The Ministry of Finance has recently submitted a draft resolution to the Ministry of Justice for review, proposing amendments to certain provisions of Resolution No. 107/2023/QH15. This resolution, issued by the National Assembly, pertains to the imposition of additional corporate income tax in accordance with global anti-tax base erosion regulations.
BOT Power Projects Face Potential $400 Million Tax Liability
In its proposal, the Ministry of Finance cited the Ministry of Industry and Trade’s assessment of the impact of the global minimum tax on Build-Operate-Transfer (BOT) thermal power projects in Vietnam.
According to the Ministry of Industry and Trade’s accompanying document, there are currently seven BOT power projects with government guarantees that may incur additional tax obligations under the Global Anti-Base Erosion (GloBE) rules.
These projects, characterized by large capacities and substantial investment capital, rely on 75-80% international financing and 20-25% investor equity.
Upon review, it was determined that all seven projects are operated by multinational corporations, making them subject to Resolution 107.
Preliminary estimates indicate significant financial losses for these BOT power projects due to the GloBE rules.
Specifically, the Mong Duong 2 project faces a $14.4 million liability by 2040; Vinh Tan 1, $65 million by 2043; Nghi Son 2, $189.53 million by 2047; Van Phong, $10 million by 2049; Vung Ang 2, $52.9 million between 2033 and 2040; and Hai Duong, $94 million.
In total, six of the seven projects are expected to pay an additional $425.83 million in corporate income tax (the Duy Hai 2 project’s impact assessment is pending).
Nghi Son 2 BOT Thermal Power Plant has been operating both turbines commercially since July 2022. Photo: Thanh Hoa Newspaper |
Given these circumstances, the Ministry of Industry and Trade has urged the Ministry of Finance to request government approval for a National Assembly exemption of BOT power projects from Resolution 107, or to introduce suitable exemption mechanisms.
The proposal also notes that during the drafting of Resolution 107, an exemption for projects with investment incentives was considered. However, following deliberations by the National Assembly Standing Committee, this provision was replaced by Article 8, Clause 2.
The Ministry of Finance argues that amending Resolution 107 to empower the government to handle tax exemption requests is both necessary and appropriate.
The global minimum tax policy is a novel, complex, and evolving issue, with many countries yet to fully implement it. This lack of precedent necessitates a flexible mechanism for Vietnam.
The policy’s implementation in Vietnam is still in its early stages, with many unforeseen challenges. Resolution 107, enacted in late 2023, applies from the 2024 tax year, with a GloBE filing deadline of December 31, 2025. Unique cases, such as government-guaranteed BOT power projects, may arise during this period.
Without a flexible handling mechanism, there is a risk of legal disputes, complaints, and damage to Vietnam’s investment reputation.
Additionally, ensuring the government’s timely intervention and the National Assembly’s oversight is crucial. A balanced delegation of authority to the government is essential for addressing specific issues as they emerge.
Proposal to Exempt BOT Power Projects from Global Minimum Tax
The Ministry of Finance proposes adding Clause 10 to Article 4 of Resolution 107:
“The applicable top-up tax for a given fiscal year shall be zero for enterprises operating BOT power projects under Build-Operate-Transfer contracts with tax commitments signed before January 1, 2024, the effective date of Resolution 107.
For multinational enterprises with multiple constituent entities in Vietnam, the top-up tax allocation shall be based on the group’s total top-up tax liability, with the allocated amount set to zero.
For enterprises operating as the sole constituent entity or joint venture of a multinational group in Vietnam, a tax return must be filed in accordance with Article 6, with the top-up tax declared as zero.”
This amendment aims to effectively exempt government-guaranteed BOT power projects from the GloBE rules by setting their top-up tax liability to zero.
*Tâm An*
*- 05:45 23/09/2025*
