South Korean electronics giant Samsung Electronics has warned that proposed tax and incentive reforms in Vietnam could undermine investment flows and raise costs for global manufacturers.
The concerns centre on draft amendments to Vietnam’s high‑tech law, currently under review by the Vietnam National Assembly and expected to be adopted in December.
Specifically, the amendments would phase out certain preferential tax, duty, and land-use incentives for high-tech firms that have been a cornerstone of Vietnam’s foreign direct investment (FDI) strategy.
Samsung tells Vietnam to keep its tax policies friendly for foreign investors
Samsung Electronics has built factories in Bac Ninh and Thai Nguyen, hiring tens of thousands of Vietnamese workers to produce 60% of the smartphones it sells worldwide. Samsung contributes over one-tenth of Vietnam’s total exports and has helped the country become a significant part of the global tech supply chain.
However, Samsung and other South Korean companies are now concerned that the new law will eliminate the special benefits afforded to high-tech companies, including lower taxes, exemptions from duties, and more affordable access to land. Korean business leaders stated that removing these benefits would make it difficult for companies like Samsung to initiate new projects or factories, as prices would likely skyrocket.
The Korean Chamber of Commerce in Vietnam (Kocham) and Ko Tae Yeon said the changes might slow down investment and hinder the country’s long-term growth goals. He asked the government to maintain favourable policies for foreign investors, so that companies can continue to bring new technology and jobs into Vietnam.
Korean officials stated that Samsung expressed its concerns privately but did not threaten to halt or reduce its investments. The company requests that the government clarify how the new rules apply to existing projects and compensate companies for any resulting losses.
Samsung and other investors want the government to ensure that the policies adhere to the global tax rules, including a 15% minimum tax, to reduce unexpected costs.
The global tax plan by Vietnam makes foreign companies uneasy
Korean companies in Vietnam have consistently enjoyed favourable corporate tax rates, which have been as low as 5%. This means the firm has more money to build new factories, hire workers, and increase exports.
Now that the government has increased these rates, companies are worried that costs will be high. The government of Vietnam has promised to compensate for any losses the changes cause, but investors say the process of getting these funds is slow and unclear. They say these unclear rules may cause delays that make it difficult to plan for new projects or continue current operations.
Experts say the new 15% minimum may not affect companies that already pay this rate; however, the fact that there is no published legal text and the rules remain unclear is very troubling.
On the other hand, analysts suggest that the government can provide direct grants, research and development (R&D) credits, or other forms of support that adhere to international tax rules to attract investors. However, companies currently lack the confidence to plan future investments because these benefits are still not tangible.
Business leaders say Vietnam needs to be clear and fair to investors for the country’s long-term success lest they push firms to neighbouring nations like Malaysia or Thailand, where the rules are clear and reliable.
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Source: https://www.cryptopolitan.com/samsung-sounds-alarm-over-vietnam-tax%E2%80%91reform/