Samsung Electronics has asked for a US$15.5 million import tariff exemption for its electronics factory in Ho Chi Minh City because local materials do not meet their manufacturing standards.
Vietnam Television reported Sunday that Samsung had asked for roughly $8 million in tariff exemptions to import construction materials for the factory and around $7.5 million in tariff exemptions for production materials it will use over the next five years, in addition to its preferential customs policies.
Vietnam imposes import tariffs on parts and materials used in home electronics.
Samsung said it is asking for the exemptions since its products will use the latest technology and that it expects to generate US$6 billion a year at the factory in the future, which will translate into big tax revenue for Vietnam.
The Korean giant issued a statement saying that the factory must meet international standards and the company doesn't have the time to establish a quality supply chain in Vietnam.
Samsung asked not to be taxed on the imports because, it claims, business will be tough enough during the initial years of operation.
Fixed properties alone will cost the company around $700 million, it said.
The tax break will save the factory some of the start-up trouble and give it a better shot at developing into a profitable enterprise, the company said.
HCMC officials approved the construction of the consumer electronics factory in September 2014.
The US$1.4 billion factory is designed to occupy around 70 hectares of Saigon Hi-tech Park in District 9 and employ between 4,000-5,000 people.
Samsung then said it planned to operate the factory for 50 years starting in the first quarter of 2016.
The company’s representatives pledged to use 30-40 percent domestically-produced components in each of its final products after three years of stable manufacturing.