“Foreign investors are entitled to operate theater business in Vietnam. The regulations on the type of business entity, conditions or the State’s incentives should be taken into consideration when investing in this sector. “
Foreign investors are entitled to operate theater business in Vietnam. The regulations on the type of business entity, conditions or the State’s incentives should be taken into consideration when investing in this sector.
Theater business is a form of disseminating movies as prescribed in the current Cinematography Law.
Type of business entity of foreign investors investing in theater business
The Cinematography Law of 2006 allowed the foreign investors to establish a wholly foreign-owned enterprise in order to operate theater business in Vietnam. However, this provision was amended by the current Cinematography Law of 2009. Accordingly, for the services of production, distribution and broadcasting, foreign investors are only allowed to operate in forms of business cooperation contract (BCC), or establish joint venture with Vietnamese partners who are licensed to provide such services in Vietnam.
For the form of business cooperation contract (BCC), foreign investors shall enter into a contract with Vietnamese partners in order to perform the theater business without establishing any economic organizations.
For the form of joint venture, foreign investors will cooperate with a Vietnamese enterprise in order to set up a joint venture to perform the theater business. The capital contribution of foreign investors cannot exceed 51% of legal capital of the joint venture in accordance with Vietnam commitments to WTO .
Please also be noted that the partners of Vietnam in both aforementioned cooperation forms must not be house of culture, cinema broadcasting spots, clubs, public associations of movie broadcasting, and mobile projection team of movies in Vietnam.
Conditions for implementation of the theater business of foreign investors
The enterprises are entitled to import movies for dissemination. The imported movies must have the lawful copyright and do not violate the prohibited acts in the field of cinematographic activities such as containing the contents that distort history and violate the cultural customs, etc.
Vietnamese movies produced by the film production studios, imported movies and the ones produced from cooperating and providing the manufacturing services, joint venture with foreign organizations and individuals an only be released in theaters after obtaining the license for movie dissemination granted by competent authority on cinematography.
For the movies produced and imported by the television or radio station, which have gained the decision to broadcast on television and radio, they can be broadcasted without the license for movie dissemination. More importantly, the licensing for movie dissemination will be based on the opinion of film evaluation board.
Since January 1st 2015, the movie theaters which are newly built or renovated must apply the national technical regulations stipulated in Circular 16/2013 /TT-BVHTTDL. Such technical regulations specify the technical and management requirements for movie theaters, including the engine room, auditorium and lobby area. Those are the standard regulations for the quality of images, audio, seat or exits, etc.
Incentives from the State of Vietnam
Enterprises constructing theaters for movies dissemination business or for other cinematographic activities is entitled to be allocated and leased land bythe State in accordance with the Law on Land and also entitled to the exemption of the registration fee when registering the land use rights and house ownership as prescribed by law.
Investment in theater business is an incentive investment sector. Enterprises which have at least 60 broadcastings per year and ensure the technical standards of movie theaters as prescribed in Circular 16/2013 TT-BVHTTDL, shall be able to gain the tax rate incentives. Accordingly, the income tax rate for the enterprises is 10% during the operation time.