VietNamNet Bridge – The Ministry of Finance (MOF) has rejected the military telecom group Viettel’s proposal to enjoy the tax incentives like those given to Samsung Vietnam.

Viettel wants preferentials like those for Samsung

Preferential tax not applicable to Viettel: MoF

MOF has said “no” to the claims for the preferentialism like those for the 100 percent South Korean invested enterprise Samsung Electronics Vietnam (SEV), saying that Viettel and SEV are in different conditions, therefore, they get different treatments.

Prior to that, in August 2013, Viettel sent a dispatch to the finance ministry, asking for the tax exemption on all the materials, auxiliary parts and accessories imports to be used for the research, design, manufacturing, production and assembling of mobile phones in Vietnam, with no discrimination if the products cannot be made domestically or not.

The telecom group wanted the preferentials to be applied to the holdings companies and the subsidiaries in which Viettel holds 100 percent of chartered capital. It wished to enjoy the tax incentives for five years, from 2013 to 2017.

Viettel now bears the high tax rates for the imports of materials, auxiliary parts and accessories that serve the phone set production. These include a lot of important input parts that still cannot be made domestically, including the vibration motors (25 percent), batteries (20 percent), connectors (15 percent) and microphone (15 percent).

In an effort to persuade the Ministry of Finance to give the tax incentives, Viettel mentioned the case of SEV, a 100 percent foreign invested enterprise, which now enjoys the import tax exemption for five years for the same products and materials.

The tax incentives for SEV, according to Viettel, give SEV big advantages and help it become more competitive.

The military group also thought that MOF, which gave tax incentives to a foreign invested enterprise with great advantages in technologies and financial capability, would not give the same tax incentives to a domestic enterprise.

Viettel also asked to impose the preferential corporate income tax of 10 percent on the mobile phone products made domestically by Viettel in order to help encourage the local production of high-technology products.

However, the Ministry of Finance has rejected the claim, saying that under the current import tax law, the production and assembling of mobile phones is not subject to the import tax preferentials.

Only if Viettel develops its mobile phone assembling in the localities with very difficult socio-economic conditions will it be able to exempt tax on the imports, which cannot be made domestically, for five years.

Regarding the case of SEV, MOF said that SEV can enjoy the tax incentives because it is an enterprise in export processing zone (EPZ), and a high-technology enterprise.

As for the proposal on the preferential 10 percent corporate income tax, MOF said that the Corporate Income Tax comprises detailed provisions about the subjects to enjoy the preferential tax rate of 10 percent, and that Viettel needs to refer to the provisions to find out if it can enjoy the tax incentives.

The decision by Vietnam to give investment incentives to Samsung Vietnam as an export processing company and high technology enterprise remains controversial.

Vietnamese enterprises have been jealous of SEV’s big investment incentives. Meanwhile, analysts pointed out that while the “big guy” can enjoy a lot of incentives, it cannot bring the expected high benefits to Vietnam in general and the local economy in particular.

Kim Chi

Translated from VTC