Is bottled natural water subject to severance tax in Vietnam?
Is bottled natural water subject to severance tax in Vietnam?
Based on Article 2 of the 2009 Law on severance tax(amended by Clause 1 of Article 4 of the 2014 Amendment Law on Various Tax Laws), the subjects to tax are specified as follows:
- Metallic minerals.
- Non-metallic minerals.
- Crude oil.
- Natural gas, coal gas.
- Products from natural forests, excluding animals.
- Natural marine products, including both marine animals and plants.
- Natural water, including surface water and underground water, excluding natural water used for agriculture, forestry, fishery, and salt industry.
- Natural bird nests.
- Other resources specified by the Standing Committee of the National Assembly.
Thus, based on these provisions, natural water, including bottled natural water, is subject to severance tax.
Is bottled natural water subject to severance tax in Vietnam? (Image from Internet)
For Vietnamese and foreign parties to a business cooperation contract to exploit natural resources, which party shall pay severance tax?
According to Article 3 of the 2009 severance tax Law, the taxpayers are specified as follows:
- Severance tax taxpayers are organizations and individuals that exploit resources subject to severance tax.
- In certain specified cases, severance tax taxpayers are:
+ In a joint venture, the joint venture company is the taxpayer.
+ In a business cooperation contract (BCC) between Vietnam and a foreign party for resource extraction, the tax obligation of each party must be clearly defined in the BCC.
+ If small-scale resource exploiters sell to intermediaries who agree in writing to declare and pay the tax on behalf of the exploiters, then the intermediaries are the taxpayers.
Thus, based on the above provisions, in a BCC between Vietnam and a foreign party for exploiting bottled natural water, the party responsible for paying the tax will be determined according to the contract terms. Therefore, the agreement must be specified in the contract.
What is the severance tax rate for bottled natural water in Vietnam?
According to Article 7 of the 2009 severance tax Law, the tax rates are specified as follows:
- The framework of severance tax rates is provided as follows:
| Group | Name | (%) |
| I | Metallic minerals | |
| 1 | Iron, manganese | 7 - 20 |
| 2 | Titanium | 7 - 20 |
| 3 | Gold | 9 - 25 |
| 4 | Rare earth elements | 12 - 25 |
| 5 | Platinum, silver, tin | 7 - 25 |
| 6 | Wolfram, antimony | 7 - 25 |
| 7 | Lead, zinc, aluminum, bauxite, copper, nickel | 7 - 25 |
| 8 | Cobalt, molybdenum, mercury, magnesium, vanadium | 7 - 25 |
| 9 | Other metallic minerals | 5 - 25 |
| II | Non-metallic minerals | |
| 1 | Soil for leveling, constructing | 3 - 10 |
| 2 | Stone, excluding limestone and cement production; gravel; sand, excluding glass sand | 5 - 15 |
| 3 | Clay for bricks | 5 - 15 |
| 4 | Granite, fire clay | 7 - 20 |
| 5 | Dolomite, quartzite | 7 - 20 |
| 6 | Kaolin, mica, technical quartz, glass sand | 7 - 15 |
| 7 | Pyrite, phosphorite, limestone for burning lime and cement production | 5 - 15 |
| 8 | Apatite, serpetine | 3 - 10 |
| 9 | Underground anthracite | 4 - 20 |
| 10 | Open-pit anthracite | 6 - 20 |
| 11 | Brown coal, fat coal | 6 - 20 |
| 12 | Other coal | 4 - 20 |
| 13 | Diamonds, ruby, sapphire | 16 - 30 |
| 14 | Emerald, alexandrite, black opal | 16 - 30 |
| 15 | Addit, rhodolite, pyrope, beryllium, spinel, topaz | 12 - 25 |
| 16 | Amethyst, blue-green, yellow-orange crystal quartz; cryolite; white opal, fire opal; feldspar; turquoise; nephrite | 12 - 25 |
| 17 | Other non-metallic minerals | 4 - 25 |
| III | Crude oil | 6 - 40 |
| IV | Natural gas, coal gas | 1 - 30 |
| V | Products of natural forests | |
| 1 | Group I wood | 25 - 35 |
| 2 | Group II wood | 20 - 30 |
| 3 | Group III, IV wood | 15 - 20 |
| 4 | Group V, VI, VII, VIII wood and other types of wood | 10 - 15 |
| 5 | Branches, tops, roots | 10 - 20 |
| 6 | Firewood | 1 - 5 |
| 7 | Bamboo, reed, rattan, cane, vầu | 10 - 15 |
| 8 | Agarwood, ky nam | 25 - 30 |
| 9 | Star anise, cinnamon, cardamom, cardamom fruit | 10 - 15 |
| 10 | Other natural forest products | 5 - 15 |
| VI | Natural marine products | |
| 1 | Pearls, abalone, sea cucumbers | 6 - 10 |
| 2 | Other natural marine products | 1 - 5 |
| VII | Natural water | |
| 1 | Natural mineral water, natural hot water, filtered bottled natural water | 8 - 10 |
| 2 | Natural water for hydropower production | 2 - 5 |
| 3 | Natural water for other production and business purposes, excluding the types listed in points 1 and 2 of this group | |
| 3.1 | Surface water | 1 - 3 |
| 3.2 | Underground water | 3 - 8 |
| VIII | Natural birds' nests | 10 - 20 |
| IX | Other resources | 1 - 20 |
- The specific tax rate for crude oil, natural gas, and coal gas is determined progressively based on the average daily production.
- Based on the provisions of Clauses 1 and 2 of this Article, the Standing Committee of the National Assembly stipulates specific tax rates for each type of resource at different times, ensuring the following principles:
+ In line with the resource group and type within the tax rate framework prescribed by the National Assembly;
+ Contributing to the state management of resources; protecting, exploiting, efficiently, and economically using resources;
+ Ensuring state budget revenues and stabilizing the market.
Thus, for natural mineral water, natural hot water, filtered bottled natural water, the tax rate will be 8-10%.
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