VietNamNet Bridge – The Ministry of Finance (MOF) has proposed to apply the preferential corporate income tax rate of 10 percent to press agencies from January 1, 2014.
A difficult period for press agencies
A report by the Ministry of Industry and Trade on the competitiveness of the 10 business fields conducted in 2012, showed that the Vietnamese ad markets grows by 20-30 percent per annum.
In 2008, the total revenue from the ad market was VND9.057 trillion, while the figure soared to VND17.206 trillion in 2011. It is expected that the total revenue would be VND24 trillion by 2015.
However, despite the promising ad market, the press agencies’ revenue from ads has been increasing very slowly by 13 percent from 2008 to VND2.332 trillion. And if considering the inflation rate of 63 percent over the last five years, the ad revenue would decrease by 25 percent. The modest revenue has been divided to 780 press agencies with 1,000 publications.
Analysts believe that print newspapers would not be able to improve their position with the modest market share of 13 percent, if it cannot enjoy preferences.
TV news is believed to hold 81 percent of the market share and online newspapers 5 percent.
Dr. Le Dang Doanh advocates the application of the 10 percent preferential tax to print newspapers, saying that the tax cut would not much affect the receipts of the state budget, but it would be big enough to help press agencies improve their publications’ quality and their competitiveness.
Immediate tax cut wanted
While the Ministry of Finance suggested that the new tax rate would be applied from January 1, 2014, press agencies have insisted on an earlier date of application, July 1, 2013.
Dr. Doanh, while affirming that the 25 percent tax rate is unreasonable, said that the tax cut should be applied as soon as possible.
He said press agencies should not be considered as businesses to be taxed. Press agencies have to fulfill the political and social tasks of propagandizing the Communist Party’s and the State’s policies.
According to Nguyen Xuan Minh, Acting Editor in Chief of Saigon Tiep Thi said the 25 percent tax rate is unbearable to press agencies; therefore, a more reasonable tax rate needs to be applied as soon as possible.
Many press agencies have been living on the ad revenues, not from newspaper sale. Meanwhile, the ad revenue has decreased since businesses, which are in big difficulties, tend to cut down the budget on advertisements.
While the income has decreased, the input cost has increased, from the management costs, content production and input materials.
According to Minh, the paper Saigon Tiep Thi now uses is imported from France. Previously, the press agency could pay in US dollar, but later, it has to pay in dong with higher interest rate. Despite the higher input costs, press agencies cannot raise the selling prices. Therefore, it is now facing big challenges.