VietNamNet Bridge – A proposed luxury tax on online games has spread fear among gaming companies, who believe smuggled products would ruin their business if the tax becomes law.

Nguyen Thi Son, secretary general of the Vietnam Lawyers’ Association, proposed the tax at the workshop in August discussing the amendment of the luxury tax law, or “Special Consumption Tax Law”.

The proposal was put into discussion at the National Assembly’s Steering Committee meeting in late September, which came to the conclusion that the amended law should include online games.

In Vietnam, people have a negative attitude about online games and gaming companies, because they believe that online games are the origin of social problems.

Gaming firms are opposed to the tax. The director of a privately run game studio noted that online gaming is a high-technology industry, the development of which is encouraged by governments.

Therefore, it will be unreasonable for Vietnam to impose a tax on games that could hinder the development of a profitable industry.

“In China, online games are listed as a high-technology industry, while the businesses in the field now enjoy tax exemptions, preferential land rents and receive tax refunds when exporting their games. Why does Vietnam go against the world’s trend?” he said.

The game developer went on to say that taxing online games would benefit foreign firms and kill domestic firms, because this would encourage the smuggling of foreign games into Vietnam.

“As Vietnamese games become expensive due to the luxury tax, gamers would prefer smuggled games which are free of tax,” he explained. “Therefore, taxation would very likely lead to the death of the domestic game industry.”

The outstanding characteristic of special goods is that they can be provided to anyone anywhere in the world. Imposing a tax on smuggled goods would be impossible.

Tran Hoang Minh, a senior executive of VTC Game, said it was unreasonable to impose a luxury tax on online games because, in principle, this kind of tax was imposed on the kinds of luxury goods and services and consumer goods that are harmful to health.

Meanwhile, online games, which have existed in Vietnam for five years, are normal entertainment services.

“From the angle of the ICT (information and communication technology), online games are a catalyst that can encourage the development of support industries,” he said.

“Thanks to games, for example, the computing animation industry has been developing rapidly,” he continued.

The executive also warned that Vietnamese game distributors have to pay very high distribution costs, and would surely incur losses if a luxury tax was imposed.

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