What are principles of online video game management in Vietnam? What is the VAT rate for online video game service provision in Vietnam?
What are principles of online video game management in Vietnam?
According to Article 37 of Decree 147/2024/ND-CP (effective from December 25, 2024), the principles of online video game management are regulated as follows:
(1) Online video games are classified as follows:
- Video games with interactions between multiple players simultaneously through the enterprise's game server system (referred to as G1 games);
- Video games with interactions only between the player and the enterprise's game server system (referred to as G2 games);
- Video games with interactions between multiple players but without interactions between players and the enterprise’s game server system (referred to as G3 games);
- Video games downloadable over the internet, without interactions between players or between players and the enterprise's game server system (referred to as G4 games);
- For new types of online video games not specified in points a, b, c, d of clause 1, Article 37 of Decree 147/2024/ND-CP, the Ministry of Information and Communications will advise and propose management measures to the Prime Minister of the Government of Vietnam for consideration and decision.
(2) Enterprises are allowed to release G1 online video games when they have a License to provide G1 online video game services and a Decision to release G1 online video games.
(3) Enterprises are permitted to release G2, G3, and G4 online video games when they have a Certificate to provide G2, G3, G4 online video game services and a Notification Confirmation for releasing G2, G3, G4 online video games.
(4) Foreign organizations and individuals providing online video game services to users in Vietnam, including cross-border services, must establish an enterprise in accordance with Vietnamese law to provide online video game services under this Decree and the regulations on foreign investment.
What are principles of online video game management in Vietnam? What is the VAT rate for online video game service provision in Vietnam? (Image from Internet)
What is the VAT rate for online video game service provision in Vietnam?
According to Official Dispatch 2270/TCT-CS in 2020 from the General Department of Taxation guiding tax policies for online video game service activities, it includes the following contents:
Firstly, based on clause 3, Article 9 of Circular 219/2013/TT-BTC regulating cases where the 0% tax rate is not applicable as follows:
0% Tax Rate
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- Cases where the 0% tax rate is not applied include:
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- The following services provided in Vietnam for foreign organizations or individuals are not applicable to the 0% tax rate:
+ Sports competitions, art performances, cultural and entertainment events, conferences, hotels, training, advertising, travel services;
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Secondly, based on Article 11 of Circular 219/2013/TT-BTC regulating cases where the 10% VAT rate applies as follows:
10% Tax Rate
The 10% tax rate applies to goods and services not included in Articles 4, 9, and 10 of this Circular.
The VAT rates specified in Articles 10 and 11 are uniformly applied to each type of goods and services in import, production, processing, or commercial business stages.
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Additionally, in Official Dispatch 2270/TCT-CS in 2020 from the General Department of Taxation, it concludes as follows:
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- For online video game services provided through Google and Apple: If the service is provided within Vietnam, it does not apply the 0% VAT rate as regulated in clause 3, Article 9 of Circular No. 219/2013/TT-BTC but is subject to the 10% VAT rate as stipulated in Article 11 of Circular No. 219/2013/TT-BTC dated December 31, 2013 by the Ministry of Finance.
Therefore, the provision of online video game services will apply a 10% VAT rate.
Which entity is the VAT payer in Vietnam ?
According to Article 3 of Circular 219/2013/TT-BTC, VAT payers are organizations and individuals producing or trading in goods and services subject to VAT in Vietnam, regardless of their business sector, form, or organization (hereafter referred to as business establishments), and organizations or individuals importing goods, purchasing services from abroad, subject to VAT (hereafter referred to as importers), including:
- Business organizations established and registered under the Law on Enterprises 2020, Law on Cooperatives 2023, and other specialized business laws;
- Economic organizations of political organizations, socio-political organizations, social organizations, professional-social organizations, armed forces units, career organizations, and other organizations;
- Enterprises with foreign-invested capital and foreign parties involved in business cooperation under the Law on Investment; foreign organizations and individuals conducting business in Vietnam but not establishing a legal entity in Vietnam;
- Individuals, households, independent business groups, and other subjects engaged in production, business, import activities;
- Organizations and individuals conducting business in Vietnam purchasing services (including services associated with goods) from foreign organizations without permanent establishments in Vietnam, individuals abroad who are non-residents of Vietnam, are VAT payers, except in cases not required to declare, calculate, and pay VAT as guided in clause 2, Article 5 of Circular 219/2013/TT-BTC.
The regulations on permanent establishments and non-resident subjects are implemented according to the laws on corporate income tax and personal income tax.
- Branches of export processing enterprises established to conduct the purchase and sale of goods and activities directly related to the purchase and sale of goods in Vietnam according to the regulation of industrial zones, export processing zones, and economic zones.
