Circular No. 191/2012/TT-BTC Amending and Supplementing Circular No. 155/2011/TT-BTC dated November 11, 2011 of the Ministry of Finance guiding taxes on exploration, development, and exploitation activities of oil and gas joint venture “Vietsovpetro” from Block 09-1 as stipulated in the 2010 Agreement.

CIRCULAR

Amending and supplementing Circular No. 155/2011/TT-BTC dated November 11, 2011 of the Ministry of Finance guiding taxation on exploration, development, and exploitation activities of oil and gas by the Vietnam-Russia Joint Venture "Vietsovpetro" from Block 09-1 as stipulated in the 2010 Agreement.

relating to taxes on exploration, development of oil and gas fields, and exploitation activities of the Vietnam-Russia Joint Venture "Vietsovpetro" from Block 09-1 as provided for in the Agreement of 2010

||| pursuant to the provisions of the Agreement of 2010

_____________________________

Pursuant to the Agreement between the Government of the Socialist Republic of Vietnam and the Government of the Russian Federation signed on December 27, 2010 regarding continued cooperation in geological exploration and oil and gas exploitation on the continental shelf of the Socialist Republic of Vietnam within the framework of the Vietnam-Russia Joint Venture "Vietsovpetro" (hereinafter referred to as the 2010 Agreement);

Pursuant to the Petroleum Law 1993 adopted by the National Assembly on July 6, 1993; the Law amending and supplementing certain articles of the Petroleum Law adopted by the National Assembly on June 9, 2000; Law amending and supplementing certain articles of the Petroleum Law No. 10/2008/QH12 dated June 3, 2008 and guiding documents;

Pursuant to the Law on Ratification, Accession and Implementation of International Treaties No. 41/2005/QH11 dated June 14, 2005 of the National Assembly of the Socialist Republic of Vietnam and guiding documents;

Pursuant to Tax Laws, Fee and Charge Regulations, and guiding documents;

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

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

The Ministry of Finance guides the amendment and supplementation of certain provisions in Circular No. 155/2011/TT-BTC dated November 11, 2011 of the Ministry of Finance regarding tax and State budget contributions (hereinafter referred to as tax) for exploration, development, and exploitation activities of oil and gas by the Vietnam-Russia Joint Venture "Vietsovpetro" from Block 09-1 as stipulated in the 2010 Agreement as follows:

Article 1. Amending and supplementing certain provisions in Circular No. 155/2011/TT-BTC as follows:

1. Replacing Article 19 with a new Article 19 as follows:

"Article 19. Declaration and payment of provisional additional tax on oil profit from residual oil balance

The residual oil balance is the value of the quantity of product (oil) left over annually that Vietsovpetro has not fully utilized, which is decided by the Joint Venture Council at each meeting to be declared and paid as additional tax, corporate income tax, and divided between the two participating sides of the Joint Venture (including the residual oil amount left for Vietsovpetro according to the planned price and the difference in revenue from selling oil at actual prices compared to planned prices that Vietsovpetro has not fully utilized).

1. Determining the volume of oil profit from residual oil balance:

Volume of oil profit from residual oil balance = Residual oil balance amount / Average weighted price of crude oil sold during the residual period

Where:

- The residual oil balance amount is the amount approved at each Joint Venture Council meeting.

- The average weighted price of crude oil sold during the residual period equals the total revenue from crude oil sales during the residual period divided by the total volume of crude oil sold during the residual period. The residual period is the time frame Vietsovpetro determines the residual oil balance amount to report to the Joint Venture Council for approval.

2. Determining provisional additional tax on the volume of oil profit from residual oil balance:

2.1. Based on the volume of oil profit from residual oil balance and the corresponding average weighted price of crude oil sold during the residual period, Vietsovpetro determines the amount of provisional additional tax on the volume of oil profit from residual oil balance according to the principles outlined in Article 17 and Clause 1, Article 18 of Circular No. 155/2011/TT-BTC dated November 11, 2011 of the Ministry of Finance.

Example: Assuming in a year, the Joint Venture Council decides the residual oil balance amount is 120,000,000 USD. The average weighted price of crude oil sold during the residual period is 120 USD/barrel.

Volume of oil profit from residual oil balance = 120,000,000 / 120 = 1,000,000 barrels According to the principles outlined in Article 17, Clause 1, Article 18 of Circular No. 155/2011/TT-BTC dated November 11, 2011 of the Ministry of Finance, the amount of provisional additional tax on the volume of oil profit from residual oil balance is determined as follows:

(i) The amount of provisional additional tax payable on the volume of oil profit from residual oil balance corresponding to the portion of oil price higher than the base price by 20% to 50% = 50% x Average weighted price of crude oil sold during the residual period up to 150% of the base oil price - 1.2 x Base crude oil price x Volume of oil profit from residual oil balance = 50% x (1.5 x 75 - 1.2 x 75) x 1,000,000 = 11,250,000 USD

and

(ii) The amount of provisional additional tax payable on the volume of oil profit from residual oil balance corresponding to the portion of oil price higher than the base price by more than 50% = 60% x Average weighted price of crude oil sold during the residual period - 1.5 x Base crude oil price x Volume of oil profit from residual oil balance = 60% x (120 - 1.5 x 75) x 1,000,000 = 4,500,000 USD Total provisional additional tax payable on the volume of oil profit from residual oil balance = (i) + (ii) = 15,750,000 USD.

2.2. In cases where the annual audit results of Vietsovpetro by the Audit Board result in a residual oil balance amount, the Audit Board reports to the Joint Venture Council for decision. Vietsovpetro declares and pays provisional additional tax and corporate income tax according to the Joint Venture Council's decision.

3. Declaration and payment of provisional additional tax on oil profit from residual oil balance:

3.1. The declaration form for provisional additional tax is Form 01-1/PTHU-VSP issued together with this Circular.

3.2. Deadline for submitting the provisional additional tax declaration form:

Not later than the twentieth day (20) from the date the Joint Venture Council decides the residual oil balance amount according to the resolution of each Joint Venture Council meeting but not later than December 31 of each year. If the twentieth day falls on a holiday, the deadline for submitting the provisional additional tax declaration form is the next working day following the holiday.

3.3. Deadline for paying provisional additional tax: not later than the last day of the deadline for submitting the provisional additional tax declaration form as stipulated in Point 3.2 of this Article."

2. Amend Clause 1 of Article 20 as follows:

"1. Determining the amount of additional revenue to be paid based on final settlement: The amount of additional revenue to be paid based on final settlement shall be equal to the total amount of additional revenue to be paid determined in accordance with the guidance provided in Clause 1, Article 18 of Circular No. 155/2011/TT-BTC dated November 11, 2011 issued by the Ministry of Finance and Clause 1, Article 1 of this Circular."

3. Amend the first item of Point 2.1, Clause 2, Article 20 as follows:

"Form for final settlement of additional revenue according to Form No. 02/PTHU-VSP issued together with this Circular"

4. Replace Article 24 with a new Article 24 as follows:

"Article 24. Declaration and payment of provisional corporate income tax on income from surplus funds from retained oil
1. Determining the amount of provisional corporate income tax on income from surplus funds from retained oil:

Amount of provisional corporate income tax to be paid = Income from surplus funds from retained oil x Corporate income tax rate

Where:

- Income from surplus funds from retained oil equals ( = ) Surplus funds from retained oil approved by the Joint Council minus (-) The amount of additional revenue to be paid corresponding to the profit-making oil volume from surplus funds from retained oil determined in accordance with the guidance provided in Clause 1, Article 1 of this Circular.

- The corporate income tax rate prescribed in Agreement 2010 is 50%.

2. Declaration and payment of provisional corporate income tax on income from surplus funds from retained oil:

2.1. Documents for declaration of provisional corporate income tax are the Provisional Corporate Income Tax Declaration Form for income from surplus funds from retained oil according to Form No. 01-1/TNDN-VSP issued together with this Circular.

2.2. Deadline for submission of documents for declaration of provisional corporate income tax:

Not later than the twentieth (20th) day from the date the Joint Council decides the amount of surplus funds from retained oil according to the Resolution of each Joint Council meeting but not later than December 31 of each year. In case the twentieth day falls on a holiday, the deadline for submission of documents for declaration of provisional corporate income tax is the next working day following the holiday.

2.3. Deadline for payment of provisional corporate income tax: not later than the last day of the deadline for submission of documents for declaration of provisional corporate income tax as stipulated in Point 2.2 of this Article."

5. Amend Clause 1, Article 25 as follows:
"1. Determining the amount of corporate income tax to be paid based on final settlement: The amount of corporate income tax to be paid shall be equal to the total amount of corporate income tax determined in accordance with the guidance provided in Clause 1, Article 23 of Circular No. 155/2011/TT-BTC dated November 11, 2011 issued by the Ministry of Finance and Clause 4, Article 1 of this Circular."

6. Amend Clause 2, Article 25 as follows:
"2. Documents for declaration of final settlement of corporate income tax are the Corporate Income Tax Final Settlement Declaration Form according to Form No. 02/TNDN-VSP issued together with this Circular."

7. Replace the following forms:

- Replace the Additional Revenue Declaration Forms No. 01-1/PTHU-VSP, No. 01-2/PTHU-VSP, and No. 02/PTHU-VSP issued together with Circular No. 155/2011/TT-BTC with Forms No. 01-1/PTHU-VSP and No. 02/PTHU-VSP issued together with this Circular.

- Replace the Corporate Income Tax Declaration Forms No. 01-1/TNDN-VSP, No. 01-2/TNDN-VSP, and No. 02/TNDN-VSP issued together with Circular No. 155/2011/TT-BTC with Forms No. 01-1/TNDN-VSP and No. 02/TNDN-VSP issued together with this Circular.

Article 2. Implementation and Effectiveness

1. This Circular takes effect from December 27, 2012. For the additional revenue and corporate income tax on profit-making oil from surplus funds from retained oil generated in 2011, if VIETSOVPETRO has declared and paid differently from the guidance provided in this Circular, it shall adjust its declaration in accordance with the guidance provided in this Circular.

2. Other contents not specified in this Circular continue to be implemented in accordance with the guidance provided in Circular No. 155/2011/TT-BTC dated November 11, 2011 issued by the Ministry of Finance guiding taxes on exploration, development, and exploitation of oil and gas by the Vietnam-Russia Joint Venture "Vietsovpetro" from Block 09-1 as stipulated in Agreement 2010.

3. During implementation, if there are difficulties or obstacles, units are requested to promptly report to the Ministry of Finance for research and supplementary guidance./.