Illustration: Calculator — Source: Wikimedia Commons (CC).
A French industrial group runs a factory in Vietnam enjoying a 10 percent corporate income tax incentive in an industrial park. In 2024, the group CFO received two letters at once: the Vietnamese tax authority demanding a top-up tax filing under Resolution 107, and headquarters in Paris notified to apply France’s IIR rules. The same Vietnamese profit, potentially taxed twice — which mechanism takes priority?
The Pillar Two frame: 15 percent is a floor, not a ceiling
Pillar Two of the OECD/G20 Inclusive Framework sets a 15 percent global minimum tax for multinational groups with consolidated revenue of EUR 750 million or more (in at least two of the four fiscal years before the tested year). Three rules operate in a priority order:
- QDMTT (Qualified Domestic Minimum Top-up Tax): the subsidiary’s home country collects first the top-up needed to bring the effective rate to 15 percent.
- IIR (Income Inclusion Rule): the parent (in France) collects the shortfall on foreign low-taxed subsidiaries if their country applies no QDMTT.
- UTPR (Undertaxed Profits Rule): a backstop allocating any remaining top-up across other group entities.
The ordering matters enormously in practice: once Vietnam has collected QDMTT, France (via IIR) does not collect again on the same income — no double taxation if the machinery works as designed.
The Vietnam side: Resolution 107 and Decree 236/2025
Vietnam’s National Assembly adopted Resolution 107/2023/QH15 on 29 November 2023, effective 1 January 2024 and applicable from fiscal year 2024. The eight-article Resolution covers two things: the QDMTT for constituent entities in Vietnam, and the IIR for Vietnamese parents holding low-taxed foreign entities. Articles 4 and 5 set out the formulas for computing the top-up under each mechanism.
An update many businesses have missed: the Government issued Decree 236/2025/ND-CP guiding Resolution 107, effective 15 October 2025, detailing taxpayers, filing and administration. On timing, QDMTT returns and payment are due no later than 12 months after the fiscal year-end; for IIR, 18 months for the first year and 15 months thereafter.
The message for French groups: the Vietnamese subsidiary falls within QDMTT — a 10 percent CIT incentive no longer means a 10 percent effective rate. The gap to 15 percent is collected as top-up tax in Vietnam.
The France side: IIR from 2024, UTPR from 2025
France transposed EU Directive 2022/2523 through its 2024 Finance Law (Article 33): the IIR and France’s domestic top-up tax apply from 1 January 2024; the UTPR from 1 January 2025. Decree 2024-1126 (December 2024) details the reporting duties. Groups must file the GloBE Information Return (GIR) within 15 months of the fiscal year-end (18 months for the first year in scope).
For a French holding–Vietnamese subsidiary structure: because Vietnam applies QDMTT, France’s IIR in principle no longer touches the Vietnamese income. But the group must still meet its full GloBE reporting duties in France, and UTPR exposure can arise wherever top-up remains uncollected anywhere in the chain.
A checklist for French group leadership
First, confirm scope: test the last four years of consolidated revenue against the EUR 750 million threshold — two qualifying years out of four is enough.
Second, compute the Vietnamese effective tax rate (ETR) under GloBE standards, not Vietnamese accounting standards — the two can diverge, and the gap decides the top-up.
Third, re-examine current incentives: CIT holidays and reductions do not reduce QDMTT liability — remodel the real economics of the investment incentive package.
Fourth, synchronise the two countries’ filing calendars: Vietnam QDMTT (12 months) and France GIR (15/18 months) — the phase gap demands tight internal data processes.
Fifth, reassess the holding structure: intermediate companies in third countries can trigger their own IIR/UTPR duties — look beyond the bilateral France–Vietnam link.
Frequently asked questions
Once the Vietnamese subsidiary has paid QDMTT, does the French parent still owe IIR on the same income?
In principle no, because QDMTT collects first. But the parent must still report and evidence this in its French GloBE file.
What is a 10 percent Vietnamese incentive worth under Pillar Two?
It still reduces ordinary CIT payable, but the gap to 15 percent is collected via QDMTT. Model the “post-QDMTT effective rate” instead of looking at the headline incentive rate.
What about a newly formed group without four years of revenue history?
Resolution 107 and Decree 236/2025 contain specific rules for this case (at least two qualifying years within the actual operating period). Check the texts to determine scope precisely.
Should profits be shifted elsewhere to avoid Vietnamese QDMTT?
Do not design tax planning merely to dodge QDMTT — the IIR and UTPR are built to close exactly that gap. Any restructuring needs in-depth tax advice and transfer-pricing compliance.
This article has been quality-reviewed by the FLAW AI Legal Council
