Are households drilling wells for daily-life needs required to pay severance tax in Vietnam?

Are households drilling wells for daily-life needs required to pay severance tax in Vietnam?

Based on Article 9 of the 2009 Law on severance tax (amended by Clause 2, Article 4 of the 2014 Law on Amendments to Tax Laws), the subjects exempt from severance tax are regulated as follows:

[1] Taxpayers who suffer losses to declared and paid resources due to natural disasters, fires, or unexpected accidents are considered for tax exemption or reduction for the lost resources; if the tax has been paid, it will be refunded or deducted from the severance tax payable for the next period.

[2] Exemption from tax for natural seafood.

[3] Exemption from tax for branches, tops, firewood, bamboo, rattan, reeds, thorns, giang, thatch, vầu, lồ ô extracted by individuals for domestic use.

[4] Exemption from tax for natural water used to generate hydropower by households or individuals for domestic use.

[5] Exemption from tax for natural water extracted by households or individuals for domestic use.

[6] Exemption from tax for soil extracted and used on-site in the allotted area; soil extracted for leveling and building security, military, and dyke works.

[7] Other cases of tax exemption or reduction as regulated by the Standing Committee of the National Assembly.

Additionally, the subjects exempt from severance tax are further guided by Clause 1, Article 10 of Circular 152/2015/TT-BTC, which states:

severance tax Exemption

The cases eligible for severance tax exemption as specified in Article 9 of the Law on severance tax and Article 6 of Decree No. 50/2010/ND-CP, include:

1. severance tax exemption for organizations and individuals exploiting natural seafood.

2. severance tax exemption for organizations and individuals exploiting branches, tops, firewood, bamboo, rattan, reeds, thorns, giang, thatch, vầu, lồ ô extracted by individuals for domestic use.

3. severance tax exemption for organizations and individuals exploiting natural water used for hydropower generation to serve the domestic use of households and individuals.

4. severance tax exemption for natural water extracted by households or individuals for domestic use.

5. severance tax exemption for soil extracted and used on-site in the allotted area; soil extracted for leveling and building security, military, and dyke works.

Soil extracted and used on-site exempted from tax in this point includes sand, stones, and gravel mixed in the soil but not specifically identified and used in raw form for leveling and building works; If transported elsewhere for use or sale, severance tax must be paid as regulated.

6. Other cases of severance tax exemption, where the Ministry of Finance, in cooperation with relevant Ministries and sectors, reports to the Government of Vietnam for submission to the Standing Committee of the National Assembly for consideration and decision.

Thus, drilling a well for daily-life needs for domestic purposes will be exempt from severance tax.

Are households drilling wells for daily-life needs required to pay severance tax in Vietnam? (Image from the Internet)

What are conditions for tax reduction due to loss in Vietnam?

Based on Article 11 of Circular 152/2015/TT-BTC stipulating the reduction of severance tax:

Cases eligible for severance tax exemption as specified in Article 9 of the 2009 Law on severance tax and Article 6 of Decree 50/2010/ND-CP, include:

- Taxpayers who suffer losses to declared and paid resources due to natural disasters, fires, or unexpected accidents are considered for tax exemption or reduction for the lost resources; if the tax has been paid, it will be refunded or deducted from the severance tax payable for the next period.

- Other cases for severance tax reduction, where the Ministry of Finance, in cooperation with relevant Ministries and sectors, reports to the Government of Vietnam for submission to the Standing Committee of the National Assembly for consideration and decision.

If the tax has been paid, it will be refunded or deducted from the severance tax payable for the next period.

*Procedures for tax exemption and reduction are implemented in accordance with Article 12 of Circular 152/2015/TT-BTC as follows:

Procedures, authority for tax exemption and reduction comply with the Law on Tax Administration, Law on Amendments and Supplements to certain articles of the Law on Tax Administration, and guiding documents.

How to calculate taxable prices of natural resources in Vietnam?

Based on Point a, Clause 4, Article 6 of Circular 152/2015/TT-BTC as amended by Article 1 of Circular 174/2016/TT-BTC, taxable prices of natural resources will be calculated in four specific cases as follows:

[1] The taxable value of natural water used for hydropower generation is the average commercial electricity selling price.

The average commercial electricity selling price for severance tax calculation for hydropower production facilities is determined based on the average retail electricity price decided by the Ministry of Industry and Trade.

[2] For timber, it is the price at the delivery yard (warehouse, yard at the extraction site); if the delivery yard price is not determined, the taxable price is based on the price set by the provincial People's Committee according to the guidance in Clause 6 of this Article.

[3] For natural mineral water, natural hot water, natural purified bottled and canned water, natural water used for production and business without a selling price, the taxable price is set by the provincial People's Committee according to the principles guided in Clause 5, Article 6 of Circular 152/2015/TT-BTC.

[4] Organizations and individuals extracting resources without fully complying with accounting policies and documentation regulations are subject to tax assessment by the tax authority according to tax management laws.

In this case, the taxable resource output is determined based on inspection results, and the taxable resource price is the price in the Price List set by the provincial People's Committee applicable for each period.