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The Government Standing Committee has just issued a conclusion announcement, stating that online game services will not be subject to special consumption tax (SCT). This announcement not only relieves the worries of Vietnamese online game businesses but also creates opportunities for the game industry to develop, aiming to support the growth of this industry and contribute positively to the development of society.
Vietnamese businesses face fierce competition
According to the Department of Radio, Television and Electronic Information (Ministry of Information and Communications), only 15% of the 200 registered game companies are still operating in Vietnam. Meanwhile, each year, unlicensed cross-border games generate revenue of VND5,000 billion, accounting for 30% of the game publishing market in Vietnam.
“Vietnam has great potential to develop the gaming industry, but it faces many prejudices and is not really encouraged to develop. Therefore, domestic enterprises face many difficulties and the growth rate is still limited. For many years, domestic gaming enterprises have had to face extremely fierce competition from global gaming and technology corporations, gradually losing their competitiveness in their own home market,” said Mr. Nguyen Trong Nghia, representative of the Vietnam Game Producers and Publishers Alliance.
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| A conference connecting gaming industry businesses organized by the Department of Radio, Television and Electronic Information (Ministry of Information and Communications) |
Globally, the gaming industry is a pillar of the digital content industry and digital economy. According to estimates from Newzoo, the total gaming industry revenue in 2022 worldwide will reach 184 billion USD and is expected to reach 194 billion USD in 2023. Vietnam and countries in the Southeast Asian region are considered emerging markets, with a large and rapidly growing number of internet users. The average gaming industry revenue growth rate in Southeast Asia in the period 2020-2025 is 8.2%/year, in Vietnam it is nearly 9%/year, so it is of great interest to foreign gaming companies. Many developed countries consider the gaming industry as a pillar in the process of developing the digital economy. The gaming industry's operations also affect the revenue of other supporting products such as IT human resources, content creation, design, advertising, hardware devices (PC, mobile, processing chips), telecommunications networks, etc.
The leader of a game production company said that the production or distribution of games by Vietnamese enterprises in the domestic market is not difficult, but the problem lies in having to fulfill all obligations to the State and competing with foreign enterprises because they do not have to fulfill any obligations. This is also one of the reasons why only about 15% of registered Vietnamese game enterprises are still operating, 85% have stopped or moved their operations abroad to enjoy policies on procedures, infrastructure, tax rates, etc.
The Ministry of Information and Communications has set a goal that in the next 5 years, the Vietnamese game industry will reach a revenue of 1 billion USD, the number of publishers will increase to 100 - 150 enterprises, attracting about 400 new start-up projects in this field.
Restrict cross-border games
To promote the development of the domestic game industry, on July 24, the Government Office announced the conclusion of the Government Standing Committee on draft laws and proposed the development of related laws. According to this announcement, for now, online game businesses will not be subject to special consumption tax. According to Mr. Thai Thanh Liem, CEO of Topebox Game Studio, this is what domestic game businesses are looking forward to. "If special consumption tax is applied to games, domestic businesses will tend to move to establish businesses abroad such as Singapore, then provide cross-border online game services to Vietnam to avoid high taxes. On the other hand, applying special consumption tax will not encourage domestic game businesses to increase investment and development, while this is one of the few industries with great potential," Mr. Thai Thanh Liem shared.
At the same time, according to experts, in order for the domestic game industry to develop, the prevention of illegal cross-border games must be more drastic. At the conference on implementing solutions to manage payment channels for games recently chaired by the Ministry of Information and Communications, delegates said that illegal cross-border games dominate the domestic market because payment for games is now easy in many forms, payment intermediaries do not proactively check, or even cannot check, leading to money being deposited for illegal games, gambling, etc. According to Deputy Minister of Information and Communications Nguyen Thanh Lam, the Ministry of Information and Communications will coordinate with the Ministry of Public Security and the State Bank to take measures to prevent illegal games. Specifically, the Ministry of Information and Communications will require organizations and enterprises providing intermediary payment services to implement solutions to prevent, not connect and pay for illegal games through their payment systems or when receiving requests from state management agencies.
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* Mr. TRAN PHUONG HUY, Director of VTC Intecom: Good management instead of applying special consumption tax policy
The goal of imposing special consumption tax is to regulate consumer behavior and increase state budget revenue, but applying this tax to the gaming industry is completely different. According to data from the Vietnam Gaming Alliance, out of every 100 people participating in online games, only less than 10 people pay (exactly 5.8 people), 90% of players do not pay. This means that adjusting the behavior of tax collectors is adjusting the behavior of 5.8 people, a very small number, unable to achieve the goal. Even before imposing special consumption tax, consumers have used foreign services, so imposing tax on the online gaming industry is unintentionally increasing unfair competition, leading to reverse protection for foreign gaming businesses.
In the world, China and South Korea have measures to regulate behavior by creating a connection between the government and businesses related to user information through ID cards and owner phone numbers. Since 2010, China has clearly regulated, depending on age, how long players are allowed to play, what specific time frames, how much they pay, thereby effectively controlling 70% of minors playing games less than 3 hours/week, the rate of young gamers decreased by 32% (from 122 million people to 82 million people in 2020). Vietnam can apply successful lessons from China and South Korea. If we add regulations on issuing chip-embedded ID cards to people under 14 years old, when minors create online gaming accounts, they will have to send authentication to the management agency, helping the State and businesses manage the accounts of gamers on online platforms more closely, thereby managing and controlling consumer behavior instead of applying the special consumption tax policy.
* Mr. LA XUAN THANG, Director of online game publishing VNG: Positive and trendy perspective
In countries like the US, Japan, South Korea, etc., online games are not only recognized as an important economic sector, but are also identified as a spearhead for cultural exports. Recently, some countries like Singapore, the United Arab Emirates, etc. have had many policies to attract gaming corporations and companies to set up headquarters and operate.
Games are an intellectual industry, highly creative, where new technologies such as blockchain technology, VR virtual reality technology, virtual learning technology and e-sports - a sport that has been recognized by the Olympic Committee to be officially competed in sports events... should be viewed positively and in line with trends. In Vietnam, online game business is a conditional business, must be assessed for content by specialized state management agencies, ensure requirements on content elements when put on the market and always have age classification, user warnings before use. Meanwhile, most of the unhealthy, deviant content comes from games that are illegally released in Vietnam, are not managed by specialized management agencies, and do not pay any taxes to Vietnam. In the past, state management agencies have made many efforts to prevent this situation but have not found a feasible solution.
BINH LAM - KIM THANH recorded
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