What is the severance tax-liable price in Vietnam?

What is the severance tax-liable price in Vietnam?

First of all, based on Article 4 of the Law on severance tax 2009, severance tax bases include:

[1] natural resource output used for severance tax calculation

[2] severance tax-liable price

[3] severance tax rate

Thus, the severance tax-liable price is one of the three severance tax bases.

Severance tax-liable price  is the selling price of a unit of natural resource-derived products imposed by the extracting entity exclusive of VAT. This price must not fall below the severance tax-liable price imposed by the People’s Committee of the province. Otherwise, the severance tax-liable price imposed by the People’s Committee of the province shall apply.

If the cost of transport of natural resource-derived products and selling price are written on separate invoices, the severance tax-liable price is the selling price exclusive of transport cost (regulated in Article 6 of Circular 152/2015/TT-BTC).

What is the severance tax-liable price in Vietnam? (Image from the Internet)

What is the severance tax-liable price for natural resources of which unit prices of natural resource-derived products can be determined in Vietnam?

Under Clause 1, Article 6 of Circular 152/2015/TT-BTC, the severance tax-liable price for natural resources is regulated as follows:

- With regard to natural resources of which unit prices of natural resource-derived products can be determined

+ Taxable price is the selling price of a unit of natural resource-derived products of the same class and quality exclusive of VAT and extracted within the month; Selling price of a unit of natural resource equals (=) total revenue (exclusive of VAT) from the sale of the resource divided by (:) total quantity of the same resource sold in the month.

+ If no revenue is earned though the natural resource still extracted in the month, taxable price is the weighted mean of taxable unit price of the latest month in which revenue is earned. If the weighted mean of taxable unit price of the latest month in which revenue is earned is lower than the taxable price imposed by the People’s Committee of the province, the taxable price imposed by the People’s Committee of the province shall apply.

+ In case organizations being legal entities extract natural resources for a corporation/conglomerate under contracts, or sell natural resources at prices decided by such corporation/conglomerate, the taxable prices shall be decided by the corporation/conglomerate but not lower than the prices imposed by the People’s Committee of the province where natural resources are extracted.

Which entity is responsible for paying severance tax on in case natural resources that are banned from extraction or illegally extracted are confiscated in Vietnam?

Under Clause 5, Article 3 of Circular 152/2015/TT-BTC which regulates taxpayers:

Taxpayers

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 this Circular. Taxpayers in some particular cases:

1. 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.

2. 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.

3. 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.

4. Every entity using water from irrigation works for power generation is taxpayer, 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.

5. 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.

Thus, 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.