Samsung Requests Tax Exemption for its Samsung CE Complex in Vietnam

January 14, 2015 Posted by Vietnam Briefing Reading Time: 4 minutes

HANOI – In a sign of the company’s increasing influence in Vietnam, Samsung has submitted a proposal to Prime Minister Nguyen Tan Dung requesting preferential tax treatment for its new Samsung CE Complex, a manufacturing facility located in Ho Chi Minh City’s Saigon Hi-Tech Park.

The proposal would reportedly grant Samsung a tax exemption on imported construction materials. The company has also requested that Vietnam’s entry to the ASEAN Trade in Goods Agreement (ATIGA) be considered when granting the company a tax exemption for imported components and materials in its first five years of manufacturing. Tax exemptions under ATIGA will come into effect in 2018 in Vietnam. Additionally, the company has requested preferential treatment during customs procedures.

RELATED: Dezan Shira & Associates’ International Tax Planning Services

The total tax exemption Samsung is likely to receive on imported construction materials is expected to reach US$8 million, and the exemptions under ATIGA will reach US$7.5 billion. The company’s total tax on imported components and materials for the Vietnamese market is projected to reach US$25 million, including US$5 million during the first five years.

The Samsung CE Complex project, which is breaking ground this January 2015, is expected to come into operation in Q2 2016 and to reach an estimated revenue of US$6 billion per year.

Samsung has been granted tax exemptions in the past. In the northeast province of Thai Nguyen, Samsung and its units secured a deal that will allow them to avoid paying tax for the first four years of operations, and receive a 50 percent tax break for the following nine years. As of November 2014, Samsung’s total investment in Thai Nguyen province was US$6.4 billion.

Despite having only opened its first factory in the country in 2009, Samsung’s exports from Vietnam in 2014 reached US$12.7 billion, over 11 percent of the country’s total exports. Vietnam has been a bright spot in a tough year for the company and markets seem to have endorsed the increased investment into the country – Samsung’s stock price jumped 5.14 percent on the November 2014 announcement that the company had applied for a license to build its US$3 billion Thai Nguyen smartphone plant.

While Samsung, due to its size, has been able to negotiate exceedingly beneficial tax and other financial incentive agreements with the Vietnam government, even smaller companies can gain substantial benefits. For example, newly established companies investing in the high-tech sector and/or producing software, as well as the incomes of hi-tech enterprises and hi-tech agricultural enterprises qualify for a range of incentives, these include:

A 10 percent Corporate Income Tax (CIT) rate (usually 22 percent) for 15 years
A CIT exemption for up to four years and a 50 percent CIT reduction for up to nine subsequent years

For more information on how your company can benefit from Vietnam’s tax incentives, please contact Dezan Shira Vietnam for specialist tax advisory. For a tailored report on Vietnam’s tax treaties, get in touch with Asia Briefing at: editor@asiabriefing.com

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Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email vietnam@dezshira.com or visit www.dezshira.com.

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