Vietnam Issues its Pillar 2 Decree

On August 29, 2025, Decree 236/2025/NĐ-CP (‘the Decree’) was published which includes provisions for the detailed operation of the GloBE rules in Vietnam, including top-up tax returns and required administrative notifications. The Decree takes effect from October 15, 2025 and applies from fiscal year 2024.

This follows Resolution No 107/2023/QH15 (‘the Resolution’) that was published in the Official Gazette on December 21, 2023 to enact the Pillar Two GloBE rules.

General

The Resolution applies an Income Inclusion Rule (IIR) and a domestic minimum top-up tax (intended to be a Qualified Domestic Minimum Top-Up Tax (QDMTT)) from January 1, 2024.

The Resolution provides for the high-level application of the IIR and QDMTT in Vietnam.

The Decree includes the remainder of the provisions to implement the GloBE rules in Vietnam. This includes:

-GloBE Income Adjustments;

-International Shipping Exemption;

-Specific rules for PEs/Flow-through Entities;

-The calculation of Adjusted Covered Taxes;

-Allocation of Covered Taxes;

-GloBE Loss Election;

-Minority-Owned Entities and Joint Ventures;

-Restructuring Rules;

-Rules for Investment Entities;

-Distribution Tax Regimes;

-Taxable Distribution Method Election.

OECD Administrative Guidance

The Decree includes a number of aspects of the First and Second Set of OECD Administrative Guidance including:

-Sovereign wealth funds and the definition of Ultimate Parent Entity (Article 1.4)

-Meaning of “ancillary” for Non-Profit Organisations (Article 1.6)

-Forex Hedge election (Article 2.2)

-Debt release election (Article 2.4)

-Accrued Pension Expenses (Article 2.5)

-Excess negative tax carry-forward guidance (Article 2.7)

-Substitute Loss carry forwards (Article 2.8)

-Equity Gain or loss inclusion election (Article 2.9)

-Allocation of taxes arising under a Blended CFC Tax Regimes (Article 2.10)

-Restricted Tier 1 Capital (Article 3.3)

-Portfolio shareholding election (Article 3.5)

-Application of Tax transparency election to Mutual insurance companies (Article 3.6)

-Transitional deferred tax rules (Article 4.1)

Aspects of the Second Set of OECD Administrative Guidance included in the Decree are:

-Tax Credits Guidance (MTTCs) (Article 2)

-SBIE Rules

-Foreign rules (Article 3)

-Stock-based compensation election

-Leases (Article 3)

-QDMTT Safe Harbour (Article 4.1)

No aspects of the Third or Fourth Set of OECD Administrative Guidance are included in the Resolution or Decree, aside from some Safe Harbour provisions.

Safe Harbours 

Article 11 and Appendix II, Part V of the Decree includes the detailed operation of the Transitional CbCR Safe Harbour including the definition of Qualified CbC Reports and Qualified Financial Statements, and the treatment of Net Unrealised Fair Value Losses. It also applies some aspects of the December 2023 OECD Administrative Guidance, including:

-Transitional CbCR – Purchase Accounting Adjustments  (Part V, Section 9)

-Transitional CbCR – Same Financial Statements/Local Financial Statements for Statutory Reporting (Part V, Section 6)

-Transitional CbCR – MNEs not required to file CbC Reports (Part V, Section 3)

-Transitional CbCR – Qualified Financial Statements for PEs (Part V, Section 7)

Article 10 of the Decree provides for the QDMTT Safe Harbour. This is based on QDMTTs that qualify under the OECDs Peer Review process for the Safe Harbour.

Article 12 of the Decree includes the Simplified Calculations Safe Harbour for Non Material Constituent Entities.

Elections in the OECD Model Rules

The only election from the OECD Model Rules included in the Vietnamese Resolution is the De-minimis Election in Article 5(12) (and included in Article 7 of the Decree).

However, the following elections are included in the Decree:

-Excluded Entity Election (Article 3(3));

-Stock-Based Compensation Election; (Article 4.3 of Appendix II)

-Election to use the Realization Method; (Article 4.5 of Appendix II)

-Election to Spread Capital Gains; (Article 1.4 of Appendix II)

-Consolidation Election; (Article 1.5 of Appendix II)

-Unclaimed Accrual Election; (Article 9.7 of Appendix II)

-GloBE Loss Election; (Article 10 of Appendix II)

-Prior Year Adjustment Election; (Article 11.1 of Appendix II)

-Substance-Based Income Exclusion Election; (Article 6.1 of Appendix II)

-Taxable Distribution Election; (Article 12 of Appendix II)

-Tax Transparency Election; (Article 11 of Appendix II)

-Distribution Tax Regime (Article 9 of Appendix II)

Elections in the Administrative Guidance

The following are included in the Decree:

-Equity Investment Inclusion Election;(Article 4.1.3.4/5 of Appendix II)

-Foreign Exchange Hedge Election; (Article 4.1.3.4/5 of Appendix II)

-Excess Negative Tax Carry-Forward Election; (Article 8.5/8.6 of Appendix II)

-Debt Release Election; (Article 4.2 of Appendix II)

-Portfolio Shareholding Election (Article 4.1.2.4 of Appendix II)

QDMTT Design Features

The detailed rules for the application of the QMTT are provided in the Decree. Part II, Section 1 of the Decree includes provisions for a domestic minimum tax (intended to be a QDMTT).

The amount of top-up tax under the QDMTT is the general GloBE top-up tax calculated under the Decree. However, the Decree provides for a number of adjustments.

Article 5 expressly applies irrespective of the shareholdings in the group entities located in Vietnam. This reflects the OECD Administrative Guidance that provides that Top-up Tax that is subject to the QDMTT is based on the whole amount of the jurisdictional Top-up Tax calculated, irrespective of the ownership interests held in the Constituent Entities located in the QDMTT jurisdiction by any Parent Entity of the MNE Group.

The QDMTT applies the general GloBE rules to determine the accounting standard used under Article 4 of the Decree. As such, the domestic minimum tax is calculated using the financial accounting standard of the UPE, and, if that is not practicable, on the basis of an accepted accounting standard or an approved accounting standard, if:

                -the constituent entity’s financial statements are prepared in accordance with that standard,

                 -the information contained in the financial statements is reliable; and

                 -permanent differences of more than EUR 1 million are conformed with the UPEs accounting standard.

Article 7.4 of Appendix II of the Decree provides for the required adjustment to the allocation of taxes for QDMTT purposes (based on the OECD Administrative Guidance).

Tax paid or incurred by a Constituent Entity-owner under a CFC Tax Regime that is pushed down to a domestic Constituent Entity in the GloBE Rules must be excluded, as provided in the OECD Administrative Guidance. This is included in Article 7.4 of Appendix II of the Decree.

This preserves Vietnam’s primary right to tax income accruing to a Vietnamese member entity which is also a CFC. If there were no statutory derogation from the general GloBE rules for the calculation of the domestic minimum tax, and the CFC tax paid by the controlling company abroad were included in the included taxes of the Vietnamese CFC, the effective tax rate would be increased. Therefore, excluding the CFC tax from the Vietnamese CFCs covered taxes allows Vietnam to tax low-taxed income at a higher rate than would be the case under an IIR.

Article 7.4 also prevents the pushdown of tax to hybrids, PEs and for taxes on distributions (except for Vietnamese withholding tax on dividends).

The UTPR exclusion for MNEs in their initial phase of international activity does not need to be included in a QDMTT, however, it can be included. The Second Set of OECD Administrative Guidance provides jurisdictions with three options regarding the temporary UTPR exclusion in their QDMTT legislation.

Option one allows the jurisdiction not to adopt it.

Option two allows the jurisdiction to adopt it but limits it to cases where no Parent Entity is required to apply a Qualified Income Inclusion Rule with respect to Constituent Entities of an MNE Group located in the QDMTT jurisdiction.

Option three allows the jurisdiction to adopt it without any limitations.

Under Article 9 of the Decree, Vietnam will apply option three.

Art 4(2) of the Decree provides that MNE groups with constituent entities subject to the QDMTT shall decide on the allocation of additional taxes payable under the QDMTT among constituent entities in Vietnam and declare information on the allocated tax amount in the Supplementary Corporate Income Tax Declaration (Form No. 01/TNDN-QDMTT).

Under the OECD Administrative Guidance, a domestic minimum tax does not need to apply to Stateless Constituent Entities (or permanent establishments), or to investment entities to be a QDMTT. Article 4 provides that the QDMTT does not apply to these.

Registration

There are no provisions for registration in the Vietnamese Resolution. However, Article 15(6) of the Decree provides that MNE groups with Constituent Entities in Vietnam are required to register within 90 days from the end of the reporting fiscal year using form No. 01-DKTD-DVHT.

Article 6(3) of the Resolution (Article 14(1) of the Decree) provides that if an MNE group has more than one constituent entity in Vietnam, the UPE or a constituent entity in Vietnam is required to submit a notification to designate the filing constituent entity within 30 days from the end of the reporting fiscal year using Form No. 01/TB-ĐVHT. The form also includes a list of constituent entities subject to the GloBE rules.

Filing

The relevant aspects of the submission of a GloBE Information Return (GIR) are included, as provided in the OECD Model Rules.

The proposed approach is that every Constituent Entity located in Vietnam will have an obligation to file a GIR in Vietnam. However, this obligation can be discharged if the GIR is filed by:

-The Ultimate Parent Entity, or

-The Designated Filing Entity.

Where the GIR is being filed by either the Ultimate Parent Entity or the Designated Filing Entity, the Constituent Entity, must file a notification with the Tax Authority on Form No. 03/TB-ĐVHT (included in the Decree).

The notification must contain:

-Details of the entity that is filing the GIR, and

-The jurisdiction in which such an entity is located.

Where the GIR is filed by the Designated Local Entity it needs to outline the Constituent Entities that it is filing on behalf of.

Both the GIR and associated notifications must be filed no later than 15 months after the end of the fiscal year (with an 18-month deadline for the Transition Year).

Article 6(1)-(2) of the Resolution and Article 16 of the Decree also require the submission of a QDMTT Tax Return and/or a Top-Up Tax Return for IIR purposes. The deadline for filing a domestic top-up tax return is 12 months after the end of the fiscal year, whilst the deadline for filing an IIR Top-Up Tax Return for the IIR is 15 months after the end of the fiscal year (18 months in the transition year).

Article 16 of the Decree provides that the QDMTT declaration includes:

-An information declaration form (Form No. 01/TKTT-QDMTT – included in the Decree)

-A supplementary corporate income tax declaration form (Form No. 01/TNDN-QDMTT – included in the Decree)

-An explanatory statement explaining any difference in the financial accounting standard used (Form No. 01/TM – included in the Decree)

-The GIR (unless this is not required)

-A report on the financial data of each constituent entity used for the purpose of preparing the Consolidated Financial Statements of the UPE.

The IIR Top-up Tax declaration includes:

-An information declaration form (Form No. 01/TKTT-IIR – included in the Decree)

-A Supplementary corporate income tax declaration form (Form No. 01/TNDN-IIR – included in the Decree)

-An explanatory statement explaining any difference in the financial accounting standard used (Form No. 01/TM – included in the Decree)

-Consolidated financial statements of the UPE

-A report on the financial data of each constituent entity used for the purpose of preparing the Consolidated Financial Statements of the UPE.

Under Article 17 of the Decree, the filing obligations above are based on the currency used in the preparation of the UPE’s consolidated Financial Statements; however, for the Supplementary corporate income tax declaration form and the payment of tax due, the taxpayer may choose to use Vietnamese Dong.