Foreign investors are entitled to operate a theatre business in Việt Nam. The regulations on the type of business entity, conditions or the State’s incentives should be taken into consideration when investing in this sector.
Theatre business is a form of disseminating movies as prescribed in the current Cinematography Law.
Types of business entity for foreign investors investing in theatre business
The Cinematography Law of 2006 allowed foreign investors to establish a wholly foreign-owned enterprise to operate a theatre business in Việt Nam. 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 via two forms – one, through a business co-operation contract (BCC) or two, by establishing a joint venture with Vietnamese partners who are licensed to provide such services in Việt Nam.
In a BCC, foreign investors can enter into a contract with Vietnamese partners to operate a theatre business without establishing any economic organisations.
For a joint venture, foreign investors will co-operate with a Vietnamese enterprise to set up a joint venture to operate a theatre business. The capital contribution of foreign investors cannot exceed 51 per cent of the legal capital of the joint venture in accordance with Việt Nam’s commitments to WTO.
Please also note that those who partner with Việt Nam in both aforementioned co-operation forms must not be a house of culture, cinema broadcasting spots, clubs, public associations of movie broadcasting and mobile projection team of movies.
Conditions for implementation of theatre business for foreign investors
The enterprises are entitled to import movies for dissemination. The imported movies must have legal copyright and must not violate prohibited acts in the field of cinematographic activities, such as containing content that distorts history and violates the cultural customs.
Vietnamese movies produced by film production studios, imported movies and the movies produced via co-operation and provision of manufacturing services and joint ventures with foreign organisations and individuals can only be released in theatres after obtaining the license for movie dissemination granted by the competent authority on cinematography.
Movies produced and imported by a television or radio station can be broadcast without a license for movie dissemination. More importantly, the license for movie dissemination will be based on the opinion of the film evaluation board.
Since January 1, 2015, movie theatres which are newly built or renovated must apply the national technical regulations stipulated in Circular 16/2013 /TT-BVHTTDL. These regulations specify the technical and management requirements for movie theatres, including the engine room, the auditorium and the lobby area. These are the standard regulations for the quality of images, audio, seats, exits, etc.
Incentives from the State of Việt Nam
Enterprises constructing theatres for the movie dissemination business or for other cinematographic activities are entitled to be allocated and leased land by the State in accordance with the law and also entitled to exemption of the registration fee when registering the land use rights and house ownership as prescribed by law.
Investment in the theatre business is an incentivised investment sector. Enterprises that broadcast at least 60 movies per year and ensure the technical standards of movie theatres as prescribed in Circular 16/2013 TT-BVHTTDL are maintained will be able to avail tax rate incentives. Accordingly, the income tax rate for the enterprises is 10 per cent during operations. — PLF Law Firm