The Finance Ministry warned that enforcing the global minimum tax could trigger larger compensation payouts under so-called ‘adverse change in law’ clauses in BOT contracts. — VNA/VNS
HANOI: Vietnam is weighing a global minimum tax exemption for several government-guaranteed coal-fired power projects, a move that is likely to forgo hundreds of millions of dollars in revenue, but help the country avoid compensation claims and maintain investor confidence.
The proposal is set out in the draft amendment of the National Assembly’s Resolution No. 107/2023/QH15 on the implementation of the global minimum tax, which the Finance Ministry has submitted for legal appraisal.
Accordingly, the ministry proposed that certain coal power plants implemented under the build-operate-transfer (BOT) practice and Government Guarantee and Undertaking be exempted from the 15% global minimum tax under the Organisation for Economic Co-operation and Development’s Base Erosion and Profit Shifting framework.
This is aimed at maintaining the stability of the investment environment and avoiding compensation claims, the ministry said.
The ministry’s report showed that there are seven BOT coal power projects that could be subject to additional tax under the global minimum tax regime.
These projects all involve multinational investors, with around 75% to 80% of their capital sourced from international lenders.
Initial assessments estimated that six of the seven projects could face a combined top-up tax liability of up to US$425.83mil.
Mong Duong 2 will face a top-up tax of US$14.4mil by 2040, Vinh Tan 1 US$65mil by 2043, Nghi Son 2 US$189.53mil by 2047, Van Phong US$10mil by 2049, Vung Ang 2 US$52.9mil between 2033 and 2040, and Hai Duong US$94mil.
The financial impact of Duyen Hai 2 has not yet been assessed.
The Finance Ministry warned that enforcing the global minimum tax could trigger larger compensation payouts under so-called ‘adverse change in law’ clauses in BOT contracts.
Two mitigation options are being discussed, including raising electricity tariffs and extending project lifespans, but the former could fuel inflation and threaten economic stability while the latter could conflict with Vietnam’s climate commitments.
Thus, the ministry proposed the top-up tax rate at zero for eligible BOT coal power projects and that the government be allowed to grant further exemptions in future.
The proposal is seen as a strong signal to key foreign energy investors, including Mitsubishi, Marubeni, Sumitomo, Kepco, AES and China Southern Power Grid, who are operating major thermal power plants.
The ministry said that as global minimum tax policy remains an emerging and complex issue, with many countries yet to complete their domestic legislation, Vietnam must have a flexible mechanism to address potential impacts and maintain investor confidence.
Experts said the move reflected Vietnam’s attempt to balance fiscal revenue with investment appeal.
Vietnam was among the first countries to implement the global minimum tax in 2024, aiming to collect an estimated US$600 million annually. Exempting BOT projects with state guarantees is seen as a strategic effort to avoid ripple effects on electricity prices and energy security.
The draft resolution is under public consultation and expected to be presented to the National Assembly during its October 2025 session.
If approved, exemptions would take immediate effect for qualified projects, potentially preventing larger compensation liabilities while preserving investor trust and energy stability. — Viet Nam News/ANN
