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Vietnam Issues New Tax Regulations for Casinos

December 20, 2012

Since the last draft Decree issued in 2010 which called for public opinions, the Ministry of Finance (“MOF”) has again issued a new draft and is seeking further opinions after conducting research on the casino business model in the region. The draft is expected to be approved within this year. We note some important highlights below:

With respect to taxes, a casino enterprise must pay: (1) special sales tax (SST): 30%; (2) value added tax (VAT): 10%; and (3) corporate income tax (CIT): 25%, subject to a declaration method combined with a minimum tax on a deemed basis to be issued by the MOF. No tax incentives or reductions will apply to casinos and prize-winning electronic games, as well as the purchase of game machines or tables. It is still unclear whether the mechanism for minimum tax on a deemed basis will be (a) paying a certain percent of annual revenue in case the casino activities are in loss position, or (b) paying an absolute tax amount based on the number of machines/tables. This minimum tax declaration method for casino activities may prove to be controversial, as compared with other normal business activities using the net gain method.

It should be noted that investors planning to establish new casino businesses must have at least 10 years of relevant experience in recreational complex and activities and register at least US$4 billion in investment capital. The area of the casinos must not exceed 3% of the total area of the construction in the resort, tourism and entertainment places. In addition, an investor can only obtain an operation permit for the casino activities after it has completed the construction of the core work under the investment license (such as a resort, tourism area, entertainment area).

Regarding advertising and promotion, a casino enterprise may advertise as per the Law on Advertisement, which will become effective on 1 January 2013. We note that under the prior draft, a casino is not allowed to advertise for casino activities in any form. In the past, many casino enterprises have faced issues with the authorities regarding certain advertisement. This new rule appears to allow casino enterprises to advertise with fewer limitations. In addition, casino enterprises are allowed to provide discounts to players at a cap of 2% of the total value of conventional money exchanged by the players, and such discount is utilized to reduce taxable revenue. The casino enterprises can also provide accommodation, food, transportation and other services to the players as promotion. The enterprise may not provide any other forms of promotion. As a side note, there is currently a cap for CIT deduction on for advertising and promotional expenses.

Concerning admittance into casinos, the draft Decree confirms that only foreigners and overseas Vietnamese (those with foreign passports) are allowed to enter casinos. It was expected that this rule would be amended to allow high income local Vietnamese.


Thuan is an experienced tax and accounting adviser with over 15 years of work experience. He has advised on the tax implications of large construction and engineering projects, major acquisitions, and on several highly publicized real estate developments in Vietnam, Cambodia, Laos, and Myanmar. Thuan has assisted property funds with their divestiture in Vietnam and advised multinationals on their corporate restructuring projects. He oversaw the team that reorganized the supply chain for a cosmetic multinational in Vietnam, including customs duty aspects. He specializes in corporate tax strategies for multinationals, banks and investment funds.
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