Samsung taxed by review plan

March 06, 2013 | 15:03

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An offer of preferential corporate income tax for Samsung at its planned $2 billion facility in northern Thai Nguyen province may require a review by the National Assembly.

The Ministry of Finance (MoF) has declared that the offer of Thai Nguyen Provincial People’s Committee to extend preferential tax treatment for Samsung Electronics Vietnam’s second plant exceeded the current legal regulations and thus would require the National Assembly approval.

Samsung Electronics Vietnam planned to build a factory to produce and assemble mobile phones and hi-tech products in Thai Nguyen’s Yen Binh Industrial Zone with the total investment of $2 billion.

Earlier, Thai Nguyen Provincial People’s Committee proposed a preferential mechanism for this project including a 10 per cent corporate income tax (CIT) within 30 years, free CIT within four years since it gains profits and a 50 per cent CIT reduction during the following 12 years.

The MoF suggested that those incentives for Samsung’s second facility in Vietnam should be implemented in accordance with the existing regulations stipulated in articles 13 and 14 of the Law on Corporate Income Tax.

The land lease contract for an area of 100 hectares, which was signed on February 6 by Samsung and its Vietnamese partners for the implementation of the project, will last 49 years.

When Samsung’s second facility goes into operation, Vietnam would become the firm’s largest export manufacturing hub for handsets over the world.

Samsung’s existing facility in northern Bac Ninh province’s Yen Phong Industrial Zone went into operation in 2009. The plant last year churned out 100 million mobile phones and it now employs 24,000 local workers.

This plant had the initial investment capital of $670 million and it was licenced to raise the investment capital to $1.5 billion in November 2012.