CIRCULAR

Regulations on the method for converting the tax base for natural resources tax to determine the tax base for granting mineral exploitation rights To determine the tax base for granting mineral exploitation rights

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Pursuant to the Law on Minerals No. 60/2010/QH12 dated November 17, 2010;

Pursuant to the Law on Natural Resources Tax No. 45/2009/QH12 dated November 25, 2009 and the Law Amending and Supplementing Certain Provisions of Laws on Taxation No. 71/2014/QH13 dated November 26, 2014;

Pursuant to Decree No. 203/2013/NĐ-CP dated November 28, 2013 of the Government on the method of calculation and the level of fees for granting mineral exploitation rights; minerals;

Pursuant to Decree No. 158/2016/NĐ-CP dated November 29, 2016 of the Government detailing implementation of certain provisions of the Minerals Law;

On the basis of Decision No. 36/2017/NĐ-CP dated April 4, 2017, of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Natural Resources and Environment;

At the proposal of the Director General of the Vietnam Geological and Mineral Resources Administration and the Head of the Legal Department;

The Minister of Natural Resources and Environment promulgates this Circular regulating the method for converting the tax base for natural resources tax to determine the tax base for granting mineral exploitation rights.

Article 1. Scope of Regulation

This Circular provides detailed regulations for Clause 5, Article 69 of Decree No. 158/2016/NĐ-CP dated November 29, 2016 of the Government detailing the implementation of certain provisions of the Minerals Law.

Article 2. Applicability

This Circular applies to:

1. State management agencies for minerals and other relevant state agencies involved in the work of calculating fees for granting mineral exploitation rights.

2. Organizations and individuals exploiting minerals.

Article 3. Determining the tax base for granting mineral exploitation rights

1. Formula for determining the tax base for granting mineral exploitation rights (G):

G = G_tn x K_qđ

Where:

a) G is the tax base for granting mineral exploitation rights determined based on the conversion from the tax base for natural resources tax according to the laws on natural resources tax at the time of calculating the fee for granting mineral exploitation rights (unit of measurement is VND/unit of reserves);

b) G_tn is the tax base for natural resources tax issued by the People's Committees of provinces and centrally governed cities (hereinafter referred to as provincial People's Committee) effective at the time of calculating the fee for granting mineral exploitation rights (unit of measurement is VND/unit of product);

c) K_qđ is the conversion factor determined from the tax base for natural resources tax (unit is VND/unit of product) to the tax base for granting mineral exploitation rights (unit is VND/unit of reserves).

2. Principles for determining the conversion factor K_qđ:

a) The conversion factor K_qđ is determined depending on the quality of minerals or the tax base for natural resources tax (G_tn) as stipulated in Point b Clause 1 of this Article or the bulk density coefficient (H_{For power plants invested under the Build-Operate-Transfer (BOT) model, n is determined according to the operational period of the power plant stipulated in the BOT contract.}) as stipulated in Point e Clause 3 of this Article;

b) Cases requiring the determination of the conversion factor K_qđ are specified in Article 4 of this Circular; cases applying the conversion factor K_qđ equal to 1 (K_qđ = 1) are specified in Article 5 of this Circular;

c) The determination of the conversion factor K_qđ for each group or type of minerals shall be carried out in accordance with the provisions of Articles 6 and 7 of this Circular;

d) The conversion factor K_qđ shall be rounded off and taken to the third decimal place;

Example: K_qđ = 0.2532133, rounded off to K_qđ = 0,253.

d) Parameters when determining the conversion factor K_qđ are specified in Clause 3 of this Article.

3. Parameters when determining the conversion factor K_qđ including:

: Total cost of electricity purchase for the year (VND) from direct and indirect power plants participating in the electricity market, as specified in Clause 2 of this Article;_{t s} are the average metal content in the mine determined by dividing the total metal reserves by the total ore reserves recorded in the Decision approved by the National Mineral Reserve Evaluation Council or the provincial People's Committee or in the report on mineral exploration results, specifically according to the formula:

C_{t s} = Q_kl : Q_q

Where:

- Q_kl is the total metal reserves approved;

- Q_q is the total ore reserves recorded in the approval decision or in the report on mineral exploration results.

Example: The approved reserve decision records 1,936,000 (tons) of copper concentrate corresponding to metal reserves of 20,659 (tons). Based on the above formula, the C_{t s} It is calculated as follows:

C_{t s} = 20,659 (tons) : 1,936,000 (tons) x 100% ≈ 1.067% (rounded off)

c) C_max is the highest metal content specified in the table of the tax base for natural resources tax issued by the provincial People's Committee;

(VND) from small renewable energy power plants, as specified in Clause 2 of this Article;_{Maximum Downhill Gradient} is the lowest metal content specified in the table of the tax base for natural resources tax issued by the provincial People's Committee;

d) C is the metal content specified in the table of the tax base for natural resources tax issued by the provincial People's Committee;

(VND) from imported electricity, as specified in Clause 2 of this Article._tq is the average metal content in concentrate to determine the tax base for natural resources tax;

e) H_{For power plants invested under the Build-Operate-Transfer (BOT) model, n is determined according to the operational period of the power plant stipulated in the BOT contract.} is the bulk density coefficient to convert volume from the natural state (minerals not yet extracted from underground) to the raw state (raw minerals) determined according to the mechanical properties of each type or group of minerals and rounded off to the third decimal place;

Example: H_{For power plants invested under the Build-Operate-Transfer (BOT) model, n is determined according to the operational period of the power plant stipulated in the BOT contract.} = 1.475128, rounded off to H_{For power plants invested under the Build-Operate-Transfer (BOT) model, n is determined according to the operational period of the power plant stipulated in the BOT contract.} = 1,475.

g) D is the natural weight of the mineral (mass of the mineral in its natural state per unit volume) determined in the approved report on mineral exploration results.

Article 4. Cases where the conversion factor K must be determined_qđ

1. The resource tax calculation price issued by the Provincial People's Committee does not have a price for raw minerals (minerals after extraction).

2. The resource tax calculation price issued by the Provincial People's Committee has a price for raw minerals (minerals after extraction) but with units of measurement (dimensions) that are different from the units of measurement for the permitted mineral reserves.

Example: The permitted mineral reserve (underground) has units of m3 (or tons), while the raw mineral after extraction (already separated) has units of m3.³.

Article 5. Cases for applying the conversion factor K_qđ equal to 1 (K_qđ = 1)

Conversion factor K_qđ equal to 1 (K_qđ = 1) shall be applied in the following cases:

1. The resource tax calculation price issued by the Provincial People's Committee has a price for raw minerals (minerals after extraction).

Example: Stone blocks for cladding; various types of mineral water; clean coal in raw form; raw kaolin.

2. The resource tax calculation price issued by the Provincial People's Committee has a price based on corresponding metal ore according to the mineral reserves permitted as recorded in the Mineral Extraction Permit.

The method for determining the calculation price for granting mining rights in this case is specified in detail in Point a Clause 1 Article 6 of this Circular.

Article 6. Determining the conversion factor K_qđ for groups of metallic minerals

1. Formula for determining the conversion factor K_qđ for cases where the resource tax calculation price issued by the Provincial People's Committee is based on ranges of metal ore content:

a) In the case where the average actual metal content in the mine (Cm) falls within the ranges of metal ore content, then the calculation price for granting mining rights equals the resource tax calculation price already issued corresponding to the range of metal ore content, specifically as follows:_{t s}Example: The resource tax calculation price issued by Province TN is based on ranges of metal sulfide ore content (Pb + Zn) as follows:

K_qđ = 1 

Resource Tax Calculation Price (VND/ton)

Table 1

: Cmax_{t s} = 16,8% (Example: According to the decision approving the reserves, Mine B has an average actual metal sulfide ore content (Pb + Zn) Cm = 26%; meanwhile, in the resource tax calculation price table issued by Province TN, the highest metal sulfide ore content (Pb + Zn) Cmax is 25% (Item 5 Table 1 mentioned above). At that time, the conversion factor K is determined as: K = 26% (Cm) : 25% (Cmax).c) In the case where the average actual metal content in the mine according to the decision approving the reserves (Cm) is less than the lowest metal ore content (Cmin) defined in the resource tax calculation price table, the conversion factor Kqd is determined by dividing the average actual metal content (Cm) by the lowest metal ore content (Cmin), specifically as follows:"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_bMetal Sulfide Ore 20% ≤ (Pb + Zn content)_{For power plants invested under the Build-Operate-Transfer (BOT) model, n is determined according to the operational period of the power plant stipulated in the BOT contract.}: Cmin₂ Example: According to the decision approving the reserves, Mine X has an average actual metal sulfide ore content (Pb + Zn) Cm = 8%, while in the resource tax calculation price table issued by Province TN, the lowest metal sulfide ore content (Pb + Zn) Cmin is 10% (Item 1 Table 1 mentioned above). At that time, the conversion factor Kqd is determined as: Kqd = 8% (Cm) : 10% (Cmin)._{t s} = 24,5% (Example: According to the decision approving the reserves, Mine B has an average actual metal sulfide ore content (Pb + Zn) Cm = 26%; meanwhile, in the resource tax calculation price table issued by Province TN, the highest metal sulfide ore content (Pb + Zn) Cmax is 25% (Item 5 Table 1 mentioned above). At that time, the conversion factor K is determined as: K = 26% (Cm) : 25% (Cmax).c) In the case where the average actual metal content in the mine according to the decision approving the reserves (Cm) is less than the lowest metal ore content (Cmin) defined in the resource tax calculation price table, the conversion factor Kqd is determined by dividing the average actual metal content (Cm) by the lowest metal ore content (Cmin), specifically as follows:Example: According to the decision approving the reserves, Mine B has an average actual metal sulfide ore content (Pb + Zn) Cm = 26%; meanwhile, in the resource tax calculation price table issued by Province TN, the highest metal sulfide ore content (Pb + Zn) Cmax is 25% (Item 5 Table 1 mentioned above). At that time, the conversion factor K is determined as: K = 26% (Cm) : 25% (Cmax).2. In the case where the resource tax calculation price issued by the Provincial People's Committee only specifies a single price for a specific metal ore content value (C), the conversion factor K is determined by dividing the average actual metal content (Cm) by the metal ore content (C), specifically as follows:

Example: According to the decision approving the reserves, Mine D has an average actual tin (Sn) metal content in the mine Cm = 0.41%, while the resource tax calculation price table issued by Province NA is based on a tin (Sn) metal ore content of 70%. At that time, the conversion factor K is determined as: K = 0.41% (Cm) : 70% (C) = 0.006 (rounded)._{t s}3. In the case where the resource tax calculation price issued by the Provincial People's Committee is based on concentrate metal content, the conversion factor K is determined by dividing the average actual metal content in the mine (Cm) by the average metal content in the concentrate (C), specifically as follows:_maxExample: Copper ore from Mine E has an average metal content in the mine Cm = 1.2% Cu, while the resource tax calculation price table issued by Province YB is based on copper concentrate (Cu) with an average content C = 25.6%. At that time, the conversion factor K is determined as: K = 1.2% (Cm) : 25.6% (C) = 0.047 (rounded)._qđ 4. In the case where the resource tax calculation price issued by the Provincial People's Committee applies to multiple metals, concentrates, or valuable components, the formula for determining the conversion factor Kqd is determined similarly for each metal or valuable component as stipulated in Clauses 1, 2, and 3 of this Article._{t s}Example: The tungsten-polymetallic mine permitted to extract Wolfram, Fluorspar, Copper, and Bismuth, the resource tax calculation price table has prices based on concentrates for Wolfram, Fluorspar, and Copper, and prices based on metals for Bismuth. At that time, the conversion factor Kqd for each valuable component is determined as follows:_maxValuable Component

K_qđ TTĐ_{t s} Average Content in the Mine (Cm)

Concentrate Content in the Resource Tax Calculation Price TableExample: According to the decision approving the reserves, Mine B has an average actual metal sulfide ore content (Pb + Zn) Cm = 26%; meanwhile, in the resource tax calculation price table issued by Province TN, the highest metal sulfide ore content (Pb + Zn) Cmax is 25% (Item 5 Table 1 mentioned above). At that time, the conversion factor K is determined as: K = 26% (Cm) : 25% (Cmax).Tungsten (WO3)_{t s} Fluorspar (CaF2)Example: According to the decision approving the reserves, Mine B has an average actual metal sulfide ore content (Pb + Zn) Cm = 26%; meanwhile, in the resource tax calculation price table issued by Province TN, the highest metal sulfide ore content (Pb + Zn) Cmax is 25% (Item 5 Table 1 mentioned above). At that time, the conversion factor K is determined as: K = 26% (Cm) : 25% (Cmax).Copper (Cu)_qđ Bismuth (Bi)_qđ = 26% (C_{t s}) : 25% (C_max) = 1,040

c) In case the actual average metal content in the mine according to the decision approving reserves (C_{t s}) is less than the minimum metal ore content (C_{Maximum Downhill Gradient}) specified in the resource tax pricing table, the conversion factor Kqđ is determined by dividing the actual average metal content (C_{t s}) by the minimum metal ore content (C_{Maximum Downhill Gradient}Valuable Component

K_qđ TTĐ_{t s} : C_{Maximum Downhill Gradient}

Example: According to the decision approving reserves, mine X has an average actual sulfide lead-zinc metal content (CExample: According to the decision approving the reserves, Mine B has an average actual metal sulfide ore content (Pb + Zn) Cm = 26%; meanwhile, in the resource tax calculation price table issued by Province TN, the highest metal sulfide ore content (Pb + Zn) Cmax is 25% (Item 5 Table 1 mentioned above). At that time, the conversion factor K is determined as: K = 26% (Cm) : 25% (Cmax).) of 8%, while the minimum sulfide lead-zinc ore content (C_{t s} ) in the resource tax pricing table issued by province TN is 10% (Item 1 Table 1 mentioned above). At that time, the conversion factor Kqđ is determined as follows:Example: According to the decision approving the reserves, Mine B has an average actual metal sulfide ore content (Pb + Zn) Cm = 26%; meanwhile, in the resource tax calculation price table issued by Province TN, the highest metal sulfide ore content (Pb + Zn) Cmax is 25% (Item 5 Table 1 mentioned above). At that time, the conversion factor K is determined as: K = 26% (Cm) : 25% (Cmax).= 8% (C

K_qđ ) : 10% (C_{t s}2. In cases where the resource tax pricing table issued by the provincial People's Committee only specifies a single price for a specific metal ore content (C), the conversion factor K_{Maximum Downhill Gradient}) = 0,800

is determined by dividing the actual average metal content (C_qđ ) by the metal ore content (C), specifically according to the formula:_{t s}Example: According to the decision approving reserves, mine D has an average actual tin (Sn) metal content in the mine of C

K_qđ TTĐ_{t s} : C

= 0.41%, while the resource tax pricing table issued by province NA is based on a 70% tin (Sn) ore content. At that time, the conversion factor K_{t s} is determined as follows:_qđ = 0.41% (C

K_qđ ) : 70% (C) = 0.006 (rounded)_{t s}3. In cases where the resource tax pricing table issued by the provincial People's Committee is based on concentrate metal content, the conversion factor K

) divided by (:) the average metal content in the concentrate (C_qđ ) by the metal ore content (C), specifically according to the formula:_{t s}Example: The copper ore from mine E has an average content in the mine of C_tqValuable Component

K_qđ TTĐ_{t s} : C_tq

= 1.2% Cu, while the resource tax pricing table issued by province YB is based on a 25.6% copper (Cu) concentrate content. At that time, the conversion factor K_{t s} = 1.2% (Cm) : 25.6% (C_tq ) = 0.047 (rounded)_qđ = 0.41% (C

K_qđ 4. In cases where the resource tax pricing table issued by the provincial People's Committee applies to multiple metals, concentrates, or valuable components, the formula for determining the conversion factor Kqđ is similarly applied to each metal or valuable component as stipulated in Clause 1, Clause 2, and Clause 3 of this Article._tqExample: A tungsten-polymetallic mine is permitted to extract Tungsten, Fluorspar, Copper, and Bismuth, with the resource tax pricing table specifying prices based on concentrates for Tungsten, Fluorspar, and Copper, and prices based on metals for Bismuth. At that time, the conversion factor Kqđ for each valuable component is determined according to Table 2 below:

Valuable Component

Average Content in Mine (C

Table 2

Article 7. Determining the conversion factor K_qđ for non-metallic mineral groups

1. Formula for determining the conversion factor K_qđ In cases where the resource tax calculation price issued by the Provincial People's Committee is the raw material price but with a unit of measurement (primary unit) that does not match the unit of storage volume:

a) The resource tax calculation price is the raw material price with the unit being dong/m³ (m³ after extraction), while the permitted storage volume unit is m³ (m³ underground), the conversion factor Kqđ is determined according to the following formula:

K_qđ = H_{For power plants invested under the Build-Operate-Transfer (BOT) model, n is determined according to the operational period of the power plant stipulated in the BOT contract.}

Example: For ordinary construction stone, which is solid rock that must be blasted (blasted rock), when referring to Appendix C - Table C1 - Volume Conversion Factor from Natural Soil to Loose Soil in National Standard TCVN 4447:2012, the factor H_{For power plants invested under the Build-Operate-Transfer (BOT) model, n is determined according to the operational period of the power plant stipulated in the BOT contract.} has an average value of 1.475. At this time, the conversion factor K_qđ = 0.41% (C

K_qđ = H_{For power plants invested under the Build-Operate-Transfer (BOT) model, n is determined according to the operational period of the power plant stipulated in the BOT contract.} =1,475

b) The resource tax calculation price is the raw material price with the unit being dong/m³ (m³ after extraction), while the permitted storage volume unit is ton (ton underground), the conversion factor Kqđ is determined according to the following formula:

K_qđ = H_{For power plants invested under the Build-Operate-Transfer (BOT) model, n is determined according to the operational period of the power plant stipulated in the BOT contract.} : D

Example: According to the approved mineral exploration report, the natural density of limestone is D = 2.68, while the loose expansion coefficient for limestone (blasted rock) is H_{For power plants invested under the Build-Operate-Transfer (BOT) model, n is determined according to the operational period of the power plant stipulated in the BOT contract.} = 1.475. At this time, the conversion factor K_qđ = 0.41% (C

K_qđ = H_{For power plants invested under the Build-Operate-Transfer (BOT) model, n is determined according to the operational period of the power plant stipulated in the BOT contract.} : D = 1.475 : 2.68 = 0.550 (rounded)

2. Formula for determining the conversion factor K_qđ for cases where the resource tax calculation price issued by the Provincial People's Committee for metallic minerals based on useful components is a percentage, it is determined similarly to the provisions in Clause 2, Article 6 of this Circular.

Example: A kaolin-pyrophillite deposit has an actual average aluminum oxide content C₂O₃ according to the approved reserve decision is C_{t s} = 20.16%, while the province QN's resource tax calculation price table for kaolin-pyrophillite with aluminum oxide content less than 25% (C). At this time, the conversion factor K₂O₃is determined as: _qđ = 20.16% (C

K_qđ ) : 25% (C) = 0.806 (rounded)_{t s}3. The loose expansion coefficient H

in the formulas for determining Kqđ specified in points a and b of Clause 1 of this Article is determined in the approved mineral exploration report by the competent state agency; in cases where there is no loose expansion coefficient for the mining area permitted for exploitation, it shall be applied according to National Standard TCVN 4447:2012 published by the Ministry of Science and Technology at Appendix C - Table C1 - Volume Conversion Factor from Natural Soil to Loose Soil._{For power plants invested under the Build-Operate-Transfer (BOT) model, n is determined according to the operational period of the power plant stipulated in the BOT contract.} 1. This Circular takes effect from November 30, 2017.

Article 8. Effectiveness and Implementation

2. Mining permits issued by competent state agencies from the date the Government Decree No. 158/2016/NĐ-CP took effect until the date this Circular takes effect shall have the determination of the calculation price for the right to exploit minerals carried out in accordance with the provisions of this Circular.

3. The Vietnam Geological and Mineral Resources General Department is responsible for guiding, urging, and inspecting the implementation of this Circular.

4. Ministries, ministerial-level agencies, government agencies, provincial people's committees, and related organizations and individuals are responsible for implementing this Circular.

During the implementation of this Circular, if difficulties or obstacles arise, it is requested that relevant agencies, organizations, and individuals promptly reflect them to the Ministry of Natural Resources and Environment for study, amendment, and supplementation as appropriate./.

During the implementation of this Circular, if any difficulties or obstacles arise, it is recommended that agencies, organizations, and individuals promptly reflect them to the Ministry of Natural Resources and Environment for study, amendment, and supplementation to ensure appropriateness./.