Video game tax management – How to be effective?
- Tram Ho
This year, startups, including Vietnamese online game manufacturers, have received about $416 million in capital. But worth mentioning, only about 20% of them are based in Vietnam, the rest are overseas. The information has just been announced by the Ministry of Information and Communications.
Revenue is hundreds of millions of dollars per year, but most individuals and organizations making games… will pay taxes to foreign countries. Many start-up companies founded by Vietnamese people do business in the Vietnamese market… but set up companies abroad, leading to difficult tax arrears.
According to statistics of the Department of Broadcasting and Electronic Information, Ministry of Information and Communications, the game business in Vietnam has grown strongly. In Vietnam, it is estimated that there are nearly 28.5 million players. The revenue of this industry in Vietnam last year reached about 665 million USD, ranked 5th in Southeast Asia.
The revenue of games made in Vietnam released in the global market is up to 200 million USD/year. 50% of the most played mobile game titles originate from Vietnam, 5 of the top 10 game companies in Asia-Pacific and Australia are from Vietnam. However, the amount of tax paid to the State only accounts for half, the rest are individuals and organizations paying taxes to foreign countries, mainly in Singapore.
Currently, only about 15% of online game products with very high difficulty in Vietnam originate in the country, the rest are mainly from China, Japan, Korea… These are the places where the industry is located. Online games (online games) are one of the “drivers”, promoting the development of the entire information technology industry. Therefore, the governments of these countries have had many preferential policies to support the domestic game industry, including tax policies.
Since the late 90s of the 20th century, the Korean government has invested heavily in the online game industry, while creating many advantages in terms of policies or tax collection…
The country’s gaming industry also does not hesitate to invest to improve its ecosystem, with steps to professionalize the field of e-sports (Esports). As a result, this industry of Korea has so far become a complete ecological circle, from the initial production stage to the stage of product copyright protection, there are strict regulatory policies.
In Japan, online gaming products are not restricted to consumption and therefore are not subject to a special tax. Japan also does not require online game companies to have a license when releasing games … but only obeys the general regulations of the media entertainment industry.
In China, the government also pays great attention to the development of the domestic information technology industry in general and the game industry in particular. Since the mid-2000s, the country has had policies aimed at developing the quality of human resources in the online game industry as well as the quality of game development companies. China’s online game industry enjoys full tax incentives or subsidies like other software service industries. That is a favorable foundation for the country’s game industry to promote its strengths, rising to the top of the global game industry in terms of revenue since 2016.
In recent times, digital assets have become a concern of investors and technology around the world. In Vietnam, this wave also began to spread. Accordingly, the types of online games that create digital assets (called NFT games) also flourished. Last year, Vietnam was also honored at the top of the world’s NFT game market when there was a Vietnamese-branded game with more than 1.5 million players globally, both entertaining and earning income.
However, the legal framework has not been established, leaving this type of legal “gap”.
Having nearly 10 years of experience in developing mobile games, Mr. Dinh Trong Dung and his Game Studio are among the publishers involved early in developing the metaverse game and releasing NFT in Vietnam. Many projects of Dung are interested by international investors, willing to put in hundreds of thousands of dollars. However, the lack of basic legal frameworks related to digital assets makes Dung unable to receive investment.
Mr. Dinh Trong Dung, founder of Metal Game Studio, said: “With the lack of legal frameworks, investors are not guaranteed, making them hesitate to participate in the project, making us also lose opportunities. I know that there are some projects that want to receive investment, they must be brought to Singapore, not in the name of Vietnamese people.”
Dang Vuong Anh, blockchain consultant at NTQ Solution Technology Joint Stock Company, said: “In terms of NFT alone, the market’s trading volume in 2021 has reached 25 billion USD while in 2020 it has only reached 25 billion USD. reached 100 million USD. Thus, this field has grown by more than 100 times in just 1 year.In terms of tax for a country without a specific law like Vietnam, the tax loss is huge. “.
Tax policy is clearly necessary, but this is not the only condition to determine the development quality of the game industry in Vietnam. According to the Ministry of Information and Communications, game businesses in Vietnam are still producing and publishing video games on the basis of independent, unconnected activities, to jointly promote this industry. development, at the same time, the Ministry of Information and Communications will consider limiting foreign games; pilot management policy on blockchain technology… so that this industry is on the right track, eliminating the bad risk of pirated games and loss of budget revenue.
Source : Genk