Circular No. 153/1998/TT-BTC detailing the implementation of the amended Natural Resources Tax Ordinance.

CIRCULAR

Detailed implementation regulations for the Natural Resources Tax Ordinance (amended)

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Implementing the Natural Resources Tax Ordinance (amended) issued by the Standing Committee of the National Assembly on April 16, 1998, and Decree No. 68/1998/NĐ-CP dated September 3, 1998, of the Government detailing the implementation of the amended Natural Resources Tax Ordinance, the Ministry of Finance guides as follows:

I - TAXPAYERS AND TAX SUBJECTS:

1- All organizations and individuals belonging to various economic sectors, including State-owned enterprises, Joint Stock Companies, Limited Liability Companies, Cooperatives, Private Enterprises, Enterprises with foreign investment capital, or Foreign Parties participating in business cooperation contracts under the Law on Foreign Investment in Vietnam, households engaged in production and business, other organizations and individuals, regardless of industry, scale, form of operation, who exploit natural resources in accordance with Vietnamese laws must register, declare, and pay natural resources tax as stipulated in Article 1 of the Amended Natural Resources Tax Ordinance, except for cases specified in Point 5, Section 1 of this Circular.

2- Natural resources subject to taxation include natural resources within the territory, islands, inland waters, territorial seas, exclusive economic zones, and continental shelf under the sovereignty of the Socialist Republic of Vietnam, including:

a- Metallic minerals: Including black metallic minerals (iron, manganese, titanium...) and colored metallic minerals (gold, rare earth, platinum, tin, wolfram, copper, lead, zinc, aluminum...).

b- Non-metallic minerals, including: soil for brick making, soil for land leveling and construction projects, soil for other uses; stone, sand, gravel; coal; precious stones, mineral water, natural hot water as defined in the Minerals Law;

c- Crude oil: As defined in Clause 2, Article 3 of the Petroleum Law;

d- Natural gas: As defined in Clause 3, Article 3 of the Petroleum Law;

đ- Natural forest products, including: wood (including branches, twigs, firewood, roots, and stumps...), bamboo, rattan, pine, and various medicinal herbs and other plants and animals permitted for exploitation as natural forest products;

e- Natural aquatic products: Various types of natural animals and plants in the sea, rivers, streams, lakes, ponds, and natural wetlands.

g- Natural water includes surface water and underground water, excluding natural mineral water and hot water as mentioned above in group b.

h- Other natural resources: Including natural resources not included in the above groups.

Any intentional exploitation of prohibited natural resources will be handled according to current laws. When violations are discovered during inspections, the tax authority must notify and cooperate with relevant agencies to handle them according to their jurisdiction.

In cases where prohibited natural resources are seized and confiscated and subsequently sold, the organization responsible for selling must include full natural resources tax in the sale price and remit it to the State Budget.

4- Foreign-invested enterprises and foreign parties conducting business cooperation based on contracts paying resource fees or natural resources taxes at specific rates stipulated in investment permits issued before June 1, 1998, shall continue to pay resource fees or natural resources taxes according to those provisions until the expiration of the permit, and thereafter must follow the guidance provided in this Circular if the investment permit is extended.

5- According to Article 3 of the Amended Natural Resources Tax Ordinance and Article 3 of Decree No. 68/1998/NĐ-CP dated September 3, 1998, of the Government, in cases where joint ventures with foreign partners operate under the Law on Foreign Investment in Vietnam and the Vietnamese partner contributes capital in the form of resources listed in the investment permit, the joint venture does not have to pay natural resources tax on the resources used by the Vietnamese partner as statutory capital contribution. The Vietnamese partner must declare the quantity of resources generated and contributed quarterly or semi-annually, report to the Ministry of Finance to record the state budget capital and manage the capital according to current regulations.

6- In cases where enterprises exploiting natural resources are established based on joint ventures, business cooperation contracts, and product-sharing agreements, the natural resources tax payable by the joint venture enterprise or the foreign party must be determined in the joint venture contract and included in the share allocated to the Vietnamese party. When sharing products, the Vietnamese party is responsible for remitting the natural resources tax to the State Budget according to the Law on the State Budget.

II - BASIS FOR CALCULATING TAX AND NATURAL RESOURCES TAX SCHEDULE:

The amount of natural resources tax payable in each tax period is calculated as follows:

1- Actual volume of commercial natural resources extracted: Is the quantity, weight, or volume of natural resources actually extracted in the tax period, irrespective of the condition and purpose of extraction (for immediate sale, exchange, internal consumption, storage for subsequent production...).

- For types of natural resources that cannot be accurately determined in terms of quantity, weight, or volume due to containing multiple substances and high impurity levels, the natural resources tax is calculated based on the quantity, weight, or volume of each substance obtained through screening and sorting.

Example: A company in a tax period must screen thousands of cubic meters of soil, rock, and water (which cannot be accurately quantified) to obtain 2 kg of gold dust and 100 tons of iron ore... The natural resources tax would be calculated based on these quantities of gold dust and iron ore.

- In cases of manual, scattered, or mobile extraction that is infrequent and difficult to manage, the actual volume of natural resources extracted can be allocated seasonally or periodically. The tax authority will coordinate with local authorities and specialized management agencies to determine the actual volume of natural resources allocated.

In such cases, if the extracted natural resources are concentrated at collection points and the purchasing entity agrees to accept them, the Provincial or City Tax Bureau may decide (in writing) that the purchasing organization or individual pays the natural resources tax on behalf of the extractor.

2- Taxable value: Pursuant to Article 7 of Decree No. 68/1998/NĐ-CP dated September 3, 1998 of the Government; The taxable value for natural resource tax is the selling price per unit of the natural resource at the place of extraction and is determined specifically in each case as follows:

a) For types of natural resources that can determine the yield at the extraction stage and can be sold immediately after extraction (such as soil, rock, sand, gravel, aquatic products, etc.), the taxable value for natural resource tax is the actual selling price at the place of extraction minus turnover tax or not including value-added tax (if applicable). If transportation, loading/unloading, storage costs from the place of extraction to the place of consumption occur, these costs shall be deducted when determining the taxable value for natural resource tax; In this case, if it is not sold (such as being put into subsequent production processes), the taxable value will be applied according to the regulations stipulated in Article 7 of Decree No. 68/1998/NĐ-CP dated September 3, 1998 of the Government, as specified by the People's Committee of the province or city.

b) For types of natural resources that can determine the yield at the extraction stage but cannot be sold directly and must go through screening, sorting, etc., before being sold, the taxable value for natural resource tax is the selling price of the product after screening and sorting, minus the costs incurred from the place of extraction to the place of consumption and converted based on the content or proportion to determine the taxable value as the actual selling price of the extracted natural resource, minus turnover tax or not including value-added tax.

Example: The selling price of one ton of clean coal is 65,000 VND/ton, the cost of screening, transportation from the place of extraction to the place of sale is 10,000 VND/ton; the proportion of clean coal in the actual extracted coal is 80%, then:

c) For types of natural resources that cannot determine the quantity at the extraction stage due to large impurities and various substances, the taxable value is the actual selling price of each substance at the place of extraction minus turnover tax or not including value-added tax.

Example: Gold dust, iron ore, etc.

d) For types of natural resources that are extracted and used as raw materials for production, such as natural water used for producing purified water, mineral water, beer, and other beverages; soil used as raw material for industrial and handicraft production, the taxable value for natural resource tax is the selling price of the final product minus the costs of producing that product (including turnover tax or value-added tax payable but excluding extraction costs), but the minimum level shall not be lower than the taxable value prescribed by the People's Committee of the province or city.

Organizations and individuals extracting natural resources who comply fully with accounting records and accounting vouchers as prescribed may calculate and determine the taxable value of natural resources according to the directions in points a, b, c, or d. All other cases and cases where natural resources are extracted for purposes other than those guided in points a, b, c, and d shall apply the taxable value of natural resources prescribed by the People's Committee of the province or city according to the principles stipulated in Article 7 of Decree No. 68/1998/NĐ-CP dated September 3, 1998 of the Government.

The Provincial Tax Department shall consult the opinions of the Department of Finance - Price and the management agency of the industry in the locality to determine the taxable value of natural resources, report to the People's Committee of the province or city for decision, and report to the General Department of Taxation.

đ - The taxable value of natural resources for natural water used for hydropower production is the selling price of commercial electricity, and for wood, it is the selling price at the yard.

Specifically for oil and gas, the taxable value of natural resources shall be implemented according to the provisions of the Petroleum Law and Article 47 of Decree No. 84/CP dated February 17, 1996 of the Government detailing the implementation of the Petroleum Law.

3 - Natural Resource Tax Schedule: Implemented according to the Tax Schedule issued together with Decree No. 68/1998/NĐ-CP dated September 3, 1998 of the Government (attached to this Circular).

Based on the value of each type of natural resource, the conditions of extraction, and the management requirements for each type of natural resource during each period, the Ministry or the main managing sector shall collect relevant data and documents related to the extracted natural resources and report to the Ministry of Finance for consideration and adjustment of the natural resource tax rate in accordance with the tax rate framework stipulated in Article 6 of the Natural Resources Tax Ordinance. The adjustment of the natural resource tax rate shall only be carried out when necessary and for specific types of natural resources, not for individual cases.

III - DECLARATION, REGISTRATION, PAYMENT OF NATURAL RESOURCE TAX

1 - According to Article 9 of Decree No. 68/1998/NĐ-CP dated September 3, 1998 of the Government, organizations and individuals engaged in natural resource extraction have the responsibility to:

- Register their natural resource extraction activities with the tax authority no later than 10 days from the date they are permitted to extract natural resources or no later than 5 days before any merger, consolidation, division, dissolution, bankruptcy, or changes in natural resource extraction activities. The registration form is made in two copies, one copy sent to the direct tax collection authority, and one copy kept at the extraction site (Form No. 1 attached).

- Comply strictly with the regulations on issuing purchase and sales invoices, collecting money, and maintaining accounting books as currently prescribed.

- Monthly, within the latest 10 days of the following month, organizations and individuals extracting natural resources must declare the natural resource tax payable for the previous month (Form No. 2 attached), including cases where no natural resource tax has been generated, and submit it to the tax authority. The declaration form is made in two copies, one copy confirmed by the tax officer responsible for tax collection, one copy sent to the tax authority, and one copy kept at the site. In cases where mineral resources are extracted without the condition to declare monthly, the declaration time may be extended appropriately, in line with the characteristics of the extraction activity, as guided in writing by the Provincial Tax Department.

- Pay the natural resource tax within the deadline stated in the notification of the tax authority, but no later than the 25th day of the month following the month in which the natural resource tax was generated.

- Within thirty days after the end of the year of operation or mineral exploitation contract, the organization or individual exploiting natural resources must settle the payment of natural resource tax with the tax authority. Within ten days after the tax authority inspects and issues a notice, the organization or individual exploiting natural resources must pay any outstanding tax amount (if any) to the state budget; any overpaid tax will be refunded within the prescribed time period or credited against the natural resource tax due for the following period.

In cases where organizations or individuals exploit resources manually, scatteredly, or irregularly and are accepted by the tax authority to pay taxes through a quota method as stipulated in Point 1, Part II of this Circular, the tax authority shall base on the declaration form of the resource exploitation entity combined with actual investigation materials on the source of resources, capital, labor, exploitation means, and resource prices to accurately determine the actual volume of resources exploited and the amount of natural resource tax payable. The determination of the quota level must ensure transparency, democracy, and accuracy in accordance with the capacity for resource exploitation activities.

The allocation of natural resource tax may be calculated to be linked to the allocation of other types of taxes.

2 - The direct management agency responsible for collecting natural resource tax has the following duties, powers, and responsibilities:

- Guide and urge resource exploitation entities to register, declare, and pay natural resource tax.

- Inspect the registration, declaration, and payment of natural resource tax, and settlement of natural resource tax by resource exploitation entities.

- Calculate tax or organize investigative work, inspection, and determination of tax quotas; establish and approve tax ledgers; promptly notify the amount of natural resource tax payable and the deadline for payment according to regulations; provide legitimate tax collection receipts to taxpayers.

- Inspect and supervise resource exploitation activities; regularly and periodically inspect accounting records and vouchers to promptly identify and rectify or handle violations.

Require taxpayers to provide accounting records, vouchers, and other relevant documents related to tax calculation and payment; require financial institutions, banks, and other related organizations and individuals to provide relevant documents concerning tax calculation and payment.

- Impose administrative penalties for tax violations and resolve tax complaints.

- Retain and use data and documents provided by resource exploitation entities and other parties in accordance with prescribed regulations.

3 - The tax authority has the right to determine the amount of natural resource tax payable by taxpayers in accordance with Article 9 of the Natural Resource Tax Ordinance (amended).

4 - All organizations and individuals transporting natural resources must have sales invoices or proof that they have implemented the natural resource tax policy.

5 - Natural resource tax is a revenue of the State Budget collected at the local Treasury where the natural resources are extracted. In cases where small, scattered resource extraction entities with small amounts of natural resource tax and far from the local Treasury, the tax authority may directly collect the tax and transfer it to the Treasury. Based on the actual situation, the tax authority must clearly specify the payment schedule according to the number of days and the amount of tax collected.

IV. EXEMPTIONS AND REDUCTIONS OF NATURAL RESOURCE TAX

According to Article 10 of the Natural Resource Tax Ordinance (amended) and Article 12 of Decree No. 68/1998/NĐ-CP dated September 3, 1998 of the Government detailing the implementation of the Natural Resource Tax Ordinance (amended), exemptions and reductions of natural resource tax are carried out as follows:

1 - Projects falling under investment incentives specified in the Law on Encouraging Domestic Investment and detailed implementing decrees of the Government, if they extract non-oil minerals, are entitled to a maximum reduction of 50% of natural resource tax for the first three years from the start of exploitation; for projects already underway and falling under such categories, the remaining tax period will be considered for reduction from the date the amended Natural Resource Tax Ordinance takes effect.

The direct managing tax authority bases its decision to reduce tax on the establishment permit, investment incentive certificate, and guidelines of the Law on Encouraging Domestic Investment to determine the tax reduction in this case.

2 - Organizations or individuals exploiting natural resources affected by natural disasters, enemy attacks, or unexpected accidents causing losses to declared and paid resources are exempted from natural resource tax for the lost resources. If tax has already been paid, it will be refunded or offset against the natural resource tax due for the next period if the taxpayer agrees. The extent of damage is determined as follows:

- For specific types of resources damaged in terms of quantity, the damage is determined based on the specific quantity.

- For types of resources damaged in terms of quality or proportion, the taxable price and tax rate are reassessed. The exempted natural resource tax amount equals the difference between the previously calculated and declared tax and the tax due after the damage occurred.

Example: The clean coal ratio in raw coal is 80%, but during the flood period, the clean coal ratio decreased to 50%, thus recalculating the tax price and determining the tax exemption difference.

The procedure for requesting tax reduction must include:

- A request letter specifying the reasons, loss amount, and requested tax reduction.

- An inspection and determination report from the direct managing tax authority attached to the application for tax reduction consideration. The Director of the Tax Department decides on the natural resource tax reduction for organizations or individuals suffering losses.

3 - Organizations or individuals operating marine fishing in distant waters using large-capacity vessels are exempt from natural resource tax for the first five years from the issuance of the exploitation permit and receive a 50% reduction in natural resource tax for the subsequent five years.

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

Based on the application and distant sea fishing activity permit issued to the exploiting organization or individual, the head of the direct managing tax authority decides on the tax exemption and reduction for each year.

In cases where marine fishing activities have been conducted in offshore waters before June 1, 1998, the examination for tax exemption and reduction shall begin on June 1, 1998, with the duration as prescribed.

Example: If entity A was granted a permit to conduct marine fishing activities in offshore waters in December 1997, entity A will be exempt from resource tax for five years and have a 50% tax reduction for the next five years. The calculation period starts from June 1, 1998.

During the operation period, if organizations or individuals conducting marine fishing activities in offshore waters experience changes in conditions that reduce tax benefits, they must promptly report such changes to the nearest tax authority for confirmation. Failure to report to continue enjoying tax exemptions and reductions will be considered tax evasion and will be handled according to Article 11 of the Resource Tax Ordinance (amended).

After the specified tax exemption and reduction period (ten years), if organizations or individuals conducting marine fishing activities in offshore waters still incur losses, they may be eligible for a corresponding reduction in resource taxes for up to five consecutive years based on their annual losses.

4 - Exemption from resource tax for natural forest products harvested by residents in communes with forests, such as wood, branches, firewood, bamboo, reeds, leaves, rattan, mats, water caltrop, lotus stem, for daily living purposes, including any surplus sold. Sales must be within the jurisdiction of the district where harvesting occurs.

Based on the proposal of the People's Committee of the commune and the forestry management agency directly managing the forest, the head of the tax agency directly managing shall decide on the exemption from resource tax for this category. The decision must clearly specify the type of resources permitted to be extracted, location, method of extraction, and place of consumption. Each decision shall not exceed three months, after which the tax agency must review and inspect before issuing another exemption decision.

Cases where it is discovered that entities are exploiting the exemption from resource tax to engage in indiscriminate logging of natural forests shall have their tax exemption decisions revoked (if any) and transferred to the competent authorities for handling according to current laws.

5 - Exemption from resource tax for natural water used in hydroelectric power production that does not connect to the national power grid.

Based on the application of organizations and individuals engaged in extraction, with comments from the Provincial Industry Department, the head of the tax agency directly managing shall decide on the exemption from resource tax for this case.

6 - Exemption from resource tax for land extracted for the following purposes:

a - Filling and construction of facilities serving security and defense;

b - Filling and construction of dike, irrigation, and agricultural, forestry, and fisheries projects directly serving agriculture, forestry, and fisheries, and road construction.

c - Filling and construction of humanitarian and charitable facilities or preferential projects for those who have contributed to the revolution.

d - Filling and construction of infrastructure projects in mountainous areas (within the scope of districts designated as mountainous areas by the Ethnic Minorities Commission) to serve economic and social development in these regions.

đ - Extraction within the allocated area for filling, raising, and constructing on-site within the designated area.

e - Filling and construction of national key projects as decided by the Government for each specific case.

For cases mentioned in points a, b, c, d, đ, organizations and individuals extracting resources must submit an application detailing the reasons, accompanied by certification and recommendations from the People's Committee of the province or district (if the project falls under district-level management) where the construction takes place, to present to the tax agency directly managing the extraction area for consideration and issuance of the tax exemption decision.

V. VIOLATION HANDLING AND REWARD - COMPLAINTS AND STATUTE OF LIMITATIONS

Violation handling and rewards for organizations and individuals shall be carried out according to Articles 11, 13, and 14 of the Resource Tax Ordinance.

The right to file complaints and the procedures for resolving tax complaints shall be implemented according to Articles 15 and 16 of the Resource Tax Ordinance.

Upon discovery and conclusion of false declarations, tax evasion, or errors regarding taxes, the tax agency has the responsibility to recover taxes and penalties or refund taxes within five years prior to the date of detection, from the date of inspection when false declarations, tax evasion, or errors were detected. For organizations and individuals extracting resources who fail to declare and pay taxes, the recovery period for taxes and penalties begins from the start of business operations.

VI. IMPLEMENTATION

Tax agencies at all levels are responsible for disseminating and guiding resource extraction entities to fully understand and comply with the Resource Tax Ordinance, Decree No. 68/1998/NĐ-CP dated September 3, 1998 issued by the Government, and the contents outlined in this Circular.

This Circular takes effect from September 18, 1998, and replaces previous guidance documents on resource taxes issued by the Ministry of Finance. Any difficulties encountered during implementation should be reported promptly to the Ministry of Finance for study and resolution.

FORM NO. 1

SOCIALIST REPUBLIC OF VIET NAM
Independence - Freedom - Happiness

..., day...month...year

REGISTRATION WITH THE TAX AUTHORITY
concerning resource extraction activities

Name of business (or household name):...Tax number:...

- Business registration certificate number:...date...month...year...

- Resource extraction permit number:...date...month...year...

- Industry: (Example: Gold mining; soil extraction for brick and tile production; marine fishing...)

- Extraction location:

- Bank account opened: Account details:

- Declaration of resource extraction activities by the entity as follows:

1. Total production and business capital (fixed assets + working capital):

2. Total workforce:

3. Industry name: (Example: Non-ferrous metallurgy: gold, titanium, tin extraction resources...).

4. Date of commencement of resource extraction activities: day...month...year...

5. Projected duration of resource extraction activities...years...

6. Projected annual extraction volume:

7. Projected average selling price in year 19...:

8. Projected annual resource tax payable:

Our entity hereby registers to pay resource tax from day...month...year...and agrees to comply with all accounting record-keeping regulations, declaration and payment of resource tax, and assumes full responsibility for the accuracy of the submitted documents and data to the tax authority.

If the tax authority inspects and discovers discrepancies with the actual situation, the entity will be subject to penalties as stipulated in Article 11 of the Mineral Resources Tax Ordinance (amended).

Chief Accountant Director (business household owner)

(signature, stamp)

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The tax authority hereby acknowledges receipt of the Registration Form for Resource Exploitation Activities of: above. The registration form is made in two copies, one retained by the tax authority and one by the exploitation entity.

... day... month... year...
Head of the tax authority
(signature, stamp)

MODEL NO. 2

SOCIALIST REPUBLIC OF VIET NAM
Independence - Freedom - Happiness

... day... month... year

MINERAL RESOURCES TAX RETURN
month... (or year)... year...

- Business Name (or Household Owner's Name):...Tax Code:

- Name of Taxable Resource:

- Extraction location:

- Main office address:

- Bank Account Opening Location: Account Number:

The figures and data provided herein are accurate and truthful.

If the tax authority inspects and discovers discrepancies with the actual situation, the entity will be subject to penalties as stipulated in Article 11 of the Mineral Resources Tax Ordinance (amended).