On 22 March 2023,  Vietnam signed the Convention on Multilateral Administrative Assistance in Tax Matters (MAAC -  the Convention) to implement international cooperation for tax administration, prevention of tax evasion and avoidance.  MAAC creates a strong tax administrative measure for member countries (consisting of 146 countries) for information exchange, cross border audit and inspection, support in collecting tax, others activity to prevent tax evasion and avoidance.

The Convention allows jurisdictions to ensure results of the OECD/G20 BEPS Project, including minimum standards to implement in tax treaties to prevent treaty abuse and ‘treaty shopping’, into their existing network of bilateral tax treaties in a quick and efficient manner. By signing MAAC, Vietnam also express its commitment to OECD in meeting the conditions of international cooperation in tax administration in order to implement Base Erose Profit Shifting (BEPS).

Joining the Convention can be touted as marking the beginning of one of the most awaited developments for this year in the regime of international tax in Vietnam. Vietnam has, since the introduction of BEPS - Pillar Two, committed itself to the implementation of the global minimum tax rules. The government is actively working on domestic regulations to adapt OECD rules and guidelines, including possible revision of its tax and non-tax incentive regime to ensure the country remains competitive to attract foreign direct investment. Large Vietnamese-based corporations that have foreign operations and foreign-based MNEs that have operations in Vietnam should stay close to Pillar Two developments and understand how the competent authorities in the different jurisdictions where the group operates may respond.

Should you have any queries, please do not hesitate to contact us, or, as appropriate, your local KPMG tax advisor.