The National Assembly officially ratified the amended VAT Law on November 26, 2024, which stipulates that cultural activities, exhibitions, physical education, sports, art performance, film production, import, distribution and screening are subject to the VAT rate of 10 percent. The law will take effect on July 1, 2025.

For most investors in the industry, the twofold tax increase is sad news.

Bui Hoai Son, a member of the National Assembly’s Committee for Culture and Education, said the Vietnamese movie industry is facing difficulties as it has to compete fiercely with foreign culture and art products amid the public’s higher requirements on quality.

"It is true that the society sees the film industry as an entertainment activity, which is dispensable in people’s life,” Son said. The industry now has to make every effort to save itself before someone helps it."

According to Do Lenh Hung Tu, chair of the Vietnam Cinema Association, with the twofold tax increase, production costs will increase sharply. 

Trinh Hoan (HK Films), a major film producer in Vietnam, estimated that with the tax rate of 10 percent, the total tax would be up to hundreds of billion of dong. It would be better if the amount of tax can be used to make other films. 

Some film producers have expressed concern that once the production costs increase, they will have to raise ticket prices, which will keep audiences away from cinemas.

“Cinemas will have to raise ticket prices by 5 percent and the audience will think carefully before they spend money to buy tickets. This will hinder the development of the Vietnamese movie industry,” Nguyen Huu Tuan, producer of ‘An mang lau 4’ (tentatively translated as Murder on the Fourth Floor), said.

“The Vietnamese audience tends to choose foreign films and ignore Vietnamese made films,” he explained.

Phan Dang Di, the director of ‘Bi, dung so’ (Don’t be afraid, Bi), said the VAT is not only imposed on the audience, but on all activities of the film production process, and therefore, it turns cultural activities into money-making activities.

“Of course, there are film projects and producers for whom the 10 percent tax rate is okay. But when such a high tax rate is applied commonly, investors and producers will have to focus on making money with ‘commercial film’, and therefore, this turns out to be a barrier to products with original art, or ‘art films’,” he warned.

“Though it is more difficult for these films to approach the public, they are indispensable for people’s spiritual life,” he added.

Supports

Analysts say that the film industry will face many challenges after the VAT increases, but there is good news that the NA approved the national culture development program in 2025-2030 on November 27 with capital of at least VND122.25 trillion.

“This is a great resource to develop culture in general and film industry in particular. The industry needs to make efforts to cope with current difficulties. We need to seek opportunities to determine the Vietnamese movie brand,” Son said.

In fact, there are many other tools, not only VAT, that can be used to support film producers. Tran Thi Bich Ngoc, the producer of ‘Cu li khong bao gio khoc’ (Cu Li never cries), said raising tax is a necessity for cinema segments with high incomes.

“In other countries, besides tax, there are also culture funds and cinema production funds that support the development of domestic film industries,” Ngoc said.

“Cinema is always diverse, with the presence of different works, such as state cinema, independent cinema and private cinema. However, low-budget films or first works of directors still need support through different ways," she added.

These films bring diversity to cinema, but find it difficult to fairly compete with films with large budgets for advertisement. Ngoc proposed giving support to independent films and first works of directors/producers.

Meanwhile, producer Nguyen Huu Tuan hopes that the state will lay down policies that allow film producers to access bank loans and preferential loans from the cinema development fund. It is also necessary to set up reasonable regulations to control the market and ensure fair and healthy competition. 

Tinh Le