Latest Integrated document of the Law on Severance tax available in Vietnam

Latest Integrated document of the Law on Severance tax available in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. Integrated document of the Law on Severance tax available in Vietnam

The latest Integrated document of the Law on Severance tax is the Integrated document 23/VBHN-VBHN dated December 29, 2022, merging the following documents:

- Law on Severance tax 2009, effective from July 1, 2010

- Law No. 71/2014/QH13 on amendments to the tax laws, effective from January 1, 2015;

- Petroleum Law 2022, effective from July 1, 2023.

2. Natural resource output used for severance tax calculation in Vietnam

The natural resource output used for severance tax calculation is determined as follows:

- For an exploited natural resource the quantity, weight or volume of which can be determined, the natural resource output used for royally calculation is the quantity, weight or volume of natural resource actually exploited in a severance tax period.

- 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 natural resource output used for severance tax calculation shall be determined based on the quantity, weight or volume of each substance obtained from sorting and classification.

- 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 natural resource output used for severance tax calculation 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.

- For natural water used for hydropower generation, the natural resource output used for severance tax calculation 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.

- For natural mineral water, natural thermal water and natural water used for industrial purposes, the natural resource output used for severance tax calculation shall be determined in cubic meter On1) or liter (I) according to the metering system up to Vietnam's measurement and quality standards.

- 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.

(Article 5 of the Law on Severance tax 2009)

3. Who are severance tax payers in Vietnam?

According to the Law on Severance tax 2009, severance tax payers are resource-extracting organizations and individuals subject to resource 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.

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