Vietnam: Amending several regulations of the Law on Petroleum

The Law amending and supplementing the Law on Petroleum in 2000 of Vietnam amends and supplements several regulations of the Law on Petroleum 1993 as follows:

* Allowing the application of international practices in petroleum activities

To be specific: In cases where the Law on Petroleum and other Vietnamese legislations have not prescribed a specific matter related to petroleum activities, the parties signing a petroleum contract may agree on the application of international laws and/or international practices in petroleum activities or foreign petroleum laws, provided that such international laws, international practices or foreign laws are not contrary to fundamental principles of Vietnamese law.

* Supplementing the following 02 definitions:

- Executors are organizations and/or individuals representing the parties to a petroleum contract and executing activities within the authorized scope.

- Petroleum investment promotion projects are projects conducting petroleum activities in deep-water and offshore areas and areas with exceptionally difficult geographical and geological conditions according to the list of blocks decided by the Prime Minister.

* Not limiting the prospection and exploration area for a petroleum contract

This is a new point mentioned in the Law amending and supplementing the Law on Petroleum in 2000. According to this provision, in special cases, the Government of Vietnam may permit a prospection and exploration area for a petroleum contract to cover more than 2 blocks. Thus, the provision of the Law on Petroleum 1993 that the prospection and exploration area for a petroleum contract must not exceed 4 blocks has been annulled.

* Further specifying the income tax. To be specific:

- Organizations and individuals that conduct petroleum prospection, exploration and exploitation shall have to pay enterprise income tax at the tax rate of fifty percent (50%).

- Organizations and individuals that conduct the petroleum prospection, exploration and exploitation at petroleum investment promotion projects shall have to pay enterprise income tax at the tax rate of thirty two percent (32%).

- Organizations and individuals that conduct petroleum prospection, exploration and exploitation may be exempted from enterprise income tax for a maximum period of two (2) years and entitled to the fifty percent (50%) reduction of enterprise income tax for a maximum period of two (2) subsequent years. The exemption or reduction of enterprise income tax shall be provided for by the Government of Vietnam.

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