How to calculate severance tax in Vietnam?

How to calculate severance tax in Vietnam?

According to Article 4 of Circular 152/2015/TT-BTC, the basis for calculating the severance tax includes the taxable resource output, the severance tax price, and the severance tax rate.

The amount of severance tax payable during the period is calculated according to the following formula:

Severance tax payable during the period = Taxable resource output x Severance tax unit price x Severance tax rate

In situations where the state agency assigns a fixed severance tax amount per unit of exploited resource, the payable severance tax is determined as follows:

severance tax payable during the period = Taxable resource output x Fixed severance tax amount per unit of exploited resource

Note: severance tax determination is based on the database of the Tax Authority and adheres to tax determination regulations as stipulated in tax management laws.

How to calculate severance tax in Vietnam? (Image from the Internet)

Which items are subjects to severance tax in Vietnam?

According to Article 2 of Circular 152/2015/TT-BTC, the entities subject to severance tax include natural resources within the territory of mainland, islands, internal waters, territorial waters, contiguous zone, exclusive economic zone, and continental shelf under the sovereignty and jurisdiction of the Socialist Republic of Vietnam, including:

- Metallic minerals.

- Non-metallic minerals.

- Products of natural forests, including various types of plants and other products of natural forests, excluding animals and anise, cinnamon, amomum, and cardamom cultivated by taxpayers in natural forest areas designated for nurturing and protection.

- Natural seafood, including marine animals and plants.

- Natural water, including surface water and groundwater; excluding natural water used for agriculture, forestry, fisheries, salt production, and seawater used for cooling machines.

Seawater used for cooling machines must meet environmental standards, efficient water circulation usage, and technical-economic conditions as confirmed by a competent state agency. If using seawater causes pollution and fails to meet environmental standards, it will be handled according to regulations.

- Natural swiftlet nests, excluding those obtained from the construction of houses for attracting and harvesting by organizations and individuals.

Swiftlet nests obtained from the construction of houses to attract and harvest natural swiftlets must comply with regulations.

- Other natural resources by the Ministry of Finance, in cooperation with relevant Ministries and sectors, report to the Government of Vietnam to submit to the Standing Committee of the National Assembly for consideration and decision.

What are cases of severance tax exemption in Vietnam?

According to Article 10 of Circular 152/2015/TT-BTC, the cases of severance tax exemption include:

- severance tax exemption for organizations and individuals exploiting natural seafood.- severance tax exemption for organizations and individuals exploiting branches, tops, firewood, bamboo, bamboo shoots, rattan, and similar plants authorized for personal use.- severance tax exemption for organizations and individuals exploiting natural water for hydropower production serving households and individual consumption.- severance tax exemption for natural water exploited by households and individuals for personal use.- severance tax exemption for land granted or leased to organizations and individuals for local use within the designated or leased areas; land exploited for leveling, constructing security, military, and dike works.

Land exploited and used locally exempted from tax at this point includes sand, stone, and gravel mixed in the land but not specified individually and used in raw form for leveling and construction; if transported elsewhere for use or sale, severance tax must be paid according to regulations.

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

What are cases of severance tax reduction in Vietnam?

According to Article 11 of Circular 152/2015/TT-BTC, the cases of severance tax reduction include:

- Taxpayers facing natural disasters, fires, or unexpected accidents causing losses to the declared and taxed resources may be considered for tax exemption or reduction for the lost resources; in case the tax has been paid, it will be refunded or credited against the severance tax of the next period.

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