What is the rate of severance tax in Vietnam?

What is the rate of severance tax in Vietnam?

According to Article 7 of the Law on severance tax 2009, the rates of severance tax are stipulated as follows:

- The tax rate framework for natural resources is regulated as follows:

- The specific tax rates for crude oil, natural gas, and coal gas are determined progressively according to the average daily extraction output of crude oil, natural gas, and coal gas.

- Based on the provisions of Clause 1 and Clause 2 of Article 7 of the Law on severance tax 2009, the Standing Committee of the National Assembly specifies the specific tax rates for each type of resource in each period, ensuring the following principles:

+ Fit with the list of groups, types of resources within the tax rate framework prescribed by the National Assembly;

+ Contributing to state management of resources; protecting, exploiting, using reasonably, economically, and efficiently the source of resources;

+ Contributing to ensuring state budget revenue and market stability.

What is the rate of severance tax in Vietnam? (Image from the Internet)

How to determine taxable resource productions in Vietnam?

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

- For resources that can determine the number, weight, or volume, the taxable resource production is the actual number, weight, or volume of resources extracted during the tax period.

- For resources extracted that cannot determine the actual number, weight, or volume due to containing various substances and impurities, the taxable resource production is determined based on the number, weight, or volume of each substance obtained after screening and classification.

- For resources that are extracted but not sold and used to produce other products, if the actual number, weight, or volume of extraction cannot be directly determined, the taxable resource production is determined based on the production in the tax period and the resource usage norm per product unit.

- For natural water used for hydroelectric production, the taxable resource production is the electricity output sold by the hydroelectric production facility to the electricity purchaser according to the electricity purchase agreement or the delivered electricity output in case there is no electricity purchase agreement, determined by a measurement system meeting the Vietnamese quality measurement standards, confirmed by both the buyer and the seller or the deliverer and receiver.

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

- For resources that are extracted manually, dispersed, or from mobile, irregular extraction activities, with an annual projected extraction value of less than 200,000,000 VND, the resource extraction production is determined seasonally or periodically as lump-sum amounts for tax calculation. The tax authority cooperates with relevant local agencies to determine the lump-sum extraction production for tax calculation.

Which entities are severance taxpayers in Vietnam?

According to Article 3 of the Law on severance tax 2009, amended by Clause 2 of Article 67 of the Oil and Gas Law 2022, the provisions are as follows:

Taxpayers

1. Taxpayers of severance taxes are organizations and individuals who exploit resources subject to severance taxes, except for exploitation of resources from mines, mine clusters, and petroleum plots for residual extraction according to the provisions of the oil and gas law.

2. The taxpayers of severance taxes in some specific cases are defined as follows:

a) Enterprises formed on the basis of joint ventures for resource exploitation are the taxpayers;

b) In case of a business cooperation contract for resource exploitation, the tax responsibilities of the parties must be clearly defined in the business cooperation contract;

c) Organizations and individuals extracting small-scale resources and selling them to focal point organizations and individuals purchasing resources, if the purchasing organization and individual agree in writing to declare and pay taxes on behalf of the extracting organization and individual, the focal point purchaser is the taxpayer.

Thus, the taxpayers of severance taxes are organizations and individuals exploiting resources subject to severance taxes, except for exploitation from mines, mine clusters, and petroleum plots for residual extraction according to the provisions of the oil and gas law.