What are the cases of severance tax exemption in Vietnam?

What are the cases of severance tax exemption in Vietnam?

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

- Entities extracting natural marine organisms.

- Entities extracting branches, firewood, bamboo, rattan, etc. serving everyday life.

- Entities extracting natural water for hydroelectricity generation serving everyday life of households and individuals.

- Natural water extracted by households and individuals serving their everyday life.

- Land areas given/leased out to organizations and individuals and used on the spot; earth used for leveling, construction of security, military works, dykes.

Earth extracted and used on the spot eligible for tax exemption include sand, rock, gravel in the earth without specific substances and is used as is for leveling or construction. If earth is transport elsewhere for use or for sale, severance tax must be paid as prescribed.

- The Ministry of Finance shall cooperate with relevant Ministries and agencies in proposing other cases of exemption from severance tax to the government, which will be considered and decided by Standing Committee of the National Assembly.

What are the cases of severance tax exemption in Vietnam? (Image from the Internet)

What are the cases of severance tax reduction in Vietnam?

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

- Taxpayers who suffer from a natural disaster, conflagration, or accident that inflicts damage the declared resources may be given exemption or reduction of severance tax on the amount of damaged resources. If tax has been paid, taxpayers shall receive a refund or have it offset against severance tax payable in the next period.

- The Ministry of Finance shall cooperate with relevant Ministries and agencies in proposing other cases of severance tax reduction to the government, which will be considered and decided by Standing Committee of the National Assembly.

Which entities are severance tax payers in Vietnam?

According to Article 3 of Circular 152/2015/TT-BTC, payers of severance tax (hereinafter referred to as taxpayers) are organizations and individuals (hereinafter referred to as entities) that extract natural resources subject to severance tax mentioned in Article 2 of Circular 152/2015/TT-BTC. Taxpayers in some particular cases:

- For mineral extraction, taxpayers are the organizations and business households granted the License for mineral extraction by competent authorities.

In case an organization is granted the license for mineral extraction and permitted to cooperate with other organizations and individuals extracting natural resources, and there are separate regulations on taxpayers, the taxpayers shall be identified according to such regulations.

In case an organization is granted the license for mineral extraction and then delegates its affiliates to carry out mineral extraction, each affiliate is a taxpayer.

- If a joint venture is established among resource-extracting enterprises, the joint venture is the taxpayer;

In case a Vietnamese party and a foreign party participate in the same contract for cooperation in resource extraction, the obligation to pay tax of each party must be specified in the contract. Otherwise, all parties must declare and pay severance tax or appoint a representative to pay severance tax.

- In case an entity is awarded a construction contract and extracts a certain amount of natural resources that is permitted by the authorities, or the extraction/use of such natural resources is not contrary to regulations of law on resource extraction, such entity must declare and pay severance tax to the local tax authority in the area where natural resources are extracted.

- Every entity using water from irrigation works for power generation is taxpayer as specified in Circular 152/2015/TT-BTC, regardless of sources of capital for the irrigation works.

In case the organization managing the irrigation work supplies water for other entities to produce clean water or water for other purposes (other than power generation), the organization managing the irrigation work supplies water is the taxpayer.

- In case natural resources that are banned from extraction or illegally extracted are confiscated, subject to severance tax, and permitted to be sold, the organization assigned to sell such natural resources shall pay severance tax whenever it is incurred to its supervisory tax authority before retaining the cost of arrest, auction, reward.