Netflix to be accused of tax arrears

11:43 | 29/05/2019
Local competitors are complaining about Netflix which they claim is dodging its tax obligation and does not supervise content in line with Vietnamese laws.
netflix to be accused of tax arrears
Netflix does not pay tax in Vietnam after its 300,000 subscribers

Netflix has been present in the Vietnamese pay-TV market since 2016. Throughout these three years, it has collected 300,000 subscribers and is a rising threat to Vetnamese pay-TV service providers, who claim they are hampered by tax and other administrative fees, while Netflix is getting away without paying its due.

"Netflix charges VND260,000 ($11.3) of monthly subscription fee, but it does not have to pay taxes and its content is not managed by local authorities. While Vietnamese businesses have to pay tax not only for importing content and buy copyrights but also for providing services and corporate income. Netflix does not pay any taxes of bidding or import," said Tran Van Uy, general director of SCTV.

Nguyen Ngoc Lanh, deputy general director of VTC Digital, said that over the top (OTT) platforms like Netflix have been given far more incentives to do business in Vietnam than local firms,but they are not willing to fulfill their responsibilities on tax and content management.

In full agreement, Nguyen Xuan Cuong, vice chairman of the Vietnam Digital Communications Association (VDCA), said that cross-border OTT service providers must pay tax after doing business in Vietnam.

Regarding this issue, at the conference of the General Department of Taxation, Nguyen Thanh Lam, director general of the Authority of Broadcasting and Electronic Information (under the Ministry of Information and Communications), said that clients are paying for watching movies on Netflix monthly, so the provider has to accomplish the responsibilities regarding taxes for the revenues gained from Vietnam. The same could be said of other cross-border platforms like Google, Facebook, Grab, or Booking.com, which are gaining hundreds of millions of dollars annually from their business in Vietnam, but ignore or dodge their tax responsibilities.

Additionally, the content of these OTT services is not moderated by the local authorities. Le Dinh Cuong, vice chairman of VNPayTV, said that the association has several times proposed the Government Office, the Ministry of Information and Communications, the Ministry of Culture, Sports and Tourism, and the Ministry of Justice not to grant certificates to foreign businesses that do not match the requirements on content management and moderation in compliance with the Law on Press.

Cuong said that digital content at such cross-border platforms like Netflix, Iflix, and Facebook is too large and is updated in real time, which makes it even more important to manage and moderate their content to ensure reliability and legal compliance, and create a fair playground with local content providers.

"These platforms carry the risk of spreading false, distorting, and negative information. Unless they are brought to operate under the local legal framework, competition between local and foreign players will be unequal," said Cuong.

In Indonesia, the Ministry of Communications and Information Technology asked Netflix to set up a representative office and ensure tax compliance. Netflix has a negligible presence in the country as it is only a content provider for IndiHome, one of the service products of PT Telekomunikasi Indonesia.

In Singapore, Netflix has to co-operate with Singtel, the largest mobile network operator in Singapore, to meet legal conditions. In early-2018, Singapore's tax authority planned to apply a 7 per cent tax on online services provided by Spotify, Netflix, and Amazon Prime.

In Thailand in 2017, the National Broadcasting and Telecommunications Commission announced plans to build a legal framework managing and taxing OTT services.

By Nguyen Huong

Based on MasterCMS Ultimate Edition Ver 2.8 2018