Incentives okayed for Samsung expansion project
In a document issued in mid-September, the Government asked the Ministry of Planning and Investment to give relevant agencies guidelines on revising the investment certificate for the second-phase of the project of Samsung Electronics Vietnam Co. Ltd., including the incentives requested by the investor.
The planning ministry and relevant agencies will work with Samsung to help it revise the expansion project so that the investor will enjoy the biggest incentives under the prevalent laws.
As such, Samsung will go ahead with its expansion plan as incentives are a prerequisite for the firm to expand its investment.
Samsung has written to many agencies seeking investment incentives for its expansion project and confirming its determination in Vietnam’s market.
However, the fact that it has had to knock at many doors also exposes many shortcomings in the investment incentive mechanism of Vietnam. Not only Samsung, a number of other investors have encountered the same problem.
Samsung’s petition for incentives was submitted to the Government late last year. The company proposed a corporate income tax rate of 10% during the project’s lifetime, a tax exemption for four years and a 50% tax reduction for the following nine years for all electric and electronics products of the project. These incentives are almost similar to the ones already awarded to the investor in its first-stage investment.
However, under the current regulations, expansion projects are not given incentives.
According to the government of Bac Ninh Province, the expansion project of Samsung might be mulled for corporate income tax incentives as this is a high-tech investor. The company as a high-tech investor has enjoyed a preferential income tax rate of 10% for 15 years, a four-year tax exemption and a 50% tax reduction for the following nine years after it reports taxable incomes.
The province proposed the Government give the above special treatment to the expanded part of the project of Samsung based on the post-check mechanism.
The expansion project with capital spurred from US$670 million to US$1.5 billion in the 2015-2020 period and the investment in a R&D center in Vietnam will take the total revenue of Samsung Electronics Vietnam to US$20 billion a year, create jobs for more than 30,000 laborers and attract some 300 satellite enterprises.
The project to establish the Samsung technology complex in Vietnam is an enormous scheme and it has been deployed in line with schedule and commitments to the Government, said Bac Ninh’s government.
As of end-2011, Samsung had disbursed US$492 million into the project, or 73.43% of the total registered capital for the first stage. The investor plans to inject an additional US$684.7 million by late this year.
The project has created jobs for 23,000 laborers. The total output capacity reaches 100 million products for the whole year, with sales estimated to amount to US$10 billion including an export value of US$9.5 billion.
