Circular No. 32/2009/TT-BTC guiding the implementation of provisions on tax for organizations and individuals conducting exploration and exploitation activities of oil and gas according to the Oil Law.

CIRCULAR

Guidelines for implementing tax regulations on organizations and individuals conducting oil and gas exploration and exploitation activities as stipulated by the Oil Law.

Based on relevant Tax Laws, Ordinances, and current guiding documents;

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Pursuant to the Oil Law and guiding documents;

The Ministry of Finance provides guidelines for implementing tax regulations on organizations and individuals conducting oil and gas exploration and exploitation activities as stipulated by the Oil Law as follows:

Pursuant to the Law on Tax Administration No. 78/2006/QH11 dated November 29, 2006, and the Government's Decrees detailing the implementation of the Law on Tax Administration;

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 guidelines in this Circular apply to organizations and individuals (hereinafter referred to as contractors) conducting oil and gas exploration, crude oil and condensate (hereinafter collectively referred to as crude oil) exploitation, and natural gas, associated gas, and coalbed methane (hereinafter collectively referred to as natural gas) exploitation in Vietnam according to the provisions of the Oil Law.

Part I

GENERAL PROVISIONS

Article 1. Scope of Application

For oil and gas contracts concluded in the form of production-sharing contracts, the taxpayer is the operator.

Article 2. Taxpayer

For oil and gas contracts concluded in the form of joint operating agreements, the taxpayer is the joint operating company.

For oil and gas contracts concluded in the form of joint venture contracts, the taxpayer is the joint venture enterprise.

In cases where the Vietnam National Oil and Gas Group or its subsidiaries conduct oil and gas exploration and exploitation activities, the taxpayer is the Vietnam National Oil and Gas Group or its subsidiaries.

Article 3. Currency for Tax Payment

Where crude oil and natural gas are sold in US dollars or freely convertible foreign currencies, the currency for paying taxes related to crude oil and natural gas exploitation, including export duties, resource taxes, and corporate income tax, shall be US dollars or freely convertible foreign currencies.

Where crude oil and natural gas are sold in Vietnamese dong, the currency for paying taxes related to crude oil and natural gas exploitation, including export duties, resource taxes, and corporate income tax, shall be Vietnamese dong.

Where crude oil and natural gas are sold partly in US dollars or freely convertible foreign currencies and partly in Vietnamese dong, the currency for paying taxes related to crude oil and natural gas exploitation, including export duties, resource taxes, and corporate income tax, shall be Vietnamese dong.

The conversion from US dollars or freely convertible foreign currencies to Vietnamese dong for tax payment shall be carried out based on the average exchange rate in the inter-bank foreign exchange market published by the State Bank of Vietnam at the time of tax payment.

Article 4. Tax Registration Location, Declaration, and Payment

2. For oil and gas contracts that have commenced exploitation before the issuance of this Circular, the declaration and payment location shall be implemented according to the guidelines prior to the effectiveness of this Circular.

1. The place of tax registration, declaration, and payment (except for import tax and export tax) is the local tax office where the taxpayer has its main administrative office.

Article 5. Determination of Taxable Price for Crude Oil and Natural Gas in Cases Where Crude Oil and Natural Gas Are Not Sold Through Arm's-Length Transactions

- For crude oil: the taxable price is the average selling price of similar crude oil on the international market over three consecutive weeks: the week preceding the sale, the week of sale, and the week following the sale. The taxpayer is responsible for providing the tax authority with information about the composition and quality of the crude oil being exploited. When necessary, the tax management agency may refer to the selling prices on the U.S. market (WTI), the British market (Brent), or the Singapore market (Platts), or seek the opinion of competent state agencies regarding the determination of the taxable price of the crude oil being exploited by the taxpayer.

In cases where crude oil and natural gas are not sold under arm's length transactions, the tax administration authority (tax authority and customs authority) will determine the price for tax calculation according to the following principles:

- For natural gas: the taxable price is the selling price of similar natural gas on the market at the delivery point and other related factors. When necessary, the tax management agency may seek the opinion of competent state agencies regarding the determination of the taxable price of the natural gas being exploited by the taxpayer.

- For natural gas: the taxable price is the selling price of the same type of natural gas on the market, at the delivery location, and other related factors. When necessary, the tax administration may seek the opinion of the competent state agency regarding the determination of the price of the natural gas being exploited by the taxpayer.

Article 6. General Provisions

1. In cases where an organization or individual conducts exploration and exploitation activities for oil and gas under multiple oil and gas contracts, the implementation of tax regulations as guided in this Circular shall be carried out separately for each oil and gas contract.

2. In cases where the contractor parties participate in an oil and gas contract in the form of a product-sharing contract or a joint operating contract, receiving shares through oil and natural gas and being responsible for consuming the allocated oil and natural gas, the declaration and payment of taxes from the exploitation of oil and natural gas shall be implemented according to separate guidelines.

3. Tax management guidelines not specifically provided for in this Circular shall be implemented in accordance with current laws on tax management.

Part II

GUIDELINES FOR IMPLEMENTING TAX REGULATIONS

I. MINERAL RESOURCES TAX

Article 7. Objects Subject to Mineral Resources Tax

1. The entire volume of crude oil and natural gas extracted and retained from the contract area, measured at the point of delivery (actual crude oil and natural gas production), is subject to mineral resources tax.

2. In cases where the Government of Vietnam uses associated gas without payment and the taxpayer intends to burn it off, the taxpayer is not required to pay mineral resources tax on that associated gas.

3. In cases where during the extraction of crude oil and natural gas, the taxpayer is permitted to extract other taxable mineral resources, such resources shall be taxed according to the current laws on mineral resources tax.

Article 8. Determination of Mineral Resources Tax Due

1. Tax Period for Mineral Resources Tax:

The mineral tax period is the Gregorian calendar year.

- The first tax period begins from the date of the initial crude oil and natural gas extraction until the end of the Gregorian calendar year.

- The final tax period starts from the beginning of the Gregorian calendar year until the last day of crude oil and natural gas extraction.

2. Determination of Mineral Resources Tax Due:

2.1. Mineral resources tax on crude oil and natural gas is determined based on a progressive rate applied to the total actual production of crude oil and natural gas extracted during each tax period, calculated based on the average daily production of crude oil and natural gas from the oil and gas contract, the tax rate, and the number of days of extraction within the tax period.

2.2. Determining the Mineral Resources Tax Payable in Crude Oil or Natural Gas:

 

Where:

+ The average daily volume of crude oil or natural gas subject to mineral resources tax during the tax period is the total volume of crude oil or natural gas subject to mineral resources tax extracted during the tax period divided by the number of days of extraction during the tax period.

+ Tax Rate: According to the Mineral Resources Tax Table specified in Article 7 of Decree No. 05/2009/NĐ-CP dated January 19, 2009, detailing the implementation of the Mineral Resources Tax Ordinance and the Ordinance amending and supplementing Article 6 of the Mineral Resources Tax Ordinance, specifically:

- For crude oil:

- For natural gas:

The determination of encouraged investment oil and gas projects as the basis for applying the mineral resources tax rate is based on the list of encouraged investment oil and gas projects decided by the Prime Minister.

+ The number of days of crude oil or natural gas extraction during the tax period is the number of days of crude oil or natural gas extraction activities during the tax period, excluding days of production stoppage due to any cause.

Example: Determining the mineral resources tax payable in crude oil for the case of crude oil extraction:

Assuming:

+ Total volume of crude oil subject to natural resource tax extracted during the tax payment period: 72,000,000 barrels

+ Number of production days during the tax payment period: 360 days

+ Average daily volume of crude oil subject to natural resource tax during the tax payment period: 200,000 barrels/day (72,000,000 barrels ÷ 360 days)

+ Crude oil extracted from a contract not included in the list of encouraged investment projects (in the case of crude oil extracted from a contract included in the list of encouraged investment projects, the calculation is similar with the mineral resources tax rate applicable to encouraged investment projects)

Natural resource tax payable in terms of crude oil during the tax payment period:

{(20,000 x 8%) + (30,000 x 10%) + (25,000 x 12%) + (25,000 x 17%) + (50,000 x 22%) + (50,000 x 27%)} x 360 days = 13,086,000 barrels.

Example: Determining the mineral resources tax payable in natural gas for the case of natural gas extraction:

Assuming:

+ Total volume of natural gas subject to natural resource tax extracted during the tax payment period: 3,960,000,000 cubic meters

+ Number of production days in the tax period: 360 days

+ Average daily volume of natural gas subject to mineral resources tax during the tax period: 11,000,000 cubic meters/day (3,960,000,000 cubic meters: 360 days)

+ Natural gas extracted from a contract not included in the list of encouraged investment projects (in the case of natural gas extracted from a contract included in the list of encouraged investment projects, the calculation is similar with the mineral resources tax rate applicable to encouraged investment projects).

Natural resource tax payable in terms of natural gas during the tax payment period:

(5,000,000 x 5%) + (1,000,000 x 10%)} x 360 days = 126,000,000 cubic meters

Article 9. Declaration and Payment of Mineral Resources Tax   

1. The mineral resources tax may be paid in crude oil or natural gas; in cash; or partly in cash and partly in crude oil or natural gas.

In cases where the mineral resources tax is paid in crude oil or natural gas, the tax authority shall notify the taxpayer in writing at least six months in advance and provide specific guidance on the declaration and payment of the mineral resources tax in crude oil or natural gas.

2. Declaration and Provisional Payment of Mineral Resources Tax

2.1. Determination of the provisional amount of mineral resources tax:

Where:

+ Actual production volume of crude oil or natural gas sold is the taxable crude oil or natural gas production volume that has been sold.

+ The provisional tax calculation price is the sale price of crude oil or natural gas at the delivery point for each transaction, excluding value-added tax.

+ The provisional tax rate is determined as follows:

+ The provisional mineral resources tax payable in crude oil or natural gas for the tax period is determined according to the guidelines set out in Article 8, Section I, Part II of this Circular, based on the estimated taxable crude oil or natural gas production volume for the tax period and the number of days expected to be extracted.

+ The estimated taxable crude oil or natural gas production in the tax period is the estimated production of crude oil or natural gas subject to mineral resources tax during the tax period.

Based on the estimated annual taxable crude oil or natural gas production volume and the Mineral Resources Tax Table for crude oil and natural gas, the taxpayer determines the provisional annual tax rate and notifies the local tax authority in writing no later than December 1st of the previous tax period.

During the tax period, if there is a change in the estimated production volume of crude oil or natural gas, or the estimated number of extraction days in the last six months of the year, leading to an increase or decrease in the provisional tax rate by 15% or more compared to the previously notified provisional tax rate, the taxpayer must determine and notify the new provisional tax rate to the tax authority in writing no later than May 1st of the same year.

Example: Determining the provisional tax rate:

- Determining the provisional mineral resources tax rate for crude oil:

Assuming:

+ Total estimated taxable crude oil production volume for the tax period: 72,000,000 barrels

+ Number of days expected to extract during the tax period: 360 days

+ Average daily taxable crude oil production volume during the tax period: 200,000 barrels/day (72,000,000 barrels ÷ 360 days).

+ Estimated mineral resources tax payable in crude oil for the tax period (determined according to the guidelines set out in Article 8, Section I, Part II of this Circular): 13,086,000 barrels

The provisional mineral resources tax rate from crude oil exploitation is:

- Determining the provisional mineral resources tax rate for natural gas:

Assuming:

+ Total estimated taxable natural gas production in the tax period: 3,960,000,000 cubic meters.

+ Number of production days during the tax payment period: 360 days

+ Average daily taxable natural gas production volume during the tax period: 11,000,000 cubic meters/day (3,960,000,000 cubic meters ÷ 360 days)

+ Estimated mineral resources tax payable in natural gas for the tax period (determined according to the guidelines set out in Article 8, Section I, Part II of this Circular): 126,000,000 cubic meters

The provisional tax rate from natural gas extraction is:

2.2. Declaration and payment of provisional mineral tax:

2.2.1. For crude oil extraction:

a. The tax declaration form for provisional mineral resources tax is Form 01/TAIN-DK issued together with this Circular.

b. Deadline for submitting the tax declaration form for provisional mineral resources tax: no later than the 35th day from the date of issuing the invoice (for domestic crude oil sales) or the date confirmed by the customs authority for crude oil exports. If the 35th day falls on a Saturday, Sunday, public holiday, or national holiday (collectively referred to as holidays), the deadline for submitting the tax declaration form is the next working day after the holiday.

c. Deadline for paying provisional mineral resources tax: the same as the deadline for submitting the tax declaration form for provisional mineral resources tax.

2.2.2. For natural gas extraction:

a. The tax declaration form for provisional mineral resources tax is Form 01/TAIN-DK issued together with this Circular.

b. Deadline for submitting the tax declaration form for provisional mineral resources tax: no later than the 20th day of each month. If the 20th day falls on a Saturday, Sunday, public holiday, or national holiday (collectively referred to as holidays), the deadline for submitting the tax declaration form is the next working day after the holiday.

c. Deadline for paying provisional mineral resources tax: the same as the deadline for submitting the tax declaration form for provisional mineral resources tax.

3. Settlement of Mineral Resources Tax

3.1. For crude oil extraction:

3.1.1. Determination of the amount of mineral resources tax payable:

a. Determination of the mineral resources tax payable in crude oil for the tax period:

b. Determination of the crude oil tax rate relative to the crude oil production volume for the tax period:

c. Determination of the mineral resources tax payable in crude oil sold during the tax period:

d. Determination of the amount payable from selling mineral resources tax in crude oil during the tax period:

Where:

+ The mineral resources tax payable in crude oil sold during the tax period is determined according to the guidelines set out in Clause 3, Article 9, Section I, Part II of this Circular;

+ The tax calculation price for crude oil: is the weighted average price of crude oil sold at the delivery point under fair trade contracts during the tax period, excluding value-added tax.

e. Determination of the mineral resources tax payable in unsold crude oil during the tax period to serve as the basis for settling the mineral resources tax payable in crude oil for the subsequent tax period:

If crude oil is not sold under fair trade contracts, the tax calculation price is determined according to the guidelines set out in Article 5, Part I of this Circular.

Example: Determining the tax calculation price:

Assuming: the crude oil production volume sold during the tax period is 4,000,000 barrels, sold in three lots: Lot 1 with a production volume of 2,000,000 barrels, sold at $18/barrel; Lot 2 with a production volume of 1,000,000 barrels, sold at $20/barrel; Lot 3 with a production volume of 1,000,000 barrels, sold at $14/barrel.

g. Determination of the amount underpaid (or overpaid) from selling mineral resources tax in crude oil during the tax period:

Where:

+ The amount payable from selling mineral resources tax in crude oil during the tax period is determined according to the guidelines set out in Clause 3, Article 9, Section I, Part II of this Circular.

The provisional natural resources tax amount paid during the tax period: is the total provisional natural resources tax amount paid as stated in the Provisional Natural Resources Tax Payment Schedule (according to Form No. 02-2/TAIN-DK issued together with this Circular).

3.1.2. Declaration and payment of natural resources tax according to the final settlement tax declaration file:

a. The final settlement natural resources tax declaration file includes:

- The final settlement natural resources tax declaration form according to Form No. 02/TAIN-DK issued together with this Circular;

- The production volume and revenue from crude oil or natural gas sales declaration schedule for the tax period according to Form No. 02-1/TAIN-DK issued together with this Circular;

- The provisional natural resources tax amount declaration schedule for the tax period according to Form No. 02-2/TAIN-DK issued together with this Circular.

b. Deadline for submitting the final settlement natural resources tax declaration file:

- Not later than the 90th day from the end of the calendar year.

- Not later than the 45th day from the end date of the petroleum contract.

If the 90th or 45th day falls on a Saturday, Sunday, public holiday, or traditional festival (collectively referred to as holidays), then the deadline for submitting the settlement declaration form for mineral resources tax is the next day following the holiday.

c. Payment of tax according to the final settlement natural resources tax declaration file:

Based on the settlement declaration form for mineral resources tax, the taxpayer determines:

- If the provisional natural resources tax amount for the tax period exceeds the tax payable amount, the excess tax paid will be deducted from the next provisional natural resources tax payment amount or procedures for refunding the excess tax paid will be carried out according to current laws on tax administration, if there is no subsequent natural resources tax payment period.

- If the provisional natural resources tax amount for the tax period is less than the tax payable amount, the taxpayer must pay the remaining tax due to the State Treasury along with the deadline for submitting the final settlement natural resources tax declaration file.

3.2. For natural gas extraction:

3.2.1. Determination of the natural resources tax payable amount:

a. Determination of the natural resources tax payable by natural gas in the tax period:

b. Determination of the payable amount from selling natural resources tax by natural gas in the tax period:

Where:

+ Natural resources tax payable by natural gas in the tax period: determined as guided in Clause 3, Article 9, Section I, Part II of this Circular;

+ The mineral resources tax valuation price for natural gas: is the sale price under fair trade contracts at the delivery point during the tax period, excluding value-added tax.

In case natural gas is not sold under an arm's length transaction contract, the taxable price is determined as guided in Article 5, Part I of this Circular.

c. Determination of the underpaid (or overpaid) amount from selling natural resources tax by natural gas in the tax period:

Where:

+ Payable amount from selling natural resources tax by natural gas in the tax period: determined as guided in Clause 3, Article 9, Section I, Part II of this Circular.

The provisional natural resources tax amount paid during the tax period: is the total provisional natural resources tax amount paid as stated in the Provisional Natural Resources Tax Payment Schedule (according to Form No. 02-2/TAIN-DK issued together with this Circular).

3.2.2. Declaration and payment of tax according to the final settlement natural resources tax declaration file:

a. The final settlement natural resources tax declaration file includes:

- The final settlement natural resources tax declaration form according to Form No. 02/TAIN-DK issued together with this Circular;

- The production volume and revenue from crude oil or natural gas sales declaration schedule for the tax period according to Form No. 02-1/TAIN-DK issued together with this Circular;

- The provisional mineral resources tax paid statement during the tax period according to Form 02-2/TAIN-DK issued together with this Circular.

b. Deadline for submitting the final settlement natural resources tax declaration file:

- Not later than the 90th day from the end of the calendar year.

- Not later than the 45th day from the end date of the petroleum contract.

In case the 90th day or the 45th day falls on a Saturday, Sunday, holiday, or public holiday (collectively referred to as a non-working day), the deadline for submitting the resource tax declaration form shall be the next working day following such non-working day.

c. Payment of tax according to the final settlement natural resources tax declaration file:

Based on the settlement declaration form for mineral resources tax, the taxpayer determines:

- If the provisional natural resources tax amount for the tax period exceeds the tax payable amount, the excess tax paid will be deducted from the next provisional natural resources tax payment amount or procedures for refunding the excess tax paid will be carried out according to current laws on tax administration if there is no subsequent natural resources tax payment period.

- If the provisional natural resources tax amount for the tax period is less than the tax payable amount, the taxpayer must pay the remaining tax due to the State Treasury along with the deadline for submitting the final settlement natural resources tax declaration file.

II. EXPORT TAX, IMPORT TAX

Taxpayers shall declare and pay export tax and import tax in accordance with the laws on export tax and import tax and current tax management laws. Additionally, the Ministry of Finance provides specific guidance as follows:

Article 10. Export Tax

1. Determination of the payable export tax amount:

Where:

+ The quantity of crude oil, natural gas exported is the actual quantity of crude oil, natural gas exported.

+ The taxable value is the sale price of crude oil, natural gas under an arm's length transaction contract. In case crude oil, natural gas is not sold under an arm's length transaction contract, the export tax value is determined as guided in Article 5, Part I of this Circular.

- The export tax rate is determined as follows:

Where:

+ The proportional provisional natural resources tax rate in the tax period is determined as guided in Article 8, Section I, Part II of this Circular.

+ The export duty rate for crude oil, natural gas according to the current export tariff.

Example: Determination of the export tax rate for crude oil:

Assuming:

+ The proportional provisional natural resources tax rate according to the example in the above Article 9: 18.18%

+ The export duty rate for crude oil according to the current export tariff: 10%

Export tax rate for crude oil: 8.18% = (100% - 18.18%) x 10%

Based on the proportional provisional natural resources tax rate and the export duty rate for crude oil, taxpayers determine the export tax rate for each oil and gas contract and notify the customs authority at the crude oil export location and the tax authority at the tax registration location along with the notification deadline for the proportional provisional natural resources tax rate as stipulated in Article 8, Section I, Part II of this Circular.

2. Declaration and payment of export tax:

Procedures for declaring and paying export tax for exported crude oil and natural gas are carried out according to the laws on export tax, import tax, and tax administration.

Specifically, the deadline for paying export tax for crude oil is no later than the 35th day from the date the customs authority confirms the export of crude oil. If the 35th day falls on a Saturday, Sunday, holiday, or public holiday (collectively referred to as a non-working day), the deadline for paying export tax is the next working day following the non-working day.

Article 11. Exemption from Import Tax

The taxpayer shall exempt import tax on goods imported for the purpose of oil and gas exploration, development, and exploitation activities in accordance with the provisions of the Law on Export Tax, Import Tax, and the current Tax Administration Law.

III. ENTERPRISE INCOME TAX (EIT)

Article 12. Taxpayers Subject to Enterprise Income Tax

Income from oil and natural gas exploration, development, and exploitation activities, as well as other income of the taxpayer, is subject to enterprise income tax.

Article 13. Tax Period for Enterprise Income Tax

1. The tax period for enterprise income tax is the calendar year. In cases where the taxpayer applies a fiscal year different from the calendar year and such application has been approved by the Ministry of Finance, the tax period will be the fiscal year.

2. The first tax period for enterprise income tax is calculated from the date of commencement of the first oil and gas exploration and exploitation activity until the end of the calendar year or the end of the fiscal year.

3. The last tax period for enterprise income tax is calculated from the beginning of the calendar year or the fiscal year until the end of the oil and gas contract.

4. If the first tax period or the last tax period is shorter than three months, it may be combined with the next or previous tax period to form a complete tax period for enterprise income tax. The first or last tax period for enterprise income tax shall not exceed fifteen months.

Article 14. Determination of Taxable Income

1. Revenue from oil and natural gas exploration and exploitation activities is the total value of the volume of crude oil and natural gas actually sold under arm's length transactions during the tax period.

Where crude oil and natural gas are not sold under arm's length transactions, revenue from oil and gas exploration and exploitation activities shall be determined by multiplying the corresponding volume of crude oil and natural gas with the sales price determined by the tax authority as specified in Article 5, Part I of this Circular.

2. Deductible expenses when determining taxable income:

The taxpayer may deduct expenses when determining taxable income (excluding items listed in Clause 3 below) if they meet the following conditions:

- Actual expenses incurred in connection with oil and natural gas exploration and exploitation activities but not exceeding the amount of expenses determined by multiplying the sales revenue of crude oil and natural gas by the agreed cost recovery ratio in the oil and gas contract. In cases where there is no agreement on the cost recovery ratio in the oil and gas contract, the cost recovery ratio for determining deductible expenses is 35%.

- Expenses supported by valid invoices and documents as prescribed by law.

3. Non-deductible expenses when determining taxable income:

- Expenses allowed to be recovered in excess of the agreed cost recovery ratio in the oil and gas contract. In cases where there is no agreement on the cost recovery ratio in the oil and gas contract, the cost recovery ratio for determining non-deductible expenses is 35%.

- Expenses that cannot be considered as recoverable costs according to the oil and gas contract.

- Other expenses that cannot be deducted as allowable expenses under the current Enterprise Income Tax Law.

4. In cases where, pursuant to the oil and gas contract, each contractor directly pays expenses related to oil and gas exploration and exploitation activities, and the sale of crude oil and natural gas, these expenses will be transferred to the taxpayer for deduction as allowable expenses when determining taxable income through each contractor issuing a VAT invoice including the expense value and VAT (if applicable).

5. Other income during the tax period: implemented in accordance with the Law on Enterprise Income Tax and current guiding documents.

Article 15. Determination of Corporate Income Tax Due

1. Determination of Corporate Income Tax Due:

Wherein:

+ The taxable income for the tax period is determined as guided in Article 14, Section III, Part II of this Circular.

+ The corporate income tax rate is prescribed in Article 10 of the Law on Corporate Income Tax.

2. For oil and gas contracts signed in the form of product-sharing contracts or joint operating contracts: if each contractor separately determines the amount of corporate income tax due, then the corporate income tax each contractor must pay equals the total corporate income tax due (determined as guided above) multiplied by the oil and gas profit ratio of each contractor in the oil and gas contract.

Article 16. Declaration and Payment of Corporate Income Tax

1. Corporate income tax is provisionally calculated quarterly or per sale and settled according to the tax period.

2. Before or during the conduct of crude oil and natural gas exploitation activities, if there is taxable income from other business operations, the taxpayer shall declare and pay corporate income tax according to the current laws on corporate income tax.

3. In cases where each contractor participating in an oil and gas contract separately determines the corporate income tax, the taxpayer declares corporate income tax (including the determination of the corporate income tax each contractor must pay) and acts on behalf of each contractor to pay the corporate income tax. Payment vouchers clearly state the name of the contractor and the corporate income tax due for each contractor.

4. Provisional declaration and payment of corporate income tax

For oil and gas contracts that can determine provisional corporate income tax rates as guided below, provisional corporate income tax will be calculated per sale.

4.1. Determination of provisional corporate income tax:

Where:

+ Revenue from crude oil and natural gas sales is the full value of the actual oil and gas production sold under fair market transaction contracts for each sale.

If crude oil and natural gas are not sold under fair market transaction contracts, revenue from crude oil and natural gas sales is determined by multiplying the corresponding volume of crude oil and natural gas with the selling price determined by the tax authority as guided in Article 5, Part I of this Circular.

+ The provisional corporate income tax rate is determined as guided below:

The taxpayer self-determines the provisional corporate income tax rate and notifies the local tax authority where they are registered together with the deadline for notifying the provisional resource tax rate as stipulated in Article 9, Section I, Part II of this Circular.

Example: Determining the provisional corporate income tax rate for crude oil extraction:

Assuming:

+ Allowable cost recovery ratio: 35%

+ Provisional resource tax rate (as per the example in the aforementioned Article 9): 18.18%

+ Provisional export tax rate (as per the example in the aforementioned Article 10): 8.18%

Corporate income tax rate: 50%

The provisional corporate income tax rate is:

(100% - 35% - 18.18% - 8.18%) x 50% = 19.32%

In cases where provisional corporate income tax is paid from natural gas extraction, the provisional corporate income tax rate is similarly determined as above.

4.2. Declaration and Payment of Provisional Corporate Income Tax:

4.2.1. In cases where the taxpayer can determine provisional corporate income tax per sale:

a. The tax declaration form for provisional corporate income tax is Form 01/TNDN-DK issued along with this Circular.

b. Deadline for submitting the provisional corporate income tax declaration form: no later than the 35th day from the date of issuing the invoice (for domestic crude oil sales) or the date confirmed by the customs authority for crude oil exports. If the 35th day falls on a Saturday, Sunday, holiday, or public holiday (collectively referred to as non-working days), the deadline for submitting the provisional corporate income tax declaration form is the next working day following the non-working day.

c. Deadline for paying provisional corporate income tax: the same as the deadline for submitting the provisional corporate income tax declaration form.

4.2.2. In cases where provisional corporate income tax is calculated quarterly, the declaration and payment of corporate income tax shall be carried out according to the current laws on tax administration.

4.2.3. The taxpayer informs the local tax authority where they are registered about the payment of provisional corporate income tax per sale or quarterly.

5. Settlement of Corporate Income Tax

5.1. Documents for declaring settlement of corporate income tax include:

- Form 02/TNDN-DK for declaring settlement of corporate income tax issued along with this Circular.

- Annual financial report or financial report up to the end of the oil and gas contract.

5.2. Deadline for submitting the settlement of corporate income tax declaration form:

- Not later than the ninetieth day from the end of the calendar year or fiscal year.

- Not later than the 45th day from the end date of the petroleum contract.

If the 90th or 45th day falls on a Saturday, Sunday, holiday, or public holiday (collectively referred to as non-working days), the deadline for submitting the declaration form for settlement of corporate income tax is the next working day following the non-working day.

5.3. Payment based on the declaration form for settlement of corporate income tax:

Based on the declaration form for settlement of corporate income tax, the taxpayer determines:

- If the provisional corporate income tax paid in the tax period exceeds the tax due, the excess tax paid can be deducted from the provisional corporate income tax due for the next payment or refunded according to the current laws on tax administration, if there is no subsequent tax period.

- If the provisional corporate income tax paid in the tax period is less than the tax due, the taxpayer must pay the remaining tax due to the State Treasury together with the deadline for submitting the declaration form for settlement of corporate income tax.

IV. TAX ON INCOME FROM TRANSFER OF CAPITAL PARTICIPATION IN OIL AND GAS CONTRACTS

Article 17. Taxable Object

1. Transfer of participation capital in oil and gas contracts refers to organizations and individuals participating in oil and gas contracts transferring part or all of the invested capital for exploration, search, and exploitation of crude oil and natural gas (the transferring capital party) to one or more other organizations and individuals (the receiving capital transfer party), including cases where only rights and obligations under the oil and gas contract are transferred. The receiving party of the capital transfer in the oil and gas contract assumes the rights and obligations of the contractor conducting oil and gas exploration and exploitation activities.

2. Income from the transfer of participation capital in oil and gas contracts by the transferring party to the receiving party is subject to corporate income tax according to the guidelines set forth in Section IV, Part II of this Circular.

Article 18. Determination of Corporate Income Tax Due

1. Determination of Corporate Income Tax Due:

Corporate income tax on income from the transfer of participation capital in oil and gas contracts shall be determined as follows:

1.1. Determination of Taxable Income:

Of which

+ The transfer price is the total actual value based on market prices that the transferring party receives according to the transfer contract.

In cases where the capital transfer contract stipulates payment through installment or deferred payment methods, the transfer price does not include interest on installments or deferred payments as specified in the transfer contract.

In cases where the transfer contract does not specify a payment price or if the tax authority has grounds to determine that the payment price cannot be determined based on market prices, the tax authority has the right to inspect and request the parties involved in the transfer to provide information related to determining the current and future value of the transferred participation capital before the decision to transfer and accept the transfer is made, and to set the payment price of the contract based on reference to market prices, prices that could be sold to third parties, and prices of similar transfer contracts.

+ Purchase price of the transferred capital: determined based on accounting books and vouchers regarding allowable recovery costs of the transferring party at the time of capital transfer, after deducting recovered costs (if any), recognized by both parties to the oil and gas contract and the Vietnam Oil and Gas Group, and other costs related to the purchase price of the transferred capital but not yet counted as allowable recovery costs.

In cases where the contractor continues to transfer the received capital again, the capital cost of each subsequent transfer is determined by adding the transfer value of the previous transfer contract plus additional allowable recovery costs (if there is proof documentation), minus any recovered costs (if any).

In cases where the accounting records of the oil and gas contract are in foreign currency, the transferring party of the participation capital in the oil and gas contract in foreign currency, the transfer price and the purchase price of the transferred capital are determined in foreign currency; in cases where the accounting records of the oil and gas contract are in Vietnamese Dong, the transfer price must be converted to Vietnamese Dong at the exchange rate at the time of transfer, and the purchase price of the transferred capital is determined in Vietnamese Dong at the exchange rate at the time of participation capital contribution or the time of repurchasing the participation capital.

+ Transfer expenses are actual expenses directly related to the transfer, based on original documents recognized by the tax authority. In cases where transfer expenses occur abroad, these original documents must be certified by a notary or independent auditor of the country where the expenses occurred, and the documents must be translated into Vietnamese (with confirmation by an authorized representative).

Transfer expenses include: expenses for necessary legal procedures for the transfer; fees and taxes payable when processing the transfer procedures; transaction, negotiation, and signing contract expenses, and other expenses with supporting documentation.

1.2. Corporate income tax rate:

The corporate income tax rate on income from capital transfers is the rate prescribed in the Law on Corporate Income Tax applicable to businesses not engaged in oil and gas exploration and exploitation activities.

1.3. Exemptions and reductions of corporate income tax do not apply to income from capital transfers.

Article 19. Declaration and Payment of Corporate Income Tax on Income from Capital Transfer

1. For the capital transferor who is a foreign organization or individual participating in oil and gas contracts

1.1. The capital transferee shall be responsible for determining the corporate income tax payable, declaring, deducting, and paying the tax on behalf of the capital transferor.

1.2. Documents for declaration of tax on income from capital transfer:

- A Corporate Income Tax Declaration Form for Capital Transfer according to Model No. 03/TNDN-DK issued together with this Circular;

- A copy of the capital transfer agreement. In cases where the capital transfer agreement is in a foreign language, it must be translated into Vietnamese for the main contents: the transferor; the transferee; the transfer time; the content of the transfer; the rights and obligations of each party; the value of the agreement; payment terms, methods, and currency;

- A copy of the decision approving the capital transfer issued by the competent authority;

- A copy of the certification from the operator, joint operating company, or participating parties in the joint venture regarding the allowable recovery costs being the cost basis of the transferred capital portion of the transferor;

- Original receipts of all expenses.

In case additional documents are required, the tax authority must notify the taxpayer immediately on the day of receiving the documents if they are received directly, or within three working days from the date of receipt through postal service or electronic transactions.

1.3. The deadline for submitting the tax declaration documents is the tenth day following the date when the competent authority approves the capital transfer.

1.4. The place to submit the tax declaration documents is at the tax office specified in Article 2, Part I of this Circular where the taxpayer declares and pays corporate income tax from exploration and production activities of crude oil and natural gas.

2. For the capital transferor who is a Vietnamese organization or individual participating in oil and gas contracts: the performance of tax obligations on income from transferring the capital participation in oil and gas contracts shall be carried out in accordance with current laws on taxes.

V. OTHER TAXES, FEES AND CHARGES

During the course of business operations, taxpayers must pay other types of taxes, fees, and charges not specifically guided in this Circular in accordance with the provisions of current legal documents on taxes, fees, and charges.

Part III

IMPLEMENTATION

Article 20. Effectiveness of the Circular

1. This Circular takes effect 45 days from the date of signature, applicable to corporate income tax periods starting from 2009 onwards and applies to the payment of resource taxes for oil and gas contracts signed from the date of Decree No. 05/2009/NĐ-CP dated January 19, 2009 of the Government detailing the implementation of the Mineral Resources Tax Law (amended) and the Law Amending and Supplementing Clause 6 of the Mineral Resources Tax Law (amended) taking effect, except for oil and gas contracts that have been specifically approved by the Prime Minister regarding the resource tax rate before the effective date of Decree No. 05/2009/NĐ-CP, replacing Circular No. 48/2001/TT-BTC dated June 25, 2001 of the Ministry of Finance guiding the implementation of regulations on taxes for organizations and individuals conducting exploration and production activities of oil and gas as stipulated in the Petroleum Law.

2. Oil and gas contracts signed before the date of Decree No. 05/2009/NĐ-CP dated January 19, 2009 of the Government detailing the implementation of the Mineral Resources Tax Law (amended) and the Law Amending and Supplementing Clause 6 of the Mineral Resources Tax Law (amended) taking effect, which have already exploited resources and paid resource taxes according to the Investment License or oil and gas contract, shall continue to be implemented according to the Investment License and oil and gas contract. For oil and gas contracts not yet signed but approved by the Prime Minister before the above Decree took effect and have agreements on resource taxes, they shall be implemented according to the agreements in the oil and gas contract already approved by the Prime Minister.  

3. Oil and gas contracts that have been granted Investment Licenses before the effective date of the Petroleum Law No. 10/2008/QH12 and the Corporate Income Tax Law No. 14/2008/QH12 will continue to enjoy corporate income tax incentives (reduced tax rates and exemption periods) for the remaining period.

Taxpayers shall base their determination of the amount of tax exempted or reduced, and the corporate income tax payable during provisional and final settlement, on the provisions of the Investment License or the Prime Minister's decision regarding the tax exemption and reduction rates and periods.

The first year of taxable income is the first tax period generating taxable income. 

Tax-exempt income does not include other income items mentioned in Clause 5, Article 14, Section III, Part II of this Circular. 

4. In cases where international treaties or intergovernmental agreements to which the Vietnamese Government is a signatory provide different tax regulations for exploration and production activities of crude oil and natural gas compared to the regulations in this Circular, the payment of taxes by organizations and individuals conducting such activities shall be carried out in accordance with those international treaties or intergovernmental agreements.

During implementation, if there are difficulties or obstacles, please report them promptly to the Ministry of Finance for timely resolution./.