of the multinational corporation; no later than 15 months after the end of the fiscal year for the following years.

For violations of declaring and submitting information declarations according to the Global Minimum Tax Regulations, are there any administrative penalties for tax violations during the transition period?

Pursuant to Clause 6, Article 6 of Resolution 107/2023/QH15, declaring, paying taxes and managing taxes according to the Global Minimum Tax Regulations requirements

Declaring, paying taxes and managing taxes

…

6. The liability reduction during the transition period for financial years from December 31, 2026 onwards but excluding financial years ending after June 30, 2028 is provided as follows:

a) During the transition period, the amount of additional tax in a country for the financial year will be considered to be nil (zero) when one of the following criteria is met here:

a.1) During the financial year, the multinational corporation has a qualified Cross-Country Profit Report whose total revenue is less than EUR 10 million and pre-income tax profit is less than EUR 01 million or loss in that country;

a.2) During the financial year, the multinational corporation has a simple effective tax rate in that country of at least 15% for the year 2023 and 2024; 16% for 2025 and 17% for 2026;

a.3) The multinational corporation’s pre-income tax profit (or loss) in that country is equal to or less than the deduction for income associated with tangible assets and labor calculated under the Global Minimum Tax Regulations for constituent entities resident in that country according to the Inter-State Profitability Report participation;

b) During the transition period, no tax administrative penalties will be imposed for violations of declaration and submission of Information Declarations under the Global Minimum Tax Regulations and Additional Corporate Income Tax Declarations accompanied by Explanations explaining differences due to differences between financial accounting standards.

Thus, during the transition period, Do not impose tax administrative penalties for violations of declaration and submission of Information Declarations under the Global Minimum Tax Regulations and Additional Corporate Income Tax Declarations accompanied by Explanations explaining differences due to differences between financial accounting standards.