FDI attraction amidst global minimum tax policy

Foreign direct investment (FDI) has been rising strongly even though global economic uncertainties have negatively affected this capital flow. Many factors are taking a toll on FDI activity and Vietnam can hardly stay unscathed.

It is assumed that foreign investors choose Vietnam as an FDI destination due to better benefits in comparison to other countries. These benefits include direct economic and trade benefits like tax deduction, low-cost labor, and a sizeable market, as well as other strategic advantages like cultural similarities, reciprocal partnerships and nation-to-nation cooperation. Therefore, Vietnam needs to maintain its competitive advantages, both economic and strategic benefits, to compensate for other benefits for FDI enterprises that may evaporate when a higher tax rate applies.

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Phan Dinh Manh