There are about 200 Vietnamese-owned game studios, but most of them are headquartered in Singapore and pay tax there.
Vietnam ranks 3rd among top 10 game app manufacturers in Asia. One out of 25 games downloaded is made in Vietnam. Vietnam ranks seventh in the world and second in Southeast Asia in the number of games downloaded from app stores.
However, this is an estimate. Though Vietnam has nearly 200 game production workshops, the number of studios with head offices in Vietnam is modest. The others are located in other countries, mostly in Singapore.
This explains why Le Quang Tu Do, head of the Authority of Broadcasting and Electronic Information (ABEI) under the Ministry of Information and Communications (MIC), said at a conference in late 2022 that revenue from the game industry was $365 million in 2018, $665 million in 2021 and estimated to be satisfactory in 2022 but tax paid to the state just accounted for 50 percent, while the remaining was paid in foreign countries, mostly in Singapore.
There are many reasons for Vietnamese game studios to register their business in Singapore, including its better investment environment. They don’t have to apply for licenses for electronic game services and content for every game product, which is costly.
However, analysts believe the main reason lies in the transparent tax policies in Singapore.
The representative of a Singapore-based studio said that game producers based in Vietnam have to pay 10 percent of VAT, 10 percent of contractor tax (if they are foreign invested, or distribute games abroad), 20 percent of corporate income tax. In Singapore, they pay only 17 percent of corporate income tax.
In the first three years of operation, they enjoy 75 percent of exemption for the first taxable income of 100,000 Singaporean dollars and 50 percent on the next 100,000 dollars.
They can participate in the partial tax exemption program for the fourth year.
To encourage the development of Vietnam’s game industry, MIC is working on the strategy to develop online electronic games in 2022-2027.