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Saturday, July 13, 2024

Zero VAT for overseas digital content revenues proposed

The Saigon Times

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HCMC – The Digital Content Creation Alliance (DCCA) at the Vietnam Digital Communications Association (VDCA) has recommended a zero value added tax, or VAT, on digital service revenues generated from foreign markets.

Nguyen Viet Tiep, tax senior specialist at DCCA, said local individuals and businesses monetizing in the global digital content market are being subject to “tax over tax.”

Viet said, for example, every content creator in the YouTube Partner Program is required to provide U.S. tax info to Google, the platform’s owner. Withholding rates for foreign creators are 0-30% on earnings generated from viewers in the U.S.

When the money is brought to Vietnam, individual creators will be taxed 7%, namely 5% VAT and 2% personal income tax. Businesses will be subject to a combined 30% tax rate (10% VAT plus 20% profit tax).

While the 2015 Double Taxation Avoidance Agreement (DTAA) signed between Vietnam and the U.S. prevents firms from being taxed twice on the same revenue in both countries, the U.S. has yet to ratify the agreement.

DCCA advised the General Taxation Department to apply the concept of double taxation avoidance to the income of digital content creators, especially those who monetize in countries with which Vietnam has a DTAA.

The organization also recommended that the agency levy no VAT on revenues made by local individuals and businesses in overseas markets.

Regarding views in Vietnam, the tax recommendation for local creators’ earnings is 2% VAT and 1% personal income tax for individuals, and 10% VAT for businesses.

The domestic digital content market has grown in recent years as a result of the Government’s support policies, said Nguyen Minh Hong, chairman of VDCA.

In 2022, the industry generated revenues of US$800 million, according to the Ministry of Information and Communications.

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