Grounds for calculating charges for granting mining right in Vietnam

Charges for granting mining right in Vietnam

Pursuant to Article 4 of Decree 67/2019/ND-CP, The rate of charge for granting mining right (R) is a percentage (%) of the value of the crude ore in the permitted mining area.  R of each mineral group/type is prescribed in Appendix I enclosed with Decree 67/2019/ND-CP.

Grounds for calculating charges for granting mining right in Vietnam (Internet image)

Formula for calculating charges for granting mining right in Vietnam

Pursuant to Article 5 of Decree 67/2019/ND-CP, charge for granting mining right is calculated by adopting the following formula:

T = Q x G x K1 x K2 x R

Where:

T – Charge for granting mining right; unit: VND;

Q – Mineral reserve for calculating charge for granting mining right which is prescribed in Article 6 of Decree 67/2019/ND-CP; unit: m3, metric ton, kg and other units as decided by the regulatory authority that has the power to approve the mineral reserve;

G – Price for calculating charge for granting mining right which is the unit price of crude mineral after mining, calculated according to the price for calculating resource royalty as regulated in the law on resource royalties applicable at the time of granting mining right and provided for in Article 7 of Decree 67/2019/ND-CP; unit: VND/mineral reserve unit;

K1 – Mineral recovery coefficient related to mining method: K1= 0,9 for open-pit mining; K1= 0,6 for underground mining; K1= 1,0 for mining for mineral water or natural thermal water and other cases;

K2 – Coefficient related to disadvantaged and extremely disadvantaged areas according to the List of areas eligible for investment incentives announced by the Government: K2= 0,9 for extremely disadvantaged area; K2= 0,95 for disadvantaged area; K2= 1,0 for other mining areas;

R – Rate of charge for granting mining right; unit: %.

Management and use of charges for granting mining right in Vietnam

- Management, use and refund of charges for granting mining right shall comply with regulations of the Law on state budget; a maximum of 10% of collected charges for granting mining right shall be used for covering expenditures on investigation and protection of mineral resources, supervision of mining operation and environment protection.

- 70% of collected charges for granting mining right shall be transferred to central-government budget and the remaining amount of 30% shall be transferred to local-government budget in case mining licenses are granted by central-level agencies; 100% of collected charges for granting mining right shall be kept by local government budget in case mining licenses are granted by provincial People’s Committee.

- Funding for covering expenditures on determination of charges for granting mining right shall be derived from state budget and included in estimates of state budget expenditures allocated to Natural Resources and Environment Agencies in accordance with regulations of the Law on state budget.

- Charges for granting mining right shall be included in deductible expenses when determining income subject to corporate income tax by dividing total charge payable divided by number of licensed mining years.  Conditions for deductible expenses must be satisfied in accordance with regulations of the Law on corporate income tax.

Pursuant to: Article 12 of Decree 67/2019/ND-CP

Mai Thanh Loi

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