Vietnam ministry rejects Viettel's demand for tax breaks

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The Ministry of Finance has rejected a demand by telecom operator and cellphone maker Viettel for tax breaks similar to those it has given Samsung.

Vietnam Economic Times newspaper said the military-owned company had sought a five-year import duty waiver on phone parts for itself and its subsidiaries and a corporate tax rate of 10 percent for its retailers.

Domestic firms pay 25 percent corporate tax in general. 

Besides several tax breaks for its existing plant in the northern province of Bac Ninh, Samsung does not have to pay income tax for the first four years of operation of all its upcoming projects and a 50 percent waiver for the next 12 years.

There are no tax breaks for the cellphone manufacturing industry except in disadvantaged locations.

The ministry said Samsung Electronics Vietnam, which has invested US$5.7 billion, qualified for the incentives by being an export firm which uses high technology.

In the demands it had made in July Viettel said it is at a disadvantage while competing with Samsung, and complained that the government offers domestic companies less support and fewer incentives than foreign ones.

It was unhappy about the import tariffs of 15-25 percent on phone parts, which the country does not make. Samsung is exempt from this tax.

Viettel also pointed out that phone makers face fierce competition from imported phones, which are not taxed in the country.

It called for "timely" help from the government to expand domestic phone manufacturing, still a new industry in Vietnam.

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