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Vietnam mulls 10 pct excise tax on online games

Saturday, October 04, 2014, 10:51 GMT+7
Vietnam mulls 10 pct excise tax on online games
Gamers are seen at an Internet café in Ho Chi Minh City.

Vietnam’s Ministry of Finance has proposed adding online games to the list of goods subject to special consumption taxes, which currently includes tobacco and liquor products, a decision that could result in VND650 billion (US$30.59 million) in tax collection per annum.

The excise tax must particularly be applied to online games that can cause addiction, and those with violent content, the finance ministry said in its report to the government on the amendment of the law on special consumption tax.

The report, based on the findings of the finance ministry’s study of the Vietnamese online gaming market, was made after the National Assembly’s Standing Committee proposed subjecting online games to the excise tax.

In 2013, there were around 58 businesses, mostly located in Hanoi and Ho Chi Minh City, that provided online games in Vietnam, the finance ministry said, citing data from tax agencies.

These companies had a collectively registered capital of VND1.15 trillion ($54.13 million), while their total revenues were as high as VND7.98 trillion ($375.6 million).

Revenues from the domestic market alone were VND6.48 trillion ($305 million), according to the finance ministry.

Online gaming is thus a lucrative market, and gaming businesses are much healthier than firms operating in several other service sectors, the ministry concluded, noting that most of the Vietnamese businesses in the online gaming sector are game providers, not game makers.

The Ministry of Information and Communications has licensed 73 games to be distributed in Vietnam, but there are still a number of illegal games.

The unlicensed games, mostly from foreign game makers, have generated billions of dong worth of profits from Vietnamese gamers, according to the finance ministry.

The ministry, however, admitted that it is not easy to tell which games have violent or banned content.

“There are games that have educational content, such as helping children to learn English and math,” the ministry said.

It thus proposed that educational games, as verified by the Ministry of Education and Training, be exempted from the excise tax.

The tax rate for online games must be 10 percent in the initial phase of implementation, which the finance ministry said is intended to “allow gaming firms to have time to rearrange their business.”

Taxing online games is hoped to add more than VND650 billion a year to state coffers, the ministry said.

Once finalized, the law on special consumption tax will take effect on July 1, 2015.

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