Samsung smiles at new tax incentives

The government has green-lighted a special tax incentive policy for Samsung’s northern Bac Ninh province base.

A Samsung Electronics Vietnam source told VIR that Prime Minister Nguyen Tan Dung had approved a  Ministry of Planning and Investment (MPI) proposal to grant tax incentives to Samsung.

“The incentives will be applied immediately after we receive an adjusted investment certificate from the Bac Ninh Industrial Zones Authority,” the source said.

The MPI proposal was submitted after advice was sought from the ministries of Industry and Trade, Finance, and Science and Technology.

Accordingly, Samsung Electronics Vietnam will now enjoy a corporate income tax at 10 per cent for all products manufactured at its $670 million factory in Bac Ninh. The corporate income tax rate normally applied in Vietnam is  25 per cent.

The firm will also receive an income tax exemption in its first four years of operation and pay half this 10 per cent rate in the following nine years while enjoying tax exemption for imported components during the first five years of operation.

For its investment expansion from $670 million to $1.5 billion, the Korean company will enjoy the same incentives applied to new investment projects. The current tax regulations do not give tax incentives to expanded investments.

The company’s $670 million mobile phone factory was licenced in 2008. Last year, the firm announced it planned to increase investment to $1.5 billion by 2015 to develop a massive complex manufacturing mobile phones, laptops and other electronic products.

Not all of Samsung’s products made at the manufacturing complex in Bac Ninh province are covered by the list of hi-tech products that mean tax incentives for investors, according to the Ministry of Science and Technology.

But the MPI said Samsung’s project was important because it created jobs, boosted the development of the supporting industry and made a notable contribution to the state budget.

Bac Ninh People’s Committee estimated the firm would contribute $150 million each year to the provincial and state budgets, 450 times higher than the combined tax contribution of other foreign invested enterprises in the province this year.

Samsung Electronics Vietnam announced it had recruited nearly 9,000 workers to date and attracted more than 30 suppliers to the country with total commitment capital at around $250 million. – VIR

Tags: Samsung Electronics, Samsung Vietnam