Circular No. 69/2010/TT-BTC guiding the implementation of Decision No. 1942/QĐ-TTg dated November 25, 2009 of the Prime Minister on the collection of regulated revenue for domestic consumption of oil refining and petrochemical products of Binh Son Joint Stock Company under State Capital Ownership with One Member.

CIRCULAR

Guidelines for implementing Decision No. 1942/QD-TTg dated November 25, 2009 of the Prime Minister on the collection of adjustment fees for domestic consumption of petroleum products and petrochemicals produced by PetroVietnam Thanhhoa Refining and Petrochemical Corporation (PV OIL)

Pursuant to 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;

Pursuant to Decision No. 1942/QD-TTg dated November 25, 2009 of the Prime Minister on the collection of adjustment fees for domestic consumption of petroleum products and petrochemicals produced by PetroVietnam Thanhhoa Refining and Petrochemical Corporation (PV OIL);

The Ministry of Finance hereby provides guidelines for implementing Decision No. 1942/QD-TTg as follows:

Article 1. Objects of Collection and Tax Payers

1. The objects of collection are all petroleum products (gasoline, diesel, LPG) and petrochemical products produced and processed by PetroVietnam Thanhhoa Refining and Petrochemical Corporation (PV OIL) when consumed domestically.

2. PV OIL is responsible for declaring and paying the adjustment fee into the state budget when selling petroleum products and petrochemical products domestically.

Article 2. Non-Adjustment Fee Collection Objects

1. Petroleum products and petrochemicals directly exported or entrusted for export by PV OIL.

2. Petroleum products and petrochemicals sold by PV OIL to oil distribution companies for export.

3. Documents serving as basis for determining non-collection of regulated revenue in cases provided for in Clause 1, Clause 2 of this Article include:

- Approval from the competent authority (Ministry of Industry and Trade) for the export of petroleum products and petrochemicals.

- Export contracts; export agency contracts for entrusted exports; export contracts signed by oil distribution companies with foreign companies (for exports through oil distribution companies).

- Payment documents for exported goods through banks and other documents as required by law.

- Customs declaration forms for exported goods.

In cases where exports are made through oil distribution companies, quarterly, oil distribution companies are responsible for sending copies of the documents mentioned in points 1, 2, 3, and 4 of this clause to PV OIL for monitoring and management when declaring provisional payment of the adjustment fee.

Article 3. Basis for Collection

The basis for calculating the adjustment fee for petroleum products and petrochemicals consumed by PV OIL is the actual quarterly production volume of petroleum products and petrochemicals consumed, the price for calculating the adjustment fee, and the adjustment fee rate.

1. The actual quarterly consumption volume is the total actual consumption volume in the quarter.

2. The price for calculating the adjustment fee for petroleum products and petrochemicals sold is determined based on the actual selling price at the time of consumption by PV OIL, excluding value-added tax, special consumption tax, import tax, and other fees payable to the state budget (if applicable).

Example 1: Determining the price for calculating the adjustment fee for petroleum products:

In the first quarter of 2010, PV OIL signed a contract to sell gasoline A-95 to Company A in Hai Phong. According to the Contract, the goods were delivered by sea under the FOB terms at the product discharge port of the Dung Quat Refinery in the Dung Quat Economic Zone, Binh Son District, Quang Ngai Province. The monthly supply volume was 20,000 tons/month. The monthly selling price of gasoline (P) was 16,146,430 VND/ton, including special consumption tax (assuming a special consumption tax rate of 10%) and value-added tax (assuming a VAT rate of 10%) as stipulated at the loading port.

At that time, the selling price of gasoline without special consumption tax was

16,146,430 VND/ton ÷ 1.1 = 14,678,573 VND/ton

The selling price of gasoline without VAT and special consumption tax was

14,678,573 VND/ton ÷ 1.1 = 13,344,157 VND/ton

Assuming the import tax rate for gasoline A95 at the time of sale was 25%.

The price for calculating the adjustment fee was determined as follows:

13,344,157 VND/ton ÷ 1.25 = 10,675,326 VND/ton

Example 2: Determining the price for calculating the adjustment fee for LPG:

In the first quarter of 2010, PV OIL signed a contract to sell liquid LPG to Company B in Hai Phong. According to the Contract, the monthly supply volume was 20,000 tons/month, and the monthly selling price of liquid LPG was 11,815,395 VND/ton, including value-added tax (assuming a VAT rate of 10%) as stipulated at the loading port, LPG is not subject to special consumption tax.

At that time, the selling price of LPG without VAT was:

11,815,395 VND/ton ÷ 1.1 = 10,741,268 VND/ton

Assuming the import tax rate for LPG at the time of sale was 5%. Therefore, the price for calculating the adjustment fee for LPG in the first quarter of 2010 was:

10,741,268 VND/ton ÷ 1.05 = 10,229,779 VND/ton

Example 3: Determining the price for calculating the adjustment fee for petrochemical products:

In the first quarter of 2010, PV OIL signed a contract to sell liquid propylene to Company C in Hai Phong. According to the Contract, the monthly supply volume was 20,000 tons/month, and the monthly price of one ton of liquid propylene was 21,204,700 VND/ton (including VAT at a rate of 10% as stipulated at the loading port), propylene is not subject to special consumption tax.

At that time, the selling price of this product without VAT was:

21,204,700 VND/ton ÷ 1.1 = 19,277,000 VND/ton

Assuming the import tax rate for liquid propylene at the time of sale was 5%. Therefore, the price for calculating the adjustment fee for liquid propylene was:

19,277,000 VND/ton ÷ 1.05 = 18,359,048 VND/ton

3. The adjustment fee rate is the difference between the import tax rate applied to petroleum products and petrochemicals as specified in the current preferential import tariff schedule at the time of consumption minus the minimum import tax rate of 7% for gasoline and diesel, 5% for LPG, and 3% for petrochemical products.

Example 4: Method for determining the adjustment fee rate for petroleum products:

Based on the data in Example 1 above, the adjustment fee rate for gasoline A-95 is 18% (equal to 25% minus 7%).

4. In case the import tax rate at the time of consumption of oil refining products and petrochemical products is equal to or lower than the minimum import tax rate prescribed for oil refining products and petrochemical products under Clause 3 of this Article, then the adjustment levy shall not be collected and the enterprise shall not be compensated for losses (if any).

Example 5: With the data provided in Example 2, in this case, the adjustment levy ratio for LPG when sold is 0%.

5. The amount of the adjustment levy on oil refining products and petrochemical products for each quarter is determined by multiplying the actual quarterly consumption volume with (x) the adjusted levy calculation price multiplied by (x) the adjustment levy ratio.

Example 6: Regarding the method of determining the revenue from selling gasoline A-95 in the first quarter of 2010.

With the data provided in Examples 1 and 4 above, the adjustment levy for the contract to sell gasoline A-95 by Company A in Hai Phong in the first quarter of 2010 would be determined as follows:

The adjustment levy generated in the first quarter is calculated as (=) 3 months x 20,000 tons/month x 10,675,326 VND/ton x 18% = 115,293,520,800 VND/ton

Article 4. Currency for Payment of Revenue

The currency for payment of the adjustment levy is the Vietnamese Dong. In cases where the revenue is in foreign currency, it must be converted into Vietnamese Dong according to the average exchange rate on the inter-bank foreign exchange market published by the State Bank of Vietnam that is effective at the time of deposit into the National Treasury.

Article 5. Accounting and Budget Adjustment

1. When paying the adjustment levy on oil refining products and petrochemical products as stipulated in this Circular, Binh Son Corporation shall record it under Chapter 121, type 310, sub-item 345, item 4900, sub-item 4908.

2. The adjustment levy on oil refining products and petrochemical products as stipulated in this Circular is a revenue belonging to the state budget, which is fully allocated to the central budget.

3. The adjustment levy payable to the state budget upon consumption of oil refining products and petrochemical products produced and processed for sale by Binh Son Corporation shall be recorded as deductible expenses when determining corporate income tax for the tax period. Specific accounting transactions of Binh Son Corporation shall be carried out as follows:

+ When determining the amount payable to the state budget for the collection adjustment, record:

Debit account 632 - Cost of Goods Sold

Credit account 3339 - Fees, Taxes, and Other Payments Due

+ When paying money into the state budget, record:

Debit account 3339 - Fees, Taxes, and Other Payments Due

Credit account 112 - Bank Deposits

Article 6. Declaration, Collection, and Settlement of Revenue

1. Quarterly, Binh Son Corporation has the obligation to declare and pay the adjustment levy to the state budget as prescribed.

2. The deadline for declaring and paying the quarterly adjustment levy to the state budget is no later than the thirtieth day of the following quarter. Annually, the entity required to pay the adjustment levy as stipulated in Article 1 of this Circular has the obligation to settle the declaration and payment of revenue with the tax authority according to the provisional quarterly adjustment levy declaration forms and the annual adjustment levy settlement declaration form, model numbers 01A, 01B, 02A, and 02B issued together with this Circular.

3. In cases where products have been sold (at prices without the adjustment levy) for export but have not yet been exported in the quarter, the main company has the responsibility to notify Binh Son Corporation along with a confirmation from the competent state agency (Ministry of Industry and Trade) regarding the quantity of goods not yet exported so that Binh Son Corporation can declare and pay the additional adjustment levy corresponding to that quantity. The main company has the responsibility to settle with Binh Son Corporation the adjustment levy that Binh Son Corporation has declared and paid additionally for the goods that the main company has not yet exported.

Article 7. Organization of Implementation and Effectiveness

1. This Circular takes effect for batches of products consumed by Binh Son Corporation from the date of commencement of operations (the date of formal handover of the Dung Quat oil refinery to Binh Son Corporation) until the end of 2010 as prescribed in Clause 1, Article 6 of Decision No. 1942/QĐ-TTg.

2. During implementation, if there are difficulties, Binh Son Corporation and related units are requested to report to the Ministry of Finance for timely guidance and resolution.