Tax increase to 10%, a difficult problem for the film industry

(CLO) The increase in VAT rate from 5% to 10% recently approved by the National Assembly is considered a difficult problem that film businesses need to find a solution to in the near future.

On the afternoon of November 26, the National Assembly passed the amended Law on Value Added Tax (VAT). In the draft law just passed by the National Assembly, cultural activities, exhibitions, physical education and sports ; performing arts; film production; import, distribution and screening of films will be subject to a tax rate of 10% instead of 5% under current law.

Scene from the movie “Getting Rich with Ghosts”. Photo: DPCC

According to experts, the increase in VAT from 5% to 10% is considered a difficult problem that film businesses need to find a solution to in the near future.

Director Charlie Nguyen said that the 10% VAT increase not only affects investors and producers, but also has impacts on film quality as well as the distribution system.

For example, a project with a budget of 25 billion VND must be increased to 26 billion VND or the budget must be kept at that level but the script must be cut or rewritten. Sometimes because of that, the producer cannot afford to have the desired cast or personnel.

In particular, the door to finding investors is getting narrower because the reality shows that cinema has long been a risky industry, while business people can move towards safer fields.

Not only in the film industry, looking at it from a broader perspective, experts believe that higher tax rates will increase the cost burden for arts, entertainment and sports activities, thereby reducing people's access to cultural products.

Tran Thanh is a name that has gone down in the history of Vietnamese box office. Photo: TL

This particularly affects low-income earners, putting at risk the cultural gap between social classes.

In the long run, if the cost of cultural and sports services increases, people may spend less time and resources enjoying these activities, weakening the community's cultural foundation.

Artists and creators may also have limited resources to invest in quality products, which reduces the competitiveness of our country's culture and sports industry in both domestic and international markets.

According to Associate Professor Dr. Bui Hoai Son - Standing Member of the National Assembly's Committee on Culture and Education, the proposal to double the value added tax on the cultural sector will certainly put considerable pressure on businesses operating in this field.

Increasing taxes will increase the operating costs of businesses, forcing them to adjust the prices of their products and services to compensate for the increased taxes.

This could lead to many small and medium-sized enterprises facing financial difficulties, even having to reduce the scale of operations or stop operating. Large enterprises, although having better ability to adjust costs, still face the risk of losing competitiveness due to higher prices compared to imported products or other sectors not affected by tax increases.

Scene from the movie 'Sleeping City'. Photo: TL

On the people's side, as the prices of cultural products increase, their access to arts, entertainment and cultural education activities will be narrowed.

Meanwhile, culture plays an important role in cultivating the soul, nurturing personality and building national pride.

When people have less access to culture, they risk losing community values, identity and creativity – the fundamental factors that help society develop sustainably.

In reality, the increase in VAT from 5% to 10% is a big challenge for film businesses, requiring them to consider and solve budget problems when implementing a project.

But from another perspective, director Nguyen Quang Dung said that this change places great demands on producers and distributors in adjusting quantity and carefully selecting quality products before releasing them in theaters.

Source: https://www.congluan.vn/tang-thue-len-10-bai-toan-kho-cua-nganh-dien-anh-post323058.html