Circular No. 124/2009/TT-BTC guiding the implementation of Decree No. 05/2009/NĐ-CP dated January 19, 2009 of the Government detailing the implementation of the Mineral Resources Tax Law and the Ordinance amending and supplementing Article 6 of the Mineral Resources Tax Law.

CIRCULAR

Guidelines for implementing Decree No. 05/2009/NĐ-CP dated January 19, 2009, of the Government detailing the implementation of the Mineral Resources Tax Ordinance and the Ordinance amending and supplementing Article 6 of the Mineral Resources Tax Ordinance.

 detailed implementation of the Mineral Resources Tax Ordinance and the Ordinance amending and supplementing Article 6 of the Mineral Resources Tax Ordinance

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Pursuant to the Law on Tax Administration No. 78/2006/QH11 dated November 29, 2006;

Pursuant to Resolution No. 47/2005/QH11 dated November 1, 2005, of the National Assembly;

Pursuant to the Mineral Resources Tax Ordinance dated April 10, 1998;

Pursuant to the Ordinance amending and supplementing Article 6 of the Mineral Resources Tax Ordinance dated November 22, 2008;

Pursuant to Decree No. 05/2009/NĐ-CP dated January 19, 2009, of the Government detailing the implementation of the Mineral Resources Tax Ordinance and the Ordinance amending and supplementing Article 6 of the Mineral Resources Tax Ordinance;

Pursuant to Government Decree No. 118/2008/NĐ-CP dated November 27, 2008 stipulating the functions, powers, tasks, and organizational structure of the Ministry of Finance;

The Ministry of Finance issues guidelines for implementing Decree No. 05/2009/NĐ-CP dated January 19, 2009, of the Government detailing the implementation of the Mineral Resources Tax Ordinance and the Ordinance amending and supplementing Article 6 of the Mineral Resources Tax Ordinance as follows:

Part I

GENERAL PROVISIONS

Article 1. Scope of Application  

This Circular provides guidance on taxpayers; taxable objects; tax base; tax rates; exemptions and reductions of mineral resources tax and the organization of implementing the provisions of Decree No. 05/2009/NĐ-CP dated January 19, 2009, of the Government detailing the implementation of the Mineral Resources Tax Ordinance and the Ordinance amending and supplementing Article 6 of the Mineral Resources Tax Ordinance (hereinafter referred to as Decree No. 05/2009/NĐ-CP). Specifically, the mineral resources tax on oil and gas extraction activities shall be implemented according to separate guidance documents issued by the Ministry of Finance.

Article 2. Taxpayers 

Taxpayers subject to mineral resources tax as stipulated in Article 1 of Decree No. 05/2009/NĐ-CP include: State-owned enterprises, Joint Stock Companies, Limited Liability Companies, partnerships, Cooperatives, Private Enterprises, Enterprises with foreign investment capital or foreign parties participating in business cooperation contracts, organizations, households, and other individuals, regardless of industry, scale, form of operation, who exploit natural resources in accordance with Vietnamese law are taxpayers of mineral resources tax as stipulated in Article 1 of the Mineral Resources Tax Ordinance (as amended).

For natural resources prohibited from exploitation that are seized, confiscated, and permitted to be sold, the organization entrusted with selling them must pay the mineral resources tax.

Article 3. Taxable Objects  

Taxable objects under this Circular are natural resources within the territory, islands, inland waters, territorial seas, exclusive economic zones, and continental shelf under the sovereignty and jurisdiction of the Socialist Republic of Vietnam, including:

1. Metallic minerals;

2. Non-metallic minerals, including common construction materials and soil for bricks, soil for land leveling and construction projects, soil for other uses; rock, sand, gravel, coal, precious stones, and other non-metallic minerals; mineral water, natural hot water specified in Clause 3, Article 3 of the Law on Minerals;

3. Products of natural forests, including various types of plants and animals that are products of natural forests permitted to be exploited, such as wood (including branches, twigs, firewood, roots, and stumps), bamboo, rattan, reed, medicinal herbs, and other plants and animals permitted to be exploited;

4. Natural aquatic products: Various types of natural marine, river, stream, spring, lake, pond, canal, and natural waterway flora and fauna;

5. Natural water, including:

5.1 Surface water, such as sea, lake, river, stream, canal, pond, reservoir, dam water;

5.2 Groundwater, such as drilled groundwater (excluding natural hot water and mineral water mentioned in Clause 2 of this Article);

6. Other natural resources as prescribed by laws on natural resources;

Part II

TAX BASE AND TAX RATE OF MINERAL RESOURCES TAX

Article 4. Basis for calculating the tax

The tax base for mineral resources tax is the actual commercial volume of natural resources extracted during the period, the unit price of natural resources for taxation, and the tax rate of mineral resources tax.

The amount of mineral resources tax payable is calculated as follows:

In cases where the competent state agency sets the amount of resource tax payable per unit of extracted resource, the amount of resource tax payable shall be determined as follows:

Article 5. Actual production volume of commercial resources extracted  

The actual production volume of commercial resources extracted as stipulated in Article 5 of Decree No. 05/2009/NĐ-CP is the quantity, weight, or volume of resources actually extracted during the tax payment period, regardless of the purpose of resource extraction, and shall be determined as follows for certain cases: 

1\. For types of resources where the actual production volume of commercial resources extracted cannot be determined due to containing various substances with high impurity content, the taxable production volume of commercial resources shall be calculated based on the production volume of each substance obtained through screening and sorting.

Example 1: For coal extracted from mines containing impurities, soil, and rock that must go through screening and sorting before being sold, the actual production volume of commercial coal for calculating resource tax is the volume after screening and sorting.

In cases where ore must be screened to remove a large amount of soil and rock (the specific volume cannot be determined) to obtain 2 kilograms of gold dust and 100 tons of iron ore, the resource tax will be calculated based on the quantities of gold dust and iron ore obtained. At the same time, the production volume of other types of resources used in mining activities, such as water used for screening and processing, should also be determined.

2\. For types of resources extracted but not immediately sold and instead used for further production of products or provision of services, if the production volume cannot be directly determined, the taxable production volume of resources shall be based on the production volume of products produced during the period and the standard usage rate of resources per unit product.

Example 2: To produce 1,000 raw bricks (unfired), 1 cubic meter of clay is required. If a clay extraction facility produces 100,000 raw bricks in a month, the taxable production volume of clay extracted is 100,000 divided by 1,000 equals 100 cubic meters.³ clay. In a month, if a clay extraction facility produces 100,000 bricks, the quantity of clay extracted subject to resource tax is 100,000 bricks divided by 1,000 bricks = 100 units.³.

3. For natural water used for hydropower production: It is the electricity output volume recorded on the meter confirmed between the hydropower production facility and the transmission business entity or the business entity.

3\. For natural water used for hydroelectric power generation: It is the production volume of electricity delivered according to the meter reading confirmed between the hydroelectric power production facility and the electricity transmission business entity or the business entity.

4\. In cases of manual, scattered, or mobile extraction without regularity, where the estimated annual production volume of resources is less than 200,000,000 VND and management is difficult, it may be possible to implement a quota system for resource extraction based on seasons or periods. The tax authority will coordinate with local authorities and specialized management agencies to determine the quantity of resources subject to the quota.

Article 6. Taxable Value

The taxable value of resources as stipulated in Article 6 of Decree No. 05/2009/NĐ-CP of the Government is the selling price per unit of resource at the extraction location, excluding VAT, and shall be determined as follows for different cases:

1\. Cases where the selling price per unit of resource product at the extraction location can be determined.

1.1\. For types of resources extracted monthly with the same grade and quality, part of the production volume of resources is sold at the extraction location at market prices, while another part is sold elsewhere or used for production, processing, screening, sorting, or selection, then the taxable value of the entire production volume of resources extracted is the selling price per unit of resource product at the extraction location, excluding VAT; the selling price of a single unit of resource is calculated by dividing the total revenue (excluding VAT) from the sale of the type of resource at the extraction location by the total production volume of that type of resource sold in the month.

In cases where the extracted resources are not consumed domestically but are exported entirely, the taxable value of resources is the export price (FOB), excluding export tax.

1.2\. In cases where there is a production volume of resources extracted in the month but no revenue from selling resources, the taxable value per unit of resource is determined based on the taxable value per unit of resource product in the immediately preceding month.

2\. In cases where the selling price per unit of resource product cannot be determined as stipulated in Clause 1 of this Article, the taxable value per unit of resource is determined based on one of the following bases:

2.1\. The average selling price on the market of a unit of similar resource extracted with equivalent prices as specified by the Provincial People's Committee according to the guidance provided in Clause 5 of this Article;

2.2\. The selling price per unit of the pure product and its content in the extracted resource or the selling price of the pure product and the content of each substance in the extracted resource;

Example 3: In the case of extracting copper ore at a mine. According to the Mining Permit and the approved resource extraction design documents by the competent authority, and the verified percentage of each substance in the extracted copper ore is as follows: copper: 60%; silver: 0.2%; tin: 0.5%. The provincial people's committee has set the taxable value per unit of pure resource as follows: Copper: 8,000,000 VND/ton; Silver: 600,000,000 VND/ton; Tin: 40,000,000 VND/ton.

Based on the taxable value per unit of pure resource set by the provincial people's committee and the percentage of each substance, the taxable value per unit of resource for each substance is determined specifically as follows:

- Copper ore is: 60% x 8,000,000 VND/ton = 4,800,000 VND/ton

- Silver ore is: 0.2% x 600,000,000 VND/ton = 1,200,000 VND/ton

- Tin ore is: 0.5% x 40,000,000 VND/ton = 200,000 VND/ton

Based on the taxable value per unit of resource for each type of ore, the corresponding resource tax rate shall be applied.

2.3\. A percentage of the selling price of the product produced or processed from the extracted resource:

In cases where the yield of natural resources at the extraction stage is determined but not sold, instead being processed through screening, selection, or used for production and processing (collectively referred to as processing), the unit tax value price shall be calculated as a percentage (%) of the sale price of the processed product derived from the extracted resource, but it must not be lower than the unit tax value price specified by the Provincial People's Committee for that type of resource according to the guidance provided in Clause 5 of this Article.

The resource tax price equals (=) the sale price of goods produced from extracted resources multiplied (x) by the percentage (%) on the sale price of products obtained after screening, selection, and processing.

a. The percentage (%) on the sale price of products obtained after processing is the ratio (%) between the average cost per unit of extracted resource and the average cost per unit of processed product from the extracted resource of the preceding year.

In cases where the entity has just begun extracting natural resources, the resource tax price shall be set as prescribed by the Provincial People's Committee.

Example 4: Company A extracts coal from a mine but must go through a screening and sorting process before selling it.

- The average sale price of lump coal 3 in the month is 800,000 VND/ton.

- The cost of extracting coal incurred at the mine up to the storage area within the mining site allocated to one ton of lump coal 3 of the preceding year is 450,000 VND/ton.

- The unit cost of processed product from extracted resources of the preceding year is 480,000 VND/ton (including costs at the screening, selection, and sorting stages as stipulated by law).

- The percentage (%) on the sale price of lump coal 3 for calculating the resource tax is:

The resource tax price determined by the entity must not be lower than the unit tax value price specified by the Provincial People's Committee for that type of resource.

b. In cases where extracted resources are put into processing and after processing, by-products are obtained, the resource tax price shall be applied according to the sale price of the by-product resource as guided in Point 2.1 or Point 2.2, Clause 2, of this Article.

Example 5: In the process of iron ore smelting, if 0.05 tons of copper concentrate are obtained from each ton of pig iron and sold at 9,500,000 VND/ton, then the resource tax price for 0.05 tons of copper concentrate is: 0.05 x 9,500,000 VND = 475,000 VND. If not sold, the unit tax value price specified by the Provincial People's Committee for calculating the resource tax must be applied.

2.4. Organizations and individuals extracting natural resources must register with the tax authority their method of determining the resource tax price for each type of resource as prescribed in Clause 2 of this Article when extracting. For new extraction operations, the registration period must not exceed 30 days from the start date of extraction. If there is a change in the method of determining the resource tax price, it must be registered with the tax authority no later than the first day of the month in which the pricing method changes.

3. The unit tax value price for wood is the sale price at the delivery point (sale price at the storage area where the resource is extracted).

4. The resource tax price for natural water:

4.1 The resource tax price for natural water used for hydroelectric power production shall be implemented according to the guidance provided in Clause 1, Article 3 of Circular No. 45/2009/TT-BTC dated March 11, 2009, issued by the Ministry of Finance regarding VAT, resource tax, and corporate income tax for hydroelectric power production facilities.

4.2 For mineral water, hot natural water, and natural water used for producing products and providing services, the resource tax price shall be determined according to the principles outlined in Point 2.3, Clause 2, of this Article.

5. Organizations and individuals extracting natural resources but not selling them; or failing to comply fully with accounting records and vouchers as required; organizations and individuals paying resource tax under the fixed-rate method; or in cases where the quantity of extracted resources can be determined at the extraction stage but due to multiple processing stages, there is insufficient basis to determine the market sale price in the extraction locality, the unit tax value price shall be applied according to the price specified by the Provincial People's Committee for each period.

Based on the characteristics and requirements for establishing the resource tax price in the locality, the Provincial People's Committee shall issue directives and assign the Department of Finance to lead and coordinate with the Tax Service and the Department of Natural Resources and Environment to develop a plan for the resource tax price to be submitted to the Provincial People's Committee for decision.

Establishing the resource tax price must ensure compatibility with the content, quality, quantity of the resource, recovery rate, and market prices of the resource in the locality where the resource is extracted.

When the sale price of a resource fluctuates by more than 20%, the resource tax price must be adjusted. The provincial Department of Finance shall lead and coordinate with the Tax Service and the Department of Natural Resources and Environment to survey market prices of resources in the locality and prepare a plan for adjusting the resource tax price to be submitted to the Provincial People's Committee for decision and reported to the Ministry of Finance (General Department of Taxation).

The tax authority directly managing the collection of resource tax must publicly display the unit tax value price at its office.

Article 7. Mineral Resource Tax Rate

The tax rate for resource tax on each type of extracted resource shall be implemented according to the provisions of Article 7 and the Resource Tax Schedule in Appendix I attached to Decree No. 05/2009/NĐ-CP.

Part III

REGISTRATION, TAX DECLARATION, PAYMENT, AND SETTLEMENT OF MINERAL RESOURCE TAX

Article 8. Tax registration, tax declaration, tax payment, and tax settlement.

Matters concerning tax registration, tax declaration, tax payment, and tax settlement shall be carried out in accordance with the provisions of the Law on Tax Administration and the guiding documents for implementing the Law on Tax Administration.

Part IV

EXEMPTIONS AND REDUCTIONS OF MINERAL RESOURCE TAX

Article 9. Exemption and reduction of resource taxes 

The procedures, formalities for declaring exemption and reduction of resource taxes, and the authority to grant such exemptions and reductions as stipulated in Article 9 and Article 10 of Decree No. 05/2009/NĐ-CP shall be implemented in accordance with the guidelines set forth in Section II, Part E of Circular No. 60/2007/TT-BTC issued by the Ministry of Finance; Additionally, for certain specific cases, they shall be carried out as follows:

1. Organizations and individuals engaged in fishing activities in distant sea areas using large-capacity vessels shall be exempt from resource taxes for the first five years from the date of issuance of the exploitation permit, and shall have their resource taxes reduced by 50% for the next five years.

Large-capacity vessels refer to fishing boats equipped with main engines having a power output of 90 horsepower (HP) or more.

- Procedure for tax exemption: Based on the permit for distant sea fishing operations, organizations and individuals engaged in fishing shall determine their eligibility for tax exemption and reduction and notify the directly managing tax authority about the period during which they are eligible for such exemptions and reductions.

For businesses engaged in distant sea fishing that are required to declare and pay taxes, at the end of the tax period, they must self-determine the actual amount of resource tax exempted or reduced during the period and declare it accordingly, bearing full responsibility for the declared tax exemptions and reductions. If a business incorrectly declares conditions for tax exemption and reduction leading to an increase in the amount of tax exempted or reduced, in addition to being subject to back taxes, they will also face penalties under current regulations.

During the operation period, if there are changes in the conditions for tax exemption and reduction that reduce the level of tax benefits for organizations and individuals engaged in distant sea fishing, they must promptly report these changes to the nearest tax authority for confirmation. Failure to report such changes to continue enjoying tax exemptions and reductions will be considered tax evasion and subject to penalties.

After the period of tax exemption and reduction (ten years), if organizations and individuals engaged in distant sea fishing that are required to declare and pay taxes incur losses in their business activities in a given year, they may have their resource taxes reduced corresponding to the amount of loss incurred from distant sea fishing activities, but not exceeding the amount of resource tax payable for such activities; the period of tax reduction shall not exceed five consecutive years following the expiration of the tax exemption and reduction period. The tax reduction declaration form shall be attached to the final tax settlement declaration form, including:

- Declaration of revenue, expenses, and losses from distant sea fishing activities.

- Calculation of the amount of resource tax to be reduced.

2. Exemption of resource taxes for organizations, individuals, and households engaged in fishing and producing unprocessed salt for the year 2009 and until the end of 2010 as provided in Clause 2, Section II of Resolution No. 47/2005/QH11 dated November 1, 2005 of the National Assembly.

- Procedure for tax exemption for individuals and households: When establishing the annual tax ledger for 2009 and 2010, the tax authority shall not levy resource taxes on individuals and households engaged in fishing and producing unprocessed salt. For individuals and households who have already established the 2009 tax ledger, they must report to the tax authority for adjustment before June 30, 2009.

- Procedure for tax exemption for organizations engaged in fishing and producing unprocessed salt: Annually, organizations shall self-determine their eligibility for tax exemption on fishing and salt production activities along with other tax declarations to the tax authority as prescribed.

3. Exemption of resource taxes for natural water used in hydropower production that does not meet the conditions for connection to the national electricity grid as stipulated by the Electricity Law.

Procedure for tax exemption: Based on the application of the organization or individual exploiting the resource (with comments from the provincial Department of Industry and Trade regarding non-connection to the national electricity grid), the Director of the directly managing Tax Inspection Bureau shall decide to grant the tax exemption for this case.

Organizations and individuals exploiting land are entitled to tax exemption on resource taxes as stipulated in Clause 5, Article 9 of Decree No. 05/2009/NĐ-CP. The exemption of resource taxes for land used for leveling, construction projects includes sand, gravel, and pebbles mixed within the extracted soil, which are used in their raw form for leveling and construction purposes.

Organizations and individuals exploiting the land must submit a request for tax exemption along with relevant documents to obtain approval from the competent authority for construction projects in the locality and send the complete file to the directly managing tax authority for knowledge and monitoring of the tax exemption process. 

Part V

IMPLEMENTATION

Article 10. Effectiveness of Implementation 

1. This Circular shall take effect 45 days from the date of signature, replacing Circular No. 42/2007/TT-BTC dated April 27, 2007 of the Ministry of Finance guiding the implementation of Decree No. 68/1998/NĐ-CP dated September 3, 1998 of the Government detailing the implementation of the Mineral Resources Tax Ordinance (amended) and Decree No. 147/2006/NĐ-CP dated December 1, 2006 of the Government detailing the implementation of the Mineral Resources Tax Ordinance (amended), and shall be applied from the tax settlement period for mineral resources in 2009.

2. For certain joint venture and cooperative cases between the Vietnamese party and foreign parties to exploit natural resources under investment licenses granted prior to this, the following shall continue to apply:

2.1 Foreign-invested enterprises and foreign parties conducting business based on contracts paying for natural resources or paying mineral resource taxes at specific rates stipulated in investment licenses issued before Decree No. 05/2009/NĐ-CP took effect shall continue to pay for natural resources or pay mineral resource taxes according to those provisions until the expiration of the issued investment license. In cases where the investment license is extended after this Circular takes effect, the provisions of this Circular shall be followed.

2.2 In cases where foreign joint ventures operate under the Law on Investment (now the Law on Investment) with the Vietnamese party contributing statutory capital through natural resources specified in the investment license as provided for in Article 3 of Decree No. 05/2009/NĐ-CP, the joint venture does not have to pay mineral resource tax on the amount of natural resources used as statutory capital by the Vietnamese party. The Vietnamese party must declare the amount of natural resources contributed periodically every three or six months, report to the Ministry of Finance to record the state budget and manage the capital according to current regulations.

2.3 In cases where enterprises are established based on joint ventures, cooperation agreements, and product-sharing agreements between the Vietnamese party and foreign parties, the mineral resource tax payable by the joint venture or the foreign party must be determined in the joint venture agreement, cooperation agreement, or product-sharing agreement, and if agreed upon, included in the share allocated to the Vietnamese party. When sharing products, the Vietnamese party is responsible for paying the mineral resource tax to the state budget based on the total volume of natural resources extracted.

Any difficulties encountered during implementation should be reported to the Ministry of Finance for supplementary guidance./.