Dozens of businesses in the film production and distribution sector have sent documents to the National Assembly and the Government proposing adjustments to the value-added tax rate in the draft Law on VAT that is being discussed at the National Assembly.
A joint document bearing the seals and signatures of numerous prominent businesses and individuals in the film industry including Thien Ngan Film, BHD Vietnam, CJ CGV Vietnam, Lotte Cinema Vietnam, Mega GS, HK Film, ABC Pictures, Chanh Phuong Film, CJ HK, 89SGROUP, VCCORP, and renowned directors such as Charlie Nguyen, Nguyen Quang Dung, Thu Trang, Tran Thi Bich Ngoc, Nhat Trung, Ham Tran, and Hoang Quan was sent to the National Assembly and Government on November 12.
Vietnamese film enterprises have indicated in this document that the Draft Law on VAT which has been submitted by the Government to the National Assembly, suggests increasing the tax rate on film services from the current 5 percent to 10 percent.
The filmmakers contend that this proposal is impractical and present three arguments to support their opinions.
Initially, as outlined in the filmmakers' document, the film industry plays a significant role in the cultural activities of the nation. The Party and the State consistently prioritize this sector. This commitment is articulated in Decision 2156/QD-TTg, issued by the Prime Minister on November 11, 2013 which details the film development strategy for 2020 with a long-term vision extending to 2030.
Simultaneously, the document pointed out that the Clause 1 of Article 4 and Clause 1 of Article 5 of the 2022 Cinema Law contain stipulations that reflect the Party and State's viewpoints, principles, guidelines, and policies regarding cinema activities. These provisions are aligned with the objective of fostering and advancing a cinema industry that is both modern and distinctly rooted in national identity.
On that basis, film enterprises have been making efforts to achieve the common goals of the film industry assigned by the Prime Minister in Decision 2156/QD-TTg.
Businesses in the film industry specifically don’t ask for the government’s financial investments as well as funding related to facilities, land, or human resources. Instead, they just beg for reasonable mechanisms and policies that would enable them to contribute effectively to both the budget and society to ensure enterprises’ stable development. This approach ultimately aids in fostering an advanced culture that reflects national identity.
Second, the document reiterates the serious impacts of the Covid-19 pandemic on the film industry.
Following the pandemic, the film industry was set to recommence its activities in 2023, with a hope that it would recover in 2024 and 2025. However, the recovery rate for the film sector in 2023 was anticipated to be only nearing the levels observed in 2019, the year preceding the pandemic, and it continues to encounter numerous challenges.
The business landscape of the Vietnamese film industry has experienced notable transformations, influenced by shifts in audience preferences regarding the consumption and utilization of services following a long time being influenced by the impact from the Covid-19 pandemic.
This has significantly affected the operations of film businesses in Vietnam. Certainly, the film industry can only recover with the support of the Government and ministries with practical policies, especially tax policies.
Businesses have also highlighted that the difficulties caused by the global economic recession affect those operating within the film industry as well.
Changes in consumer demand and behavior after the pandemic, coupled with a decline in audience' purchasing power, are posing significant challenges for businesses.
Enterprises in the film industry are expecting that following the Prime Minister's leadership at the National Conference on the Development of Vietnam's Cultural Industries on December 22, 2023, new policies will emerge to assist the sector in navigating these challenges, fostering collective growth, and enabling contributions to the film strategy outlined by the Government.
The draft Law on Value Added Tax (amended) has unexpectedly proposed an increase in the tax rate from 5 percent to 10 percent, contrary to the anticipations of businesses. This proposed increase represents not only a financial strain on enterprises but also diminishes the ability of film businesses to cope with existing challenges.
Furthermore, it is likely to lead to a more profound alteration in consumer purchasing habits, particularly as their purchasing power continues to decline.
Simultaneously, it has been noted that the film industry is encountering significant challenges amid the economic recession. Increasing the tax rate without a solid foundation will likely prove difficult to justify to both the public and businesses.
In the present landscape of Vietnamese cinema, industry stakeholders have confidently suggested a reduction in the value-added tax rate for film activities to 3 percent, which is 2 percent lower than the current rate.
