What is the severance tax rate applicable to rare earth extraction in Vietnam?

What is the severance tax rate applicable to rare earth extraction in Vietnam?

Firstly, according to Article 2 of the Severance Tax Law 2009 (amended by Clause 1, Article 4 of the Law on Amendments to Tax Laws 2014), taxable objects are specified as follows:

- Metallic minerals.

- Non-metallic minerals.

- Crude oil.

- Natural gas, coal gas.

- Natural forest products, other than animals.

- Natural aquatic products, including marine animals and plants.

- Natural water, including surface water and underground water, except for natural water used for agriculture, forestry, aquaculture, and salt production.

- Natural swallow's nests.

- Other resources prescribed by the National Assembly Standing Committee.

Rare earths fall under the group of metallic minerals subject to severance tax.

Additionally, according to Article 7 of the Severance Tax Law 2009, the severance tax rates are stipulated as follows:

-  The frame severance tax tariff is specified below:

- Specific severance tax rates for crude oil. natural gas and coal gas shall be determined as partially progressive based on their daily exploited average output.

- Under Clauses 1 and 2 of Article 7 of the Severance Tax Law 2009, the National Assembly Standing Committee shall stipulate specific severance tax rates for each category of natural resource in each period on the following principles:

+ Ensuring conformity with the list of groups and categories of natural resource and within the severance tax rate bracket prescribed by the National Assembly:

+ Contributing to the state management of natural resources; protection, exploitation and rational, economical and effective use of natural resources:

+ Contributing to assuring state budget revenues and market stabilization.

Thus, rare earths fall under the group of metallic minerals.

Therefore, the severance tax rate applicable to rare earth extraction in Vietnam is 12-25%.

What is the severance tax rate applicable to rare earth extraction in Vietnam? (Image from the Internet)

What are the regulations on the declaration and payment of severance tax on rare earth extraction in Vietnam?

Under Article 8 of the Severance Tax Law 2009, the regulation is as follows:

Severance tax declaration and payment

Severance tax payers shall register, declare, calculate and pay severance tax under the law on tax administration.

Thus, severance tax payers shall register, declare, calculate and pay severance tax on rare earth extraction under the law on tax administration.

What is the method for calculating the taxable extraction quantity for rare earths that are not sold but used for turning out other products in Vietnam?

According to Clause 3, Article 5 of the Severance Tax Law 2009, the regulations are as follows:

Taxable extraction quantity

1. For an exploited natural resource the quantity, weight or volume of which can be determined, the taxable extraction quantity is the quantity, weight or volume of natural resource actually exploited in a severance tax period.

2. For an exploited natural resource the quantity, weight or volume of which cannot be determined because this natural resource contains different substances and impurities, the taxable extraction quantity shall be determined based on the quantity, weight or volume of each substance obtained from sorting and classification.

3. For natural resources which are not sold but used for turning out other products, if their actually exploited quantity, weight or volume cannot be directly determined, the taxable extraction quantity shall be determined based on the output of products turned out in a severance tax period and the use norm of natural resource per unit of product.

4. For natural water used for hydropower generation, the taxable extraction quantity is the output of electricity sold by a hydropower generation establishment to an electricity buyer under an electricity purchase and sale contract or the output of delivered electricity, in case such contract is unavailable, which is determined according to the metering system up to Vietnam's measurement and quality standards, certified by the purchaser and seller or the deliverer and recipient.

5. For natural mineral water, natural thermal water and natural water used for industrial purposes, the taxable extraction quantity shall be determined in cubic meter On1) or liter (I) according to the metering system up to Vietnam's measurement and quality standards.

6. For natural resources exploited on a manual, scattered or mobile, irregular basis, if the planned output of exploited natural resources in a year is valued at under VNI) 200 million, a fixed output of exploited natural resources may be determined on a regular or seasonal basis for severance tax calculation. Tax offices shall coordinate with local concerned agencies in determining the fixed output of exploited natural resources for severance tax calculation.

The Government shall detail this Article.

Thus, for rare earths that are not sold but used for turning out other products in Vietnam, if their actually exploited quantity, weight or volume cannot be directly determined, the taxable extraction quantity shall be determined based on the output of products turned out in a severance tax period and the use norm of natural resource per unit of product.