Korea and Japan are among the largest FDI sources into Vietnam — and both have publicly applied the Income Inclusion Rule (IIR) from 2024. For groups parented in these countries, the global minimum tax is no longer the future.
This article analyzes where top-up tax is paid and the impact on Vietnam expansion plans.
Where top-up tax is paid with a Korean/Japanese parent
GloBE ordering: top-up tax is computed and paid first in Vietnam under the QDMTT (Resolution 107/2023/QH15) on Vietnamese entities’ ETR. Only any remaining shortfall after the QDMTT credit is computed under the IIR in Korea or Japan.
Two scenarios: (1) Vietnam ETR ≥15% → zero QDMTT and zero Vietnam portion in the IIR computation — no top-up in either place. (2) Vietnam ETR <15% (e.g., on a 10% incentive) → top-up paid in Vietnam; the credit mechanism deducts it from the parent's IIR liability — each dong collected once.
The CFO takeaway: with Vietnam’s qualified QDMTT, the top-up is “settled” in Vietnam in the vast majority of cases. The Korean/Japanese IIR is mainly the parent’s filing and reconciliation duty, not a second collection.
Impact on Vietnam expansion plans
First, every expansion project needs net-ETR modelling (with top-up) from the project stage: a 10% incentive for a new project no longer means a 10% burden — the total moves toward 15%, with the gap paid in Vietnam.
Second, Vietnam’s competitive edge is not lost but transformed: instead of competing on rates, Vietnam competes on SBIE (project workforce/asset scale), infrastructure, talent and administrative speed. Substance-heavy expansions are better shielded.
Third, on compliance: Vietnamese subsidiaries need GloBE ETR computation capability and a data-supply process for the Korean/Japanese parent’s IIR filing — both countries have applied the IIR from 2024, so the first filing cycle has arrived or is imminent. Late preparation means high advisory costs and error risk.
Frequently asked questions
With a Korean/Japanese parent, where is the top-up tax paid?
In Vietnam first. Under GloBE ordering, top-up on Vietnamese entities’ ETR is computed and paid in Vietnam via the QDMTT (Resolution 107/2023/QH15). The Korean/Japanese IIR only reaches any remaining shortfall (if any) after the QDMTT credit — each dong collected once.
Have Korea and Japan adopted the minimum tax?
Per public announcements, both Korea and Japan have applied the IIR from 2024. The IIR filing duty sits with the parent at home; the Vietnamese subsidiary must compute its GloBE ETR and supply data for the group filing.
How does this affect expansion plans in Vietnam?
Every expansion must model net ETR (with top-up) from the project stage — a 10% incentive no longer equals a 10% burden. Vietnam’s edge shifts from rates to SBIE, infrastructure and talent. And build ETR capability plus the parent data-supply process now, as the first IIR filing cycle has arrived or is imminent.
With a Korean/Japanese parent, the global minimum tax is present, not future: top-up settles in Vietnam via QDMTT while the parent files the IIR with credit. Net-ETR modelling from the expansion planning stage is mandatory.
This article has been quality-reviewed by the FLAW AI Legal Council