Shall tax payers that encounter natural disasters be eligible for severance tax exemption and reduction in Vietnam?

Shall tax payers that encounter natural disasters be eligible for severance tax exemption and reduction in Vietnam?

Based on Clause 1, Article 9 of the Law on severance tax 2009, amended by Clause 2, Article 4 of the Law on Amendments to Tax Laws 2014, the regulations on exemption and reduction of severance tax are as follows:

Exemption and Reduction of Tax

1. Taxpayers who encounter natural disasters, fires, or unexpected accidents causing damage to the resources declared and taxed shall be considered for tax exemption or reduction for the damaged resources. If tax has been paid, the paid tax amount shall be refunded or deducted from the severance tax payable in the following period.

2. Exemption of tax for natural aquatic products.

3. Exemption of tax for branches, tops, firewood, bamboo, reeds, rattan, and similar materials exploited by individuals for personal use.

4. Exemption of tax for natural water used for hydroelectric production by households or individuals for self-consumption.

5. Exemption of tax for natural water exploited by households or individuals for personal use.

6. Exemption of tax for land exploited and used locally within the area of land allocated or leased; land exploited for the construction of security, military, and irrigation works.

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

Thus, taxpayers encountering natural disasters causing damage to declared and taxed resources shall be considered for tax exemption or reduction for the damaged resources. Specifically, if tax has already been paid, the paid amount will be refunded or deducted from the severance tax payable in the following period.

Shall tax payers that encounter natural disasters be eligible for severance tax exemption and reduction in Vietnam? (Image from the Internet)

How to determine taxable resource output in Vietnam?

According to Article 5 of the Law on severance tax 2009, taxable resource output is determined as follows:

- For resources extracted with determined quantities, weights, or volumes, the taxable resource output is the actual quantity, weight, or volume of the resources extracted during the taxable period.

- For resources extracted with indeterminate actual quantities, weights, or volumes due to various components and impurities, the taxable resource output is determined by the quantity, weight, or volume of each component obtained after sorting and classification.

- For resources extracted not for sale but for the production of other products where the quantity, weight, or volume cannot be directly determined, the taxable resource output is based on the output of products produced during the taxable period and resource usage norms per unit product.

- For natural water used for hydroelectric production, the taxable resource output is the electricity output sold by the hydroelectric facility to the electricity purchaser as per the electricity purchase agreement or the delivered electricity output if there is no purchase agreement, determined according to Vietnamese quality measurement standards verified by the purchaser, seller, or parties involved.

- For natural mineral water, natural hot water, and natural water used for industrial purposes, the taxable resource output is determined in cubic meters (m³) or liters (l) according to Vietnamese quality measurement standards.

- For resources extracted manually, scatteredly, or on a non-regular basis with an estimated annual extraction value below 200,000,000 VND, the extraction output is determined on a seasonal or periodic basis for tax calculation. Tax authorities cooperate with relevant local agencies to determine the allocated extraction output for tax calculation.

Which entities are severance taxpayers in Vietnam?

According to Article 1 of the Law on severance tax 2009, amended by Clause 2, Article 67 of the Petroleum Law 2022, the taxpayers of the severance tax are organizations and individuals exploiting resources subject to severance tax, except for exploiting resources from mines, oil blocks, or clusters under extraction according to petroleum law provisions.

Furthermore, in certain cases, the severance tax taxpayer is specifically defined as follows:

- In enterprises exploiting resources established through joint ventures, the joint venture enterprise is the taxpayer.

- For Vietnamese and foreign parties participating in a collaborative business contract for resource extraction, the tax obligations of each party must be clearly defined in the business contract.

- If small-scale individual or organizational resource extractors sell to focal collection units and the focal units agree in writing to declare and pay tax on behalf of the extractors, the focal collecting unit is the taxpayer.