On March 31, DCCA, the Vietnam Digital Communication Association (VDCA), and the Department of International Cooperation under MIC held a conference on developing the international market and tax policies on digital content creation.
Nguyen Thien Nghia, Deputy Director of the Authority of Information and Communications Technology (ICT) Industry, said the digital content sector has been developing rapidly in recent years, with revenue estimated at $800 million in 2022 and millions of jobs created.
VDCA chair Nguyen Minh Hong stressed that many obstacles still exist, hindering development, especially tax policies.
Nguyen Viet Tiep from DCCA pointed out that individuals and organizations that create content and earn money on international platforms are being taxed twice.
Citing the policies YouTube applies on content creators on the platform, Tiep said that creators in non-US countries registered with the US taxation bodies will have a deduction of 30 percent of income tax for views from the US, while they won’t have deductions for views from other countries.
YouTube policies say that content creators from non-US countries that don’t register tax in the US will see a deduction of 24 percent of income tax for total views all over the globe.
When the cash arrives in Vietnam, individual creators will have to pay 7 percent additionally (including 5 percent VAT and 2 percent PIT). Meanwhile, organizations and enterprises doing business on YouTube have to pay tax of 30 percent (including 10 percent VAT and 20 percent CIT).
“As such, enterprises/individuals operating on YouTube in Vietnam have to pay double tax on their revenue from views in the US (as the US has already collected tax on the views), which means an overlap of tax,” Tiep said.
A representative of DCCA said that in 1992, Vietnam signed an agreement on double taxation avoidance with 72 countries and territories, of which 60 agreements have taken effect.
The agreement between Vietnam and the US was signed in 2015. However, as the agreement has not been ratified by the US, the agreement has not taken effect yet.
Under the Vietnam-US agreement, Vietnamese individuals and enterprises that have income in the US and already pay tax in the US won’t have to pay tax in Vietnam as well. Meanwhile, US investors/investment funds that make investment, make money in Vietnam and pay tax in Vietnam won’t have to pay tax in the US as well.
“If the agreement on double taxation avoidance between Vietnam and the US can be implemented soon, this will be an important step in easing the tax burden on content creators in Vietnam,” Tiep said.
PIT can help attract talent
DCCA has proposed that the General Department of Taxation (GDT) apply the principle on avoiding double taxation on incomes from countries that have double taxation avoidance agreements with Vietnam, applied to both individuals and organizations that trade digital content on global platforms.
Regarding the digital content produced to serve foreign markets and viewers, the alliance believes that it would be better to impose a value added tax (VAT) of zero percent. As for income from the views in Vietnam, a 2 percent VAT and 1 percent of personal income tax (PIT) have been proposed for individuals, and a 10 percent VAT has been proposed for businesses.
Ly Phuong Duyen, senior lecturer of the Finance Academy said that businesses and individuals are being taxed twice as the double taxation avoidance agreement between Vietnam and the US is yet to take effect.
Nghia said that to stimulate digital content development, it would be better to think of easing PIT rather than corporate income tax (CIT). Easing CIT is the way to retain good specialists in Vietnam. In the field of microchip designing, for example, good engineers are being offered by Singaporean enterprises with a wage double than Vietnam.