What are the solutions for severance tax policy reform according to the tax reform strategy until 2030 in Vietnam?

What are the solutions for severance tax policy reform according to the tax reform strategy until 2030 in Vietnam?

According to point e, clause 1, Section 3, Article 1 of Decision 508/QD-TTg of 2022, the solutions for severance tax policy reform according to the tax reform strategy until 2030are as follows:

- Study any changes in regulations, taxable prices, and taxable natural resource outputs;

- amend the framework, rates and exemption and reduction of severance tax towards ensuring transparency and clarity, ensuring that the severance tax policy continues to be an effective tool to contribute to managing and protecting natural resources; encouraging the economical and efficient use of natural resources, deep processing and increase in the value of resources;

What are the solutions for severance tax policy reform according to the tax reform strategy until 2030 in Vietnam? (Image from the Internet)

What are the procedures for annual severance tax finalization for resource exploitation facilities in Vietnam?

Under point a, clause 6, Article 8 of Decree 126/2020/ND-CP:

Taxes declared monthly, quarterly, annually, separately; tax finalization

...

6. The following taxes and amounts shall be declared annually and finalized when an enterprise is dissolved, shuts down, terminates a contract or undergoes rearrangement. In case of conversion (except equitized state-owned enterprises) where the enterprise after conversion inherits all tax obligations of the enterprise before conversion, tax shall be finalized at the end of the year instead of the issuance date of the decision on conversion. Tax shall be finalized at the end of the year):

a) severance tax.

...

Thus, according to legal regulations, resource exploitation facilities must annually finalize their severance tax.

Additionally, the procedures for annual severance tax finalization are conducted as guided on the National Public Service Portal and according to clause 3, Article 15 of Circular 80/2021/TT-BTC as follows:

- Step 1: taxpayers engaged in resource exploitation shall prepare and submit severance tax finalization dossiers to the supervisory tax authority.

In cases where taxpayers engaged in resource exploitation have their headquarters in one province or city but conduct exploitation activities in another province or city, the tax finalization dossiers shall be submitted to the Tax Department or Tax Sub-Department as specified by the Head of the Tax Department where the resource exploitation activities occur.

Taxpayers with hydroelectric power plants shall prepare the severance tax finalization dossiers according to Form No. 02/TAIN in Appendix 2, issued together with Circular 80/2021/TT-BTC (Download), and submit them to the tax authority managing the state budget revenue where the water resource exploitation occurs.

For taxpayers with hydroelectric power plants where the hydroelectric dam is located across multiple provinces, the severance tax finalization dossiers and the appendix of tax distribution to the benefiting localities for hydroelectric activities shall be submitted to the tax authority where the hydroelectric plant’s administrative office is located. The tax amount shall be allocated to the provinces where the hydroelectric dam is located as stipulated.

Deadline for submission: No later than the last day of the third month from the end of the calendar year or fiscal year, or the 45th day from the termination date of operations, contract conclusion, or business reorganization.

- Step 2. Tax authority receives:

The tax authority shall receive and process dossiers as per regulations for those submitted directly at the tax office or dossiers sent via postal services. For dossiers submitted electronically to the tax authority, receipt, verification, acceptance, and processing shall be conducted through the tax authority's electronic data processing system.

Additionally, entities can choose one of the following ways to submit:

- Submit directly at the tax authority’s office;

- Send through postal services;

- Send electronically to the tax authority via electronic transactions (the E-tax portal of the General Department of Taxation/the portal of competent state agencies or T-VAN service providers).

Which entities are severance tax payers in Vietnam?

According to Article 3 of the Law on severance tax 2009 (amended by Clause 2, Article 67 of the 2022 Petroleum Law), the taxpayers are stipulated as follows:

- Payers of severance tax are resource-extracting organizations and individuals subject to severance taxation, except for exploitation of oil and gas fields, groups of oil fields and blocks according to the regulations of law on petroleum.

- In some cases, severance tax payers shall be defined as follows:

+ For a mining enterprise established on the basis of joint venture, the joint-venture enterprise shall pay severance tax:

+ For Vietnamese and foreign parties to a business cooperation contract to exploit natural resources, the parties' liability to pay severance tax must be specified in such contract:

+ In case an exploiter conducts small-scale exploitation of natural resources and sells them to a principal purchaser that has a written commitment or an approval to declare and pay severance tax on the exploiter's behalf, the principal purchaser shall pay severance tax.

Thus, entities required to pay severance tax include individuals and organizations exploiting the aforementioned resources.