How to determine the severance tax-liable price in Vietnam when the selling price has not been determined?

How to determine the severance tax-liable price in Vietnam when the selling price has not been determined?

Based on Article 6 of the Law on severance tax 2009, the regulations are as follows:

Taxable Price

1. The severance tax-liable price is the unit selling price of the natural resource product of the organization or individual exploiting without including value-added tax.

2. In cases where the natural resources' selling price has not been determined, the severance tax-liable price is determined based on one of the following grounds:

a) The actual selling price on the local market of similar unit natural resource products but not lower than the taxable price regulated by the People's Committee of the province or centrally-run city (hereinafter referred to as the provincial People's Committee);

b) In cases where the exploited natural resources contain various substances, the taxable price is determined according to the unit selling price of each substance and the content of each substance in the exploited natural resource but not lower than the taxable price regulated by the provincial People's Committee.

3. The severance tax-liable price in some specific cases is regulated as follows:

a) For natural water used for hydropower production, it is the average commercial electricity selling price;

b) For timber, it is the selling price at the delivery point; if the selling price at the delivery point has not been determined, the taxable price is determined based on the taxable price regulated by the provincial People's Committee;

c) For exploited natural resources not consumed domestically but exported, it is the export price;

d) For crude oil, natural gas, coal gas, it is the selling price at the delivery point. The delivery point is the point agreed in the petroleum contract where crude oil, natural gas, coal gas are transferred ownership to the participants of the petroleum contract.

4. The provincial People's Committee specifically regulates the taxable price for natural resources whose unit product selling price has not been determined, except for crude oil, natural gas, coal gas, and natural water used for hydropower production.

The Government of Vietnam details this Article.

The severance tax-liable price is determined when the selling price of the resource has not been determined based on one of the following two grounds:

- The actual selling price on the local market of similar unit natural resource products but not lower than the taxable price regulated by the provincial People's Committee;

- In cases where the exploited natural resources contain various substances, the taxable price is determined according to the unit selling price of each substance and the content of each substance in the exploited natural resource but not lower than the taxable price regulated by the provincial People's Committee.

In specific cases such as for timber, it is the selling price at the delivery point; if the selling price at the delivery point has not been determined, the taxable price is determined based on the taxable price regulated by the provincial People's Committee.

How to determine the severance tax-liable price in Vietnam when the selling price has not been determined? (Image from Internet)

Who is subject to severance tax in Vietnam?

Based on Article 2 of the Law on severance tax 2009 (amended by Clause 1 of Article 4 of the Law on Amending Tax Laws 2014), the following subjects are subject to severance tax:

- Metallic minerals.

- Non-metallic minerals.

- Crude oil.

- Natural gas, coal gas.

- Products from natural forests, excluding animals.

- Natural aquatic products, including marine animals and plants.

- Natural water, including surface water and groundwater, excluding natural water used for agriculture, forestry, fishery, and salt production.

- Natural bird’s nests.

- Other resources as regulated by the National Assembly Standing Committee.

Who is the severance tax payers in Vietnam?

Based on Article 3 of the Law on severance tax 2009 (amended by Clause 2 of Article 67 of the Petroleum Law 2022), the regulations are as follows:

Taxpayers

1. Severance taxpayers are organizations and individuals exploiting natural resources subject to severance tax, except for cases of exploiting resources for mines, mine groups, and petroleum blocks for recovery purposes as regulated by the petroleum law.

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

a) For enterprises exploiting resources established based on joint ventures, the joint venture enterprise is the taxpayer;

b) For Vietnamese parties and foreign parties participating in business cooperation contracts for resource exploitation, the tax responsibility of the parties must be clearly determined in the business cooperation contract;

c) For organizations and individuals exploiting small-scale resources selling to organizations and individuals acting as the procurement hubs, and if the procurement hubs agree in writing to declare and pay taxes on behalf of the exploiting organizations and individuals, the procurement hubs are the taxpayers.

Severance taxpayers are organizations and individuals exploiting natural resources subject to severance tax, except for cases of exploiting resources for mines, mine groups, and petroleum blocks for recovery purposes as regulated by the petroleum law.