​Vietnam fears foreign investment affected by US tax bill

A tax overhaul passed by the U.S. Congress by the end of last year may affect Vietnam’s economy as American investors are likely to send their investment back home, where the income tax rate has been significantly slashed, Vietnamese economic experts have warned. The sweeping tax reforms, signed into law by U.S. President Donald Trump on December 22, include reductions in the corporate income tax rate from 35 percent to 21 percent, and a minimum of 10.5 percent taxes on foreign profits U.S. companies send home. The tax overhaul ought to encourage corporations to relocate or build new operations in the U.S. instead of sending them overseas, where the corporate tax rate is often lower. The U.S. government also hopes that U.S. companies will repatriate their foreign cash pile, with the attractive 10.5 percent tax levied for this kind of profit. Countries where U.S. companies are doing business, including Vietnam, see those benefits as challenges for their respective economies, members of the economic advisory panel to Vietnamese Prime Minister Nguyen Xuan Phuc said in a recent report. “U.S. companies will transfer their profits generated from operations in Vietnam back home, rather than keeping the money here for reinvestment,” Vu Viet Ngoan, head of the panel, told Tuoi Tre (Youth) newspaper. “Vietnam’s economy will be impacted if many U.S. corporations would follow this trend.” Employees are seen at a shoe making plant in Vietnam. Photo: Tuoi Tre But the bigger concern comes from neighboring economies, not the U.S. tax bill itself,… [Read full story]


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