Vietnam: How to determine royalty-liable prices?

Specifically, according to Article 4 of Decree No. 50/2010/ND-CP of Vietnam’s Government, “the royalty-liable price is the exploiter's selling price of a unit of natural resource product, exclusive of value-added tax”. The determination of royalty-liable prices is prescribed as follows:

In case the natural resource's selling price cannot be determined yet. the royalty-liable price shall be determined based on either of the following grounds:

- The regional market's actual selling price of a unit of natural resource product of the same grade applicable within a provincial-level locality which must not be lower than the royalty-liable price set by the provincial-level People's Committee;

- In case the exploited natural resource contains different substances, the royalty-liable price shall be determined based on the selling price of a unit and the content of each substance but must not be lower than the royalty-liable price set by the provincial-level People's Committee.

In some cases, the royalty-liable price shall be specified as follows:

- For natural water used for hydropower generation, it is the average selling price of commodity electricity;

- For timber, it is the selling price at the place of delivery (warehouse or yard at the place of exploitation): if the selling price at the place of delivery cannot be determined yet. the royalty-liable price shall be determined based on the royalty-liable price set by the provincial-level People's Committee;

- For exploited natural resources which are not domestically sold but exported, it is the export price (FOB price) of a unit of natural resource product. For exploited natural resources which are both domestically sold and exported, the royally-liable price for the domestically sold natural resources is the selling price of a unit of natural resource product, exclusive of value-added tax. while that for the exported natural resources is the export price;

- For crude oil. natural gas and coal gas, it is the selling price at the place of delivery. The place of delivery is a place agreed upon in the oil and gas contract under which the ownership over crude oil, natural gas and coal gas is transferred to the contractual parties.

View more details at Decree No. 50/2010/ND-CP of Vietnam’s Government, effective from July 01, 2010.

Nguyen Phu

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