How to declare and pay severance tax in Vietnam?

How to declare and pay severance tax in Vietnam?

According to Article 8 of the 2009 Law on severance tax (as guided by Article 8 and Article 9 of Circular 152/2015/TT-BTC), severance tax declaration and payment are as follows:

(1) Tax registration, tax declaration, tax payment, and tax finalization are performed as follows:

- Taxpayer registration, tax declaration, tax payment, and tax finalization shall be carried out in accordance with the provisions of the 2019 Tax Administration Law, the guiding documents for the Tax Administration Law, and any amendments and supplements (if any).

- Specifically, for tax declaration, tax payment, and tax finalization concerning mineral extraction activities, the provisions in (2) below shall also be followed.

(2) Tax declaration and tax finalization for mineral extraction activities:

- Organizations and business households extracting resources are responsible for notifying the tax authorities of the method of determining the taxable price for each type of extracted resource, accompanied by the severance tax declaration for the first month of extraction. In the event of a change in the method of determining the taxable price, it must be re-notified to the competent tax authority in the month of the change.

- Monthly, taxpayers must declare taxes for the entire volume of extracted resources in the month (regardless of whether it is in stock or in the process of being processed).

- When finalizing taxes, taxpayers must prepare a detailed list accompanying the annual tax finalization declaration detailing the extraction volume of the year corresponding to the granted license for each mine. The severance tax is determined based on the tax rate of the extracted resource type corresponding to the volume and taxable price as follows:

+ The taxable volume of resources is the total volume of extracted resources in the year, regardless of whether it is in stock, in the process of being processed, or in transit.
+ In cases where the sale volume includes both resource products and industrial products, the resource volume in the resource products and industrial products must be converted into the extracted resource volume based on the resource usage norm determined by the taxpayer.
+ The taxable price is the average selling price per unit of resource product determined by dividing the total revenue from resource sales by the total corresponding sales volume of resources in the year.

How to declare and pay severance tax in Vietnam? (Image from the Internet)

Which entities are severance taxpayers in Vietnam?

Based on Article 3 of the 2009 Law on severance tax, amended by Clause 2, Article 67 of the 2022 Petroleum Law, the following stipulations apply:

Taxpayers

1. severance taxpayers include organizations and individuals engaged in resource extraction that are subject to severance tax, except for cases of extracting resources for mine, cluster of mines, or petroleum lot extraction as stated by petroleum law.

2. severance taxpayers in some specific cases are as follows:

a) For a resource-extracting enterprise established as a joint venture, the joint venture enterprise is the taxpayer;

b) For Vietnamese and foreign parties in a business cooperation contract for resource extraction, the tax-paying responsibilities of the parties must be specified in the business cooperation contract;

c) For small-scale resources extracted by individuals or organizations and sold to a purchasing focal point, the purchasing focal point can commit in writing to declare and pay tax on behalf of the small-scale extractors. In this case, the purchasing focal point is considered the taxpayer.

Hence, severance taxpayers are organizations and individuals involved in resource extraction subject to severance tax, except for the extraction of resources for mine, cluster of mines, or petroleum lot extraction as specified by petroleum law.

What are regulations on natural resource output used for severance tax calculation in Vietnam?

According to Article 5 of the 2009 Law on severance tax, the natural resource output used for severance tax calculation is as follows:

- For extracted resources that can be quantified by quantity, weight, or volume, the taxable volume is the actual quantity, weight, or volume of the resources extracted within the tax period.

- For resources that cannot be quantified immediately due to containing various substances and impurities, the taxable volume is the quantity, weight, or volume of each substance after sifting and classification.

- For resources used for other production without immediate quantification, the taxable volume is based on the production volume in the tax period and the resource usage norm per unit of production.

- For natural water used in hydropower production, the taxable volume is the electricity output sold to buyers or delivered according to the contract, determined by a measurement system that meets Vietnam's quality standards, confirmed by both the buyer and the seller or the deliverer and the receiver.

- For natural mineral water, hot natural water, or natural water used for industrial purposes, the taxable volume is measured in cubic meters (m³) or liters (l) by a system meeting Vietnam's quality standards.

- For manually extracted, dispersed, or mobile and irregular resource extractions estimating annual extraction volume value below 200,000,000 VND, tax calculation is based on contracted volume for seasonal or periodic extraction. The tax authority cooperates with relevant local agencies to determine the contracted volume for tax calculation.