If you want to understand the shifting landscape of Southeast Asian finance, you need to look at how Thai investment in Vietnam is evolving beyond retail and traditional manufacturing. For decades, major Thai players like CP Group and Central Group dominated the Vietnamese consumer market, but I have observed a distinct pivot toward innovation-heavy sectors. […]
Effective date: 15 October 2025
Applicable tax year: 2024 onwards
On 29 August 2025, the Vietnamese Government officially issued Decree No. 236/2025/ND-CP (“Decree 236”), providing detailed guidance on the implementation of the Global Minimum Tax (“GMT”) regime in Vietnam. This Decree follows Resolution No. 107/2023/QH15, dated 29 November 2023, which formally mandated Vietnam’s adoption of the Global Anti-Base Erosion (“GloBE”) rules in alignment with the OECD’s Pillar Two framework.
Decree 236 marks a significant milestone in Vietnam’s international tax reform agenda. Beyond introducing new compliance requirements, it fundamentally reshapes the principles of corporate income tax calculation for multinational enterprises (“MNEs”), particularly those with cross-border supply chains, related-party structures, and incentive-driven investment models. This article provides a consolidated overview of the Decree’s key provisions, highlights how it differs from Vietnam’s traditional corporate income tax framework, and outlines practical implications for enterprises operating in Vietnam, including existing foreign-invested companies.
Regulatory Background and OECD Recognition
Resolution 107 established Vietnam’s commitment to adopting the Global Minimum Tax framework, enabling the imposition of an additional corporate income tax to ensure that large multinational groups pay a minimum effective tax rate of 15 per cent on a jurisdictional basis. Decree 236 operationalises this commitment by setting out detailed rules, administrative procedures, and transitional measures governing Vietnam’s application of the GMT.
Importantly, as of August 2025, Vietnam’s Global Minimum Tax legislation has been recognised by the OECD Inclusive Framework on BEPS as achieving transitional qualified status. Both Vietnam’s Qualified Domestic Minimum Top-up Tax (QDMTT) and Income Inclusion Rule (IIR) frameworks are considered to meet the relevant international standards. In addition, Vietnam’s QDMTT qualifies for the QDMTT safe harbour mechanism, which is intended to reduce the risk of duplicative top-up taxation under foreign IIR regimes. This recognition enhances the predictability and coherence of Vietnam’s GMT implementation within the broader international tax landscape.
Identification of Additional Corporate Income Taxpayers (Article 3)
Under Article 3 of Decree 236, a Constituent Entity of a Multinational Enterprise is classified as an additional corporate income taxpayer for GMT purposes if the ultimate parent entity’s consolidated financial statements reflect annual global revenue of at least EUR 750 million in at least two of the four fiscal years immediately preceding the year in which the tax obligation arises.
This threshold aligns with the OECD GloBE rules and establishes the primary gateway for determining whether an MNE group falls within the scope of Vietnam’s GMT regime. Once the revenue threshold is met, relevant Vietnamese entities of the group, as well as certain overseas entities owned by Vietnamese parent entities, may be subject to additional corporate income tax under either the QDMTT or the IIR, depending on the structure and tax profile of the group.
Scope of Global Minimum Tax Application in Vietnam
Decree 236 provides detailed guidance on the application of the Global Minimum Tax through two principal mechanisms: the Qualified Domestic Minimum Top-up Tax (QDMTT) and the Income Inclusion Rule (IIR). While both mechanisms are designed to ensure a minimum effective tax rate of 15 per cent, they differ in scope, function, and taxing priority.
Scope comparison of QDMTT and IIR under Decree 236
| Criteria | QDMTT | IIR |
| Policy objective | Ensure Vietnam retains taxing rights over low-taxed domestic profits | Tax low-taxed foreign profits through Vietnamese parent entities |
| Nature of tax | Domestic top-up tax | Cross-border inclusion mechanism |
| MNE revenue threshold | EUR 750 million or more in at least two of the four preceding fiscal years | Same threshold applies |
| Entities in scope | Vietnamese Constituent Entities of in-scope MNEs, including Constituent Entities, joint ventures and JV subsidiaries, and permanent establishments (excluding stateless entities) | Overseas Constituent Entities, joint ventures, JV subsidiaries, permanent establishments, and certain investment entities owned by Vietnamese Ultimate, Intermediate, or Partially Owned Parent Entities |
| Trigger for application | Vietnamese jurisdictional effective tax rate below 15% | Overseas jurisdictional effective tax rate below 15% |
| Tax base | Income generated in Vietnam | Foreign income of overseas Constituent Entities |
| Priority within GMT framework | Takes precedence over IIR for Vietnamese profits | Applies after QDMTT in the source jurisdiction |
| Initial-phase exclusion | QDMTT may be deemed nil where the MNE operates in no more than six jurisdictions and overseas tangible assets do not exceed EUR 50 million | Not applicable |
| Transitional relief | Transitional safe harbours and de minimis thresholds may apply based on Country-by-Country Reporting data | Transitional safe harbours may apply under GloBE rules |
Initial Phase Exclusion and Transitional Relief Measures
To ease the compliance burden during the early stages of GMT implementation, Decree 236 introduces an initial-phase exclusion for QDMTT. Under this provision, Vietnam’s QDMTT liability may be deemed nil for a qualifying MNE group where both of the following conditions are met:
- The MNE group operates Constituent Entities in no more than six jurisdictions; and
- The total book value of tangible assets located outside the reference jurisdiction does not exceed EUR 50 million.
This exclusion applies for up to five fiscal years starting from the first year in which the MNE group falls within the scope of the GloBE rules. The reference jurisdiction is determined based on the jurisdiction in which the group holds the highest total value of tangible assets in that initial year.
In addition, Decree 236 incorporates transitional and de minimis relief measures aligned with OECD guidance. These include simplified effective tax rate tests and profit thresholds based on Country-by-Country Reporting (CbCR) data, which may allow jurisdictional top-up tax to be treated as nil during the transitional period, subject to specified conditions.
Income Inclusion Rule and Ordering Mechanism
The IIR under Decree 236 applies where a Vietnamese entity acts as an ultimate parent entity, partially owned parent entity, or intermediate parent entity that directly owns overseas Constituent Entities subject to low effective tax rates. In such cases, Vietnam may impose top-up tax on the foreign income of those overseas entities to bring the overall effective tax rate up to the global minimum of 15 per cent.
Decree 236 confirms the application of the IIR ordering rule in line with OECD standards. Under this rule, top-up tax is applied sequentially along the ownership chain, beginning with the ultimate parent entity, followed by partially owned parent entities, and then intermediate parent entities. This ordering mechanism ensures that top-up tax is collected at the highest appropriate level within the group structure and avoids duplication.
Tax Payment, Offsetting, and Refund Mechanisms (Clause 7, Article 16)
Additional corporate income tax arising under the Global Minimum Tax framework is payable to the central state budget. The relevant Constituent Entity is responsible for declaring and paying the additional tax in full compliance with Vietnam’s tax administration laws.
Where a Constituent Entity overpays additional corporate income tax, late payment interest, or administrative penalties under the GloBE regulations, Decree 236 provides three mechanisms for resolving the excess amount:
- Offsetting against outstanding tax liabilities or other amounts payable to the tax authority;
- Carrying forward the excess amount to offset tax obligations in subsequent periods; or
- Refunding the excess amount once the entity has fully settled all tax liabilities, late payment interest, and penalties.
These provisions introduce greater flexibility in managing overpayments and align the GMT regime with existing tax administration principles in Vietnam.
Implications for Corporate Tax Compliance
Decree 236 fundamentally reshapes the framework for corporate income tax calculation for large multinational groups, particularly those with cross-border operations, related-party transactions, or complex supply chains. The introduction of jurisdictional effective tax rate testing, group-wide revenue thresholds, and consolidated reporting requirements necessitates a reassessment of existing tax reporting processes and internal controls.
With retroactive application from the 2024 fiscal year and recognition under the OECD Inclusive Framework, Decree 236 signals Vietnam’s firm commitment to international tax reform while preserving domestic taxing rights. Multinational enterprises with operations in or from Vietnam will need to carefully monitor developments, assess their exposure under both QDMTT and IIR, and ensure timely compliance with the evolving Global Minimum Tax regime.
Conclusion
Decree No. 236/2025/ND-CP introduces significant changes to Vietnam’s corporate income tax framework by formally implementing the Global Minimum Tax in accordance with OECD Pillar Two principles. Enterprises operating in Vietnam that are part of multinational groups meeting the EUR 750 million revenue threshold may now face additional corporate income tax where their effective tax rate falls below 15 per cent, regardless of existing tax incentives or preferential regimes.
For Vietnamese constituent entities, this development requires a reassessment of current tax positions, incentive benefits, and group tax planning strategies. Foreign-invested enterprises should also anticipate increased compliance obligations, including detailed registration, filing, and reporting requirements linked to consolidated group financial data. Early coordination with group headquarters, timely preparation of required filings, and proactive review of effective tax rates will be critical to managing compliance risks and avoiding unexpected top-up tax exposures under the new regime.
