Vietnam helps Samsung save billions of dollars in taxes
Samsung Electronics is one of the world’s largest electronics manufacturers, with revenue of $177 billion and post-tax profit of $16.8 billion in 2015.
Amid stiff competition with Apple and electronics manufacturing groups from Taiwan, China and Japan, Samsung Electronics and its satellite companies have invested tens of billions of dollars to develop large-scale production complexes in the nothern provinces of Bac Ninh and Thai Nguyen, and HCM City.
Samsung Electronics has set up at least five legal entities in Vietnam, namely Samsung Electronics Vietnam (SEV), Samsung Electronics Vietnam Thai Nguyen (SEVT), Samsung Display Vietnam (SDV), Samsung CE Complex and Samsung Vina Electronics, which trades Samsung’s products in the domestic market.
Amid stiff competition with Apple and electronics manufacturing groups from Taiwan, China and Japan, Samsung Electronics and its satellite companies have invested tens of billions of dollars to develop large-scale production complexes in the nothern provinces of Bac Ninh and Thai Nguyen, and HCM City.
Of these, SEV and SEVT are the two key companies, which play very important roles not only in Vietnam but also in Samsung’s global production chain.
In 2015, the two companies received turnover of $33.4 billion and post-tax profit of $3.1 billion, making up 19 percent of the total Samsung Electronics’ turnover and profit.
The profit was equal to the profit of both Viettel and the Vietnam Oil and Gas Group (PetroVietnam). PetroVietnam is a giant in the oil & gas sector, while Viettel is a huge player in telecommunications.
Among Samsung Electronics’ subsidiaries, SEV and SEVT have revenue and profits far higher than that of other subsidiaries. They have the highest ratio of return on sales.
Analysts said that this was not a surprise that Samsung’s subsidiaries had such high profits. In investing in Vietnam, Samsung received a promise from the government of Vietnam and local authorities for very attractive investment incentives.
If a company makes $3.1 billion in profit, it would have to pay about $600 million in tax, or VND13 trillion. The normal corporate income tax rate now is 22 percent.
However, this is not applied to Samsung. With tax incentives, Samsung’s subsidiaries only pay small sums of tax.
Local newspapers quoted taxation agencies as reporting that in 2015, Samsung’s projects in Bac Ninh province paid VND1.684 trillion in taxes, while SEVT paid VND950 billion.
In the same year, Samsung Electronics and its subsidiaries worldwide paid $5 billion in corporate income tax.
US$1 = VND21,000.
