At a meeting to discuss the luxury tax draft recently released by the Ministry of Justice, online games were still on the list of products subject to luxury tax.
The luxury tax on online games had been discussed at meetings and workshops of government agencies and research institutes. After consultations, 90 said ‘no’ to taxation, while 10 opinions said there should be more research on the impact of online games on society.
MOF says online games have been developing rapidly in recent years. The revenue of the industry reached VND7.581 trillion in 2019, 11.486 trillion in 2021, and VND 12 trillion in 2022.
Meanwhile, a report from the Ministry of Health showed that online games have a negative impact on gamers, especially juveniles.
The impact includes physical health (being overweight, obesity, weaker eyesight, musculoskeletal problems) and mental health (the development of thinking skills, mental disorders, depression, addiction, nervous system problems and reduced concentration and learning ability in children).
MOF believes that it is necessary to put online games on the list of products subject to luxury games. Taxing online games will also help increase the revenue of the state budget.
MOF has been told that if Vietnam wants to tax online games, players will choose games provided by foreign companies, which will encourage Vietnamese game firms to relocate their head offices abroad.
In reply, MOF said even though a luxury tax is not imposed on online games, many Vietnamese businesses have set up their head offices overseas to produce games.
There are many reasons behind businesses’ decisions to set up their offices in other countries, including fame, positions and administrative procedures. Therefore, it is unreasonable to think that luxury tax policy will encourage Vietnamese firms to relocate to foreign countries.
Experts said that that controlling illegal games needs to be improved. The Ministry of Information and Communications should focus on renovating procedures to attract investors.
Le Hong Minh, CEO of VNG, said that imposing a luxury tax on games will make it much more difficult to develop the game industry.
Phan Duc Hieu from the National Assembly’s Economics Committee said there are proofs showing that imposing tax doesn’t always help increase budget revenue because of the negative impacts of taxation.