US Tax Policy Shifts: Impact on Vietnam-EU Supply Chains

US Tax Policy Adjustments: Challenges for Vietnamese Enterprises in the EU Supply Chain

The adjustment of tax policies by the United States has profound impacts on global supply chains, including the EU region in general and the Czech Republic in particular.

This poses significant challenges and issues for Vietnamese enterprises when participating in supply chains targeting the EU and Czech markets.

Challenges Related to the Global Minimum Tax The Global Minimum Tax (Pillar Two), initiated by the OECD/G20, is considered an important step forward in international tax cooperation aimed at limiting profit shifting, combating base erosion, and contributing to building a healthier competitive environment among multinational corporations.

In recent years, many major nations and economic regions, especially the European Union (EU), have proactively built roadmaps and perfected legal frameworks to implement this mechanism.

However, the actual implementation process is showing significant differences in policy approaches among major economies, thereby directly impacting the structure and operation of global supply chains.

The United States’ adjustment of its approach to the Global Minimum Tax—demonstrated through official statements and policy orientations of the US administration—has created changes in global trade and supply chains, posing many new issues for countries with high economic openness like Vietnam.

In adjusting this tax policy, the US aims to combat tax base erosion but chooses to implement the minimum tax according to its own mechanism and roadmap, consistent with its legal system and domestic policy priorities. This approach shows that the Global Minimum Tax is not applied uniformly but is heavily influenced by the context, institutions, and national interests of each country.

Supply Chain Fragmentation by “Parent Company Nationality” From this reality, global supply chains are beginning to fragment according to the “nationality of the parent company” rather than operating within a unified tax framework. Multinational corporations headquartered in the US have more room to organize production, allocate profits, and select investment locations, while enterprises in many other countries must comply fully with requirements.

This differentiation is not only technically significant regarding taxes but also has far-reaching impacts on how costs, risks, and benefits are allocated throughout the entire supply chain, from production to distribution in final markets, such as the EU and the Czech Republic.

Pressure on Vietnamese Enterprises Increased cost pressures and compliance requirements are impacting many Vietnamese enterprises currently participating in the supply chains of US corporations in key sectors such as electronics, textiles, footwear, wood products, precision mechanics, and processed agriculture.

In the new context, as US enterprises do not face similar supplementary tax obligations as in the EU, tax benefits generated are mainly retained at the parent company level. Meanwhile, requirements regarding environmental and social standards, traceability, supply chain transparency, and technical compliance according to EU standards continue to increase and are often shifted down to suppliers in third countries, including Vietnam.

This forces Vietnamese enterprises to face increasingly large cost pressures, while the room for price increases or profit improvement is disproportionate.

In previous periods, Vietnam was often viewed as a production hub with competitive costs and a relatively neutral position in the supply chain to the EU. However, as supply chains are restructured towards clearer stratification, stages creating high value-added tend to be retained at major economic centers, while labor-intensive and high-risk production stages continue to be placed in developing countries.

If Vietnamese enterprises do not proactively improve their position in the value chain, they may fall into a state of heavy dependence on orders, being easily replaceable, and suffering strong impacts when partners adjust global strategies.

The EU and Czech Republic Context: A Need for Long-term Vision Currently, the EU, including the Czech Republic, is implementing the Global Minimum Tax policy relatively fully, while simultaneously strengthening regulations related to sustainable development, corporate responsibility, and supply chain control.

In the same supply chain to the EU, Vietnamese enterprises must strictly comply with these standards, while some major partners have certain advantages due to the different policy approaches of the country where their parent company is headquartered. Consequently, the compliance costs for Vietnamese enterprises tend to increase faster, directly affecting price competitiveness.

The Czech Republic is an important link in the European Union’s supply chain, especially in manufacturing, mechanics, components, and technology industries with a high level of integration into the intra-EU market.

In the context of having to fully and synchronously comply with EU regulations related to the Global Minimum Tax, sustainable development, corporate responsibility, and supply chain control, Czech enterprises tend to be more cautious in selecting and maintaining partners outside the EU.

The focus of the partner evaluation process no longer stops at cost factors or short-term production capacity but shifts strongly to criteria regarding long-term stability, information transparency, governance systems, traceability capabilities, and readiness to meet compliance requirements in the medium and long term.

This trend has created direct impacts on cooperation relations between Vietnamese and Czech enterprises, especially in supply chains targeting the EU market. For Vietnamese enterprises, accessing or expanding cooperation with EU partners no longer depends solely on cost advantages or delivery speed but is increasingly linked to the capacity to meet technical, environmental, and social standards and commitments to sustainable cooperation.

Recommendations: Governance Capacity and Sustainable Integration It can be seen that the US adjustment of its approach to the Global Minimum Tax is not merely a tax issue but has created far-reaching impacts on the structure and operation of supply chains targeting the EU.

This poses new requirements for both enterprises and regulatory agencies in Vietnam to have a proactive, flexible, and long-term approach.

For Enterprises: Requirements are not limited to meeting orders or maintaining cost advantages but must strictly focus on improving governance capacity and sustainable integration into the global value chain.

• Focus: Enhance corporate governance towards financial transparency and compliance with international standards.
• Shift: Gradually move from the outsourcing/assembly model to deeper participation in high value-added stages such as design, engineering, quality management, and high-tech fields.
• Diversify: Proactively diversify partners and export markets to reduce dependence on a single supply chain, increasing resilience against global strategic adjustments.

For Policy:

• Monitor: Continue to closely monitor international developments, especially the implementation and adjustment of the Global Minimum Tax in major economies, to have proactive and timely countermeasures.
• Coordinate: Harmonize tax policies with other support tools such as infrastructure development, human resource quality improvement, innovation promotion, and support for enterprises to improve policy compliance capacity.
• Dialogue: Maintain regular and substantive dialogue with major partners in the supply chain to ensure legitimate interests of Vietnamese enterprises during integration and limit adverse impacts arising from differences in policy approaches.

From the above analysis, the US tax policy adjustment reflects important changes in global trade relations and the trend of supply chain restructuring towards clearer stratification.

For Vietnam, specifically in the linkage to the EU market, we need to identify challenges clearly, early, and fully to respond. However, this is also an opportunity to promote economic restructuring, improve growth quality, and gradually improve the position of Vietnamese enterprises in the global value chain, helping them continue to integrate effectively and sustainably in the new situation.