What is the VAT rate for the production of a 30-second television commercial in Vietnam?

What is the production of a 30-second television commercial?

Based on Clause 6, Article 3 of the Law on Cinematography 2022, the explanation for film production is the process of creating a film from script development to film completion.

A 30-second television commercial (TVC) is understood as a type of film produced and invested in, circulated on different TV channels to specifically promote a product or service. With a 30-second advertising duration, it can effectively convey multiple images, sounds, and message content to the recipient.

* Content for reference purposes only

What is the VAT rate for the production of a 30-second television commercial in Vietnam?

Based on the guidance in Official Dispatch 1015/CT-TTHT of 2016 on value-added tax (VAT) rates for the activity of producing a 30-second television commercial as follows:

Based on Clause 3, Article 4 of the Law on Cinematography No. 62/2006/QH11 by the National Assembly:

“Article 4. Explanation of Terms

…

3. A film is a cinematic work, including feature films, documentaries, scientific films, and cartoons.

Cinematic film is produced by cinematic technical means, recorded on film materials for screening on a big screen through a projector.

Video film is produced by video technical means, recorded on tapes, magnetic discs, and other recording materials for broadcast via video equipment.

Television film is a video film broadcast on television channels.

Film tapes and discs are products of video films or printed from cinematic films.”

According to Circular No. 219/2013/TT-BTC dated December 31, 2013, by the Ministry of Finance guiding VAT:

+ In Clause 13, Article 10, the VAT rate of 5% applies to:

“Cultural, exhibition, physical training, and sports activities; art performances; film production; importation, distribution, and screening.

a) Cultural, exhibition, physical training, and sports activities, except for revenues such as sales of goods, renting spaces, and booths at fairs and exhibitions.

b) Art performance activities like folk opera (tuong), traditional opera (cheo), reformed theatre (cai luong), singing, dance, music, drama, circus; other art performance activities, and services organizing art performances by theaters or folk art troupes with operation licenses issued by competent state agencies.

c) Film production; importation, distribution, and screening, except for the products mentioned in Clause 15, Article 4 of this Circular.”

+ Article 11 prescribes a tax rate of 10%:

“The 10% tax rate applies to goods and services not defined in Articles 4, 9, and 10 of this Circular.

….”

In cases where the company signs a contract with a customer to produce a 30-second television commercial that is not a feature film, documentary, scientific film, or cartoon, this activity is subject to a VAT rate of 10%.

Additionally, based on Clause 15, Article 4 of Circular 219/2013/TT-BTC which prescribes entities not subject to VAT as follows:

Entities not subject to VAT

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15. Publishing, importing, distributing newspapers, magazines, specialized newsletters, political books, textbooks, academic curricula, legal document books, scientific-technical books, books printed in minority languages, and propaganda posters, including tapes or disks recording sound, images, electronic data; money, printing money.

Newspapers, magazines, specialized newsletters, including activities transmitting newspaper, magazines, specialized newsletters.

Political books are books propagating the political directions of the Communist Party and the State, serving political tasks by topics and themes, marking anniversaries and traditional days of organizations at various levels, sectors, localities; statistical books, propagating the good person good deeds movement; books printing speeches, research, and theoretical studies of the Communist Party and State leaders.

Textbooks are books used for teaching and learning in all levels from preschool to high school (including reference books for teachers and students in accordance with the educational program content).

Curricula are books used for teaching and learning in universities, colleges, secondary professional schools, and vocational training.

Legal document books are books printing regulatory documents by the State.

Scientific-technical books are books introducing and guiding technical knowledge with direct relations to production and technical fields.

Books printed in minority languages include bilingual common language and minority language books.

Propaganda posters, banners serving propaganda and agitation purposes, mottos, leader photos, Communist Party flags, National flags, Youth Union flags, Team flags.

According to the guidelines mentioned above, if a company signs a contract with a customer to produce a 30-second television commercial that is not a feature film, documentary, scientific film, or cartoon, a VAT rate of 10% will be applied.

What is the VAT rate for the production of a 30-second television commercial in Vietnam? (Image from the Internet)

What are the rights and obligations of a 30-second television commercial producer in Vietnam?

The rights and obligations of a 30-second television commercial producer are stipulated in Article 11 of the Law on Cinematography 2022 as follows:

(i) The rights of the film producer include:

- Creative artistry within the framework of the law;

- Enjoying intellectual property rights as prescribed by intellectual property law;

- Protection of legal rights and interests related to cinematic activities.

(ii) The obligations of the film producer include:

- Complying with the provisions of the Law on Cinematography 2022 and other relevant laws;

- Performing contracts with film production establishments based on mutual agreement and not contrary to legal provisions;

- Adhering to professional ethical standards and conduct codes for individuals in the art field.