Vietnam phone maker seeks same tax breaks given to foreign rivals

TN News

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Military-run telecom Viettel has asked the Vietnamese government for tax breaks in order to compete in the local phone market, claiming there is less government support for local firms than their foreign rivals.

News website Tri Thuc Tre quoted Viettel as saying that no matter how efficiently it operates, its products struggle to compete with foreign-made ones, due to the 15-25 percent tariffs imposed on spare parts it must import.

Vietnam does not tax phones imported into the country.

Last year the country imported 17 million phones that accounted for 70 percent of phone sales.

Viettel, the country's largest telecom operator with half the market share, said it is facing fierce competition from not only imported phones, but those which are assembled locally by foreign firms.

More specifically, Viettel claimed it was at a disadvantage in its attempt to compete with Samsung Electronics Vietnam (SEV), saying the South Korean firm benefits from generous tax breaks.

SEV does not have to pay import duties on spare parts, it said.

Last September the electronics giant received the most tax breaks among foreign firms in Vietnam.

In addition to several tax breaks for its existing US$1.5-billion project in the northern province of Bac Ninh, Samsung's second-largest handset factory worldwide, the firm will be exempt from taxes for its first four years of operation, and will have its tax burden slashed by 50 percent over the next 12 years for all of its ventures in Vietnam.

SEV began construction on another $2 billion phone and tablet factory last March and has plans for three more.

Viettel said Vietnamese businesses do not get "much support" compared to foreign firms.

"Local [phone] producers including Viettel are in need of timely support from the government [in order to] to develop the phone manufacturing sector."

Viettel has asked the government to be exempted from taxes for five years starting now on imported spare parts. It has made the same request for its subsidiaries in which it holds a 100 percent stake.

It also seeks a 10 percent corporate tax rate for retailers of Viettel phones. Currently, the corporate tax rate for most domestic companies stands at 23 percent.

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