HA NOI (Biz Hub) — Vietnamese telecommunications provider Viettel Group has submitted an official document to the Prime Minister requesting a five-year tax exemption on imported mobile phone components.

A mobile phone produced by the Viettel Group. Photo vneconomy.vn

Under the plan, Viettel is requesting the same tax exemption currently given to foreign enterprises such as Samsung Electronics Viet Nam (SEV), who import components for the domestic production of mobile phones in Viet Nam.

Under Circular No.193/2012/TT-BTC, the Ministry of Finance imposed a zero per cent tax on importing pre-made phones, whilst materials imported for domestic production were taxed at 25 per cent to encourage companies to use local suppliers.

In September 2012, SEV was recognized as a key production and export firm by the Government; granting a range of tax incentives to encourage investment; including a 5 year exemption on imported parts; in addition to favourable rates on business income tax and value-added tax.

However, official document No. 1016/VPCP-QHQT showed the taxes were disadvantaging local firms who needed to charge higher prices for locally made phones.

Viettel is hoping its request will improve access to mobile components which are not produced in Viet Nam, including vibration motors, mobile phone batteries, terminal blocks and mobile phone microphones.

"Compared to foreign invested firms, domestic companies have not received much support, even though they face many challenges. Local firms like Viettel are in need of timely backing from the Government, ministries and departments to develop mobile phone production," Viettel wrote.

In the document, Viettel has asked the Prime Minister to back the plans for the Ministry of Finance to offer a five-year tax exemption on mobile phone parts from 2013 to 2017, citing benefits in research, design and mobile phone production for the Viettel Group and its associated companies.

The corporation also expressed a preference for the business income tax to be adjusted to 10 per cent of sales income from locally made phones.

In the first six months of this year, Viettel revenues hit VND72,638 billion (US$3.45 billion), around half of its annual target of VND160-170 trillion ($7.6-8.09 billion). The group is tracking an annual profit of VND34 trillion ($1.6 billion) for 2013. — VNS