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THE MINISTRY OF
FINANCE
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SOCIALIST REPUBLIC
OF VIET NAM
Independence - Freedom - Happiness
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No. 32/2009/TT-BTC
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Hanoi, February 19,
2009
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CIRCULAR
GUIDING
THE IMPLEMENTATION OF TAX PROVISIONS APPLICABLE TO ORGANIZATIONS AND
INDIVIDUALS CONDUCTING PETROLEUM PROSPECTING, EXPLORATION AND EXPLOITATION
ACTIVITIES UNDER THE PETROLEUM LAW
Pursuant to the Petroleum Law and its guiding
documents;
Pursuant to tax laws and ordinances and current guiding documents;
Pursuant to Tax Administration Law No. 78/2006/QH11 of November 29, 2006, and
the Government’s decrees detailing the implementation of the Tax Administration
Law;
Pursuant to the Government’s Decree No. 118/2008/ND-CP of November 27, 2008,
defining the functions, tasks, powers and organizational structure of the
Ministry of Finance;
The Ministry of Finance guides the
implementation of tax provisions applicable to organizations and individuals
conducting petroleum prespecting, exploration and exploitation activities under
the Petroleum Law as follows:
Part I.
GENERAL
PROVISIONS
Article 1. Scope
of application
The guidance in this Circular applies to
organizations and individuals (below referred to as contractors) conducting
activities of prespecting, exploring and exploiting crude oil and condensate
(below collectively referred to as crude oil) or natural gas, associated gas
and coal gas (below collectively referred to as natural gas) in Vietnam under
the Petroleum Law.
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1. For petroleum contracts signed in the form
of product-sharing contract, taxpayers are executives.
2. For petroleum contracts signed in the form
of joint-administration contract, taxpayers are joint-administration companies.
3. For petroleum contracts signed in the form
of joint-venture contract, taxpayers are joint-venture enterprises.
4. In cases where the Vietnam National Petroleum
Group or its attached corporations or companies conduct crude oil or natural
gas survey, exploration and exploitation activities by themselves, taxpayers
are the Vietnam National Petroleum Group or its attached corporations or
companies.
Article 3. Currencies
used for tax payment
In case crude oil or natural gas is sold in
US dollar or another freely convertible foreign currency, the currency used for
payment of taxes on crude oil or natural gas exploitation, including export
duty, royalties and enterprise income tax, is the US dollar or that freely
convertible foreign currency.
In case crude oil or natural gas is sold in
Vietnam dong, the currency used for payment of taxes on crude oil or natural
gas exploitation, including export duty, royalties and enterprise income tax,
is Vietnam dong.
In case crude oil or natural gas is sold in
both the US dollar or another freely convertible foreign currency and Vietnam
dong, the currency used for payment of taxes on crude oil or natural gas
exploitation, including export duty, royalties and enterprise income tax, is
Vietnam dong.
The conversion of US dollar or other freely
convertible foreign currencies into Vietnam dong for tax payment shall be made
at the average inter-bank foreign exchange rate announced by the State Bank of
Vietnam at the time of tax payment.
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1. Places of tax registration, declaration
and payment (excluding import duty and export duty) are provincial-level Tax
Departments of localities where taxpayers’ principal executive offices are
located.
2. For petroleum contracts under which
exploitation activities have been carried out before the effective date of this
Circular, the places of tax registration, declaration and payment comply with
the guidance provided before the effective date of this Circular.
Article 5. Determination
of taxable prices of crude oil or natural gas in case crude oil or natural gas
is not sold under arm’s length trading contracts
In case crude oil or natural gas is not sold
under arm’s length trading contracts, tax administration agencies (tax offices
and customs offices) shall determine taxable prices according to the following
principles:
- For crude oil: The taxable price is the
arithmetic mean of the sale prices of crude oil of the same category on the
international market in 3 weeks in a row: the week before, the week of and the
week after the sale of crude oil. Taxpayers shall supply tax offices with
information on the composition and quality of crude oil being exploited. When
necessary, tax offices shall refer to the sale prices on the WTI market (USA),
Brent market (England) and Platt’s market (Singapore) or consult competent
state management agencies to determine the price of crude oil being exploited
by taxpayers.
- For natural gas: The taxable price is the
sale price of natural gas of the same category on the market, taking the place
of delivery and other relevant factors into account. When necessary, tax
administration agencies may consult competent state agencies to determine the
price of natural gas being exploited by taxpayers.
Article 6. Other
general provisions
1. In case an organization or individual
conducts petroleum survey, exploration and exploitation activities under
different petroleum contracts, tax provisions guided in this Circular shall be
separately applied to each petroleum contract.
2. In case contractors to petroleum contracts
in the form of product-sharing contract or joint-administration contract
receive the divided contractual shares in crude oil or natural gas and take
responsibility to sell these divided shares, the declaration and payment of
taxes on crude oil or natural gas exploitation shall be made under separate
guidance.
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Part II.
GUIDANCE
ON THE IMPLEMENTATION OF TAX PROVISIONS
I. ROYALTIES
Royalty amount
payable in crude oil or natural gas
=
Daily output of
crude oil or natural gas liable to royalties in royalty period
x
Royalty rate
x
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Article 7. Objects
liable to royalties
1. The whole output of crude oil or natural
gas exploited and retained from the areas under petroleum contracts and
measured at the place of delivery (net crude oil or natural gas output) is
liable to royalties.
2. In case the Vietnamese Government consumes
but does not pay for the volume of associated gas which is otherwise to be
burnt off by taxpayers, taxpayers are not obliged to pay royalties on this
volume of associated gas.
3. In the process of crude oil or natural gas
exploitation, if taxpayers are permitted to exploit other resources liable to
royalties, they shall pay royalties under current legal provisions on
royalties.
Article 8. Determination
of payable royalty amount
1. Royalty period:
The royally period is the calendar year.
- The first royalty period lasts from the
first day of crude oil or natural gas exploitation till the last day of the
calendar year.
- The last royalty period lasts from the
first day of the calendar year till the day of termination of crude oil or
natural gas exploitation.
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2.1. Royalties on crude oil or natural gas
are determined on the basis of the partial progress of the total net crude oil
and natural gas output exploited in each royalty payment period which is
calculated according to the daily crude oil or natural gas output exploited
under the petroleum contract, the royalty rate and the number of days of
exploitation in the royalty period.
2.2. Determination of royalty amount payable
in crude oil or natural gas:
In which:
+ The daily output of crude oil or natural
gas liable to royalties in the royalty period is the total output of crude oil
or natural gas liable to royalties exploited in the royalty period divided by
the number of exploitation days in the royalty period.
+ The royalty rate complies with the royalty
tariff specified in Article 7 of the Government’s Decree No. 05/2009/ND-CP of
January 19, 2009, detailing the implementation of the Ordinance on Royalties
and the Ordinance Amending and Supplementing Article 6 of the Ordinance on
Royalties. Specifically:
- For crude oil:
Output
Projects eligible
for investment promotion
Other projects
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6%
8%
Between over 20,000 and 50,000 barrels/day
8%
10%
Between over 50,000 and 75,000 barrels/day
10%
12%
Between over 75,000 and 100,000 barrels/day
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17%
Between over 100,000 and 150,000
barrels/day
17%
22%
Over 150,000 barrels/day
22%
27%
- For natural gas:
Output
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Other projects
Up to 5 million m3/day
0%
0%
Between over 5 and 10 million m3/day
3%
5%
Over 10 million m3/day
6%
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The identification of projects eligible for
investment promotion to serve the application of royalty rates shall be based
on the list of petroleum projects eligible for investment promotion decided by
the Prime Minister.
+ The number of days of crude oil or natural
gas exploitation in the royalty period is the number of days of carrying out
the exploitation of crude oil or natural gas in the royalty period, excluding
days on which production stops for any reasons.
Example: determining royalties payable in
crude oil in case of crude oil exploitation:
Presumably:
+ The total output of crude oil liable to royalties
exploited in the royalty period: 72,000,000 barrels
+ The number of production days in the
royalty period: 360 days
+ The daily output of crude oil liable to
royalties in the royalty period: 200,000 barrels (72,000,000 barrels : 360
days)
+ Crude oil is exploited under contracts
outside the list of projects eligible for investment promotion (in case crude
oil is exploited under contracts on the list of projects eligible for
investment promotion, the payable royalty amount shall be calculated similarly
at a royalty rate applicable to projects eligible for investment promotion)
The royalties payable in crude oil in the
royalty period is:
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Example: Determining royalties payable in
natural gas in case of natural gas exploitation:
Presumably:
+ The total output of natural gas liable to
royalties exploited in the royalty period: 3,960,000,000 m3
+ The number of days of production in the
royalty period is 360
+ The daily average output of natural gas
liable to royalties in the royalty period is 11,000,000 m3 (3,960,000,000 m3 :
360 days)
+ Natural gas is exploited under contracts
outside the list of projects eligible for investment promotion (in case natural
gas is exploited under contracts on the list of projects eligible for
investment promotion, the payable royalties shall be calculated similarly at a
royalty rate applicable to projects eligible for investment promotion).
The royalties payable in natural gas in the
royalty period is:
{(5,000,000 x 5%) + (1,000,000 x 10%)} x 360
days = 126,000,000 m3
Article 9. Royalty
declaration and payment
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In case royalties are paid in crude oil or
natural gas, tax offices shall notify in writing taxpayers thereof 6 months in
advance and provide specific guidance on the declaration and payment of
royalties in crude oil or natural gas.
2. Declaration and payment of temporarily calculated
royalties
2.1. Determination of temporarily calculated
royalty amount:
Temporarily
calculated royalty amount
=
Output of crude oil
or natural gas actually sold
x
Price for temporary
royalty calculation
x
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In which:
+ The output of crude oil or natural gas
actually sold is the output of crude oil or natural gas liable to royalties
actually sold.
+ The price for temporary royalty calculation
is the sale price of crude oil or natural gas at the place of delivery upon
each sale under arm’s length trading contracts, exclusive of value-added tax.
+ The temporarily calculated royalty
percentage is determined under the guidance below:
Temporarily
calculated royalty percentage
=
Royalty amount to
be paid in crude oil or natural gas in the royalty period
x
100%
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+ The royalty amount to be paid in crude oil
or natural gas in the royalty period is determined under the guidance in
Article 8, Section I, Part II of this Circular on the basis of the output of
crude oil or natural gas liable to royalties to be exploited in the royalty
period and the projected number of exploitation days in the royalty period;
+ The output of crude oil or natural gas
liable to royalties projected to be exploited in the royally period is the
output of crude oil or natural gas liable to royalties to be exploited in the
royalty period.
Based on the output of crude oil or natural
gas liable to royalties projected to be exploited every year and the royalty
tariff applicable to crude oil or natural gas, taxpayers shall determine the
temporarily calculated royalty percentage of each year and notify it to local
tax offices where they make tax registration not later than December 1 of the
previous royalty period.
If there is any change in the projected crude
oil or natural gas output and the projected number of days of petroleum
exploitation in the last 6 months of the year, leading to an increase or
decrease by at least 15% of the temporarily calculated royalty percentage
already notified to tax offices, taxpayers shall determine and notify the new
temporarily calculated royalty percentage to tax offices before May 1 of this
year.
Example: determining the temporarily
calculated royalty percentage:
- Determining the temporarily calculated
royalty percentage for crude oil:
Presumably:
+ The total output of crude oil liable to
royalties projected to be exploited in the royalty period: 72,000,000 barrels
+ The projected number of exploitation days
in the royalty period: 360
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+ The royalty amount projected to be paid in
the royalty period (determined under the guidance in Article 8, Section I, Part
II of this Circular): 13,086,000 barrels.
The temporarily calculated royalty percentage
for crude oil exploitation is:
x 100% = 18.18%
Determining the temporarily calculated
royalty percentage for natural gas:
Presumably:
+ The total output of natural gas liable to
royalties exploited in the royalty payment period: 3,960,000,000 m3
+ The number of production days in the
royalty payment period: 360
+ The daily output of natural gas liable to
royalties in the royalty payment period: 11,000,000 m3/day (3,960,000,000 m3:
360 days)
+ The royalty amount projected to be paid in
the royalty period (determined under the guidance in Article 8, Section I, Part
II of this Circular): 126,000,000 m3
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x 100% = 3.182%
2.2. Declaration and payment of temporarily
calculated royalties:
2.2.1. For crude oil exploitation:
a/ The royalty declaration dossier is the temporarily
calculated royalty declaration, made according to form No. 01/TAIN-DK issued
together with this Circular (not printed herein).
b/ The deadline for submission of the
temporarily calculated royalty declaration dossier is the 35lh day counting
from the date of issuance of invoices (for crude oil sold on the domestic
market) or the day the customs office gives certification of the exported crude
oil. In case the 35th day falls on a Saturday, Sunday, holiday or new-year day
(collectively referred to as holiday), the deadline for submission of the
royalty declaration dossier is the day following that holiday.
c/ The deadline for payment of temporarily
calculated royalties is the deadline for submission of the temporarily
calculated royalty declaration dossier.
2.2.2. For natural gas exploitation
a/ The royalty declaration dossier is the
temporarily calculated royalty declaration, made according form No. 01/TAIN-DK
issued together with this Circular (not printed herein).
b/ The deadline for submission of temporarily
calculated royalty declaration dossiers is the 20th every month. In case the 20th
day falls on a holiday, the deadline for submission of royalty declaration
dossiers is the day following that holiday.
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3. Royalty finalization
3.1. For crude oil exploitation:
3.1.1. Determination of payable royalty
amount:
a/ Determination of royalties in crude oil to
be paid in the royalty period:
Royalties to be
paid in crude oil in royalty period
=
Daily output of
crude oil liable to royalties in royalty period
x
Royalty rate
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Number of days of
crude oil exploitation in royalty period
b/ Determination of the percentage of
royalties in crude oil of the exploitation output in the royalty period:
Percentage of
royalties paid in crude oil in royalty period
=
Royalties in crude
oil to be paid in royalty calculation period
x
100%
The exploitation
output of crude oil in royalty period
c/ Determination of royalties in crude oil
sold in the royalty period:
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=
Volume of sold
crude oil
x
Percentage of
royalties in crude oil in royalty period
d/ Determination of the payable amount from
the sale of royalties in crude oil in the royalty period:
Payable amount from
the sale of royalties in crude oil in royalty period
=
Royalties in crude
oil sold in royally period
x
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In which:
+ Royalties in crude oil sold in the royalty
period is determined under the guidance in Clause 3, Article 9, Section I, Part
II of this Circular;
+ The price for calculation of royalties on
crude oil is the weighted average price of crude oil sold at places of delivery
under arm’s length trading contracts in the royally period, exclusive of
value-added lax.
e/ Determination of royalties payable in
crude oil not yet sold in the royally period for use as a basis for
finalization of royalties in crude oil to be paid the subsequent royalty
period:
Royalties in crude
oil not yet sold in the royally period
=
Royalties in crude
oil not yet sold in previous royalty period
+
Royalties in crude
oil to be paid in royalty period
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Royalties in crude
oil sold in royalty period
In case crude oil is not sold under arm’s
length trading contracts, the royalty calculation price is determined under the
guidance in Article 5, Part I of this Circular.
Example: Determining the royalty calculation
price:
Price for
calculation of royalties on crude oil
-
(2,000,000 x 18) +
(1,000,000 x 20) + (1,000,000 x 14)
=
USD 17.5/barrel
4,000,000
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g/ Determination of the deficient (surplus)
amount from the sale of royalties in crude oil in the royalty period:
Deficient (surplus)
amount from the sale of royalties in crude oil in royalty period
=
Payable amount from
the sale of royalties in crude oil to be paid in royalty period
x
Amount of
temporarily calculated royalties already paid in royalty period
In which:
+ The payable amount from the sale of
royalties in crude oil in the royalty period is determined under the guidance
in Clause 3, Article 9, Section I, Part II of this Circular.
+ The temporarily calculated royalty amount
already paid in the royalty period is the total temporarily calculated royalty
amount already paid according to the submitted list of temporarily calculated
royalties (made according to form No. 02-2/TAIN-DK issued together with this
Circular) (not printed herein).
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a/ A dossier of royalty finalization
declaration comprises:
A royalty finalization declaration, made
according to form No. 02/TAIN-DK issued together with this Circular (not
printed herein);
- A list of outputs and sales of crude oil or
natural gas exploited in the royalty period, made according to form No.
02-1/TAIN-DK issued together with this Circular (not printed herein);
- A list of temporarily calculated royalty
amounts in the royalty period, made according to form No. 02-2/TAIN-DK issued
together with this Circular (not printed herein).
b/ Time limits for submission of royalty
finalization declaration dossiers:
90 days from the last day of the calendar
year.
45 days from the date of termination of the
petroleum contract.
In case the 90th or the 45th day falls on a
holiday, the deadline for submission of royalty tax finalization declaration
dossiers is the day following that holiday.
c/ Royalty payment according to royalty
finalization declaration dossiers:
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- If the temporarily calculated royalty
amount in the royalty period is larger than the payable tax amount, the surplus
amount shall be cleared against the payable tax amount in the next payment of
temporarily calculated royalties or taxpayers shall carry out procedures for
being refunded the surplus royalty amount in accordance with current legal
provisions on tax administration, if there is no subsequent royally payment
period.
- If the temporarily calculated royalty
amount in the royalty period is smaller than the payable tax amount, taxpayers
shall pay the deficient amount to state treasuries within the time limit for
submission of royalty finalization declaration dossiers.
3.2. For natural gas exploitation:
3.2.1. Determination of the payable royalty
amount
a/ Determination of royalties to be paid in
natural gas in the royalty period:
Royalties in
natural gas to be paid in royalty period
=
Daily average
output of natural gas liable to royalties in royalty period
x
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x
Number of days of
natural gas exploitation in royalty period
b/ Determination of payable amount from the
sale of royalties in natural gas in the royalty period:
Payable amount from
the sale of royalties in natural gas to be paid in royalty period
=
Royalties in
natural gas to be paid in royalty period
x
Price for
calculation of royalties on natural gas
In which:
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+ The price for calculation of royalties on
natural gas is the sale price under arm’s length trading contracts at the place
of delivery in the royalty period, exclusive of value-added tax.
In case natural gas is not sold under arm’s
length trading contracts, the royalty calculation price shall be determined
under the guidance in Article 5, Part I of this Circular.
c/ Determination of the deficient (or
surplus) amount from the sale of royalties in natural gas to be paid in the
royalty period:
Deficient (or
surplus) amount from the sale of royalties in natural gas to be paid in
royalty period
=
Payable amount from
the sale of royalties in natural gas to be paid in royalty period
x
Temporarily calculated
royalty amount already paid in royalty period
In which:
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+ The temporarily calculated royalty amount
already paid in the royalty period is the total temporarily calculated royalty
amount already paid according to the submitted list of temporarily calculated
royalty amounts (made according to form No. 02-2/TAIN-DK issued together with
this Circular) (not printed herein).
3.2.2. Royalty declaration and payment
according to royalty finalization declaration dossiers:
a/ A dossier of royalty finalization
declaration comprises:
A royalty finalization declaration, made according
to form No. 02/TAIN-DK issued together with this Circular (not printed herein);
- A list of outputs and sales of crude oil or
natural gas exploited in the royalty period, made according to form No.
02-1/TAIN-DK issued together with this Circular (not printed herein);
- A list of temporarily calculated royalty
amounts in the royalty period, made according to form No. 02-2/TAIN-DK issued
together with this Circular (not printed herein).
b/ Time limits for submission of royalty
finalization declaration dossiers:
Within 90 days from the last day of the
calendar year.
Within 45 days after the date of termination of
the petroleum contract.
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c/ Royalty payment according to tax
finalization declaration dossiers:
Based on royalty finalization declaration
dossiers:
- If the temporarily calculated royalty
amount in the royalty period is larger than the payable amount, the surplus
amount may be cleared against the payable amount in the next payment of
temporarily calculated royalties or taxpayers shall carry out procedures for
being refunded the surplus amount in accordance with current legal provisions
on tax administration, if there is no subsequent royalty payment period.
If the temporarily calculated royalty amount
in the royalty period is smaller than the payable amount, taxpayers shall pay
the deficient amount to the state treasuries within the time limit for
submission of royalty finalization declaration dossiers.
II. IMPORT DUTY AND
EXPORT DUTY
Taxpayers shall declare and pay import duty
and export duty according to the law on import duty and export duty and current
legal provisions on tax administration. Besides, the Ministry of finance guides
some specific contents as follows:
Article 10. Export duty
1. Determination of the payable export duty
amount:
Payable export duty amount
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Volume of exported crude oil or natural gas
x
Dutiable price
x
Export duty percentage
In which:
+ The volume of exported crude oil or natural
gas is the volume of crude oil or natural gas actually exported.
+ The dutiable price is the sale price of crude
oil or natural gas under arm’s length trading contracts. In case crude oil or
natural gas is not sold under arm’s length trading contracts, the export duty
calculation price is determined under the guidance in Article 5, Part I of this
Circular.
- The export duty percentage is determined as
follows:
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=
100%
-
Percentage of
temporarily calculated royalties in royalty period
x
Export duty rate
applicable to crude oil or natural gas
In which:
+ The temporarily calculated royalty
percentage in the royalty period is determined under the guidance in Article 8,
Section I, Part II of this Circular.
+ The export duty rate applicable to crude
oil or natural gas complies with the current Export Tariff.
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Presumably:
+ The temporarily calculated royalty percentage
in the example in Article 9 above: 18.18%.
+ The export duty rate applicable to crude
oil according to the current Export Tariff: 10%
The percentage of crude oil export duty:
8.18% = (100% - 18.18%) x 10%.
Based on the temporarily calculated royalty
percentage and the export duty rate applicable to crude oil, taxpayers shall
determine the export duty percentage for each petroleum contract and notify it
to the customs office where export procedures are carried out and the tax
office where they make tax registration within the time limit for notification
of the temporarily calculated royalty percentage stated in Article 8, Section
I, Part II of this Circular.
2. Export duty declaration and payment:
The procedures for declaration and payment of
export duty on exported crude oil or natural gas comply with legal provisions
on import duty, export duty and tax administration.
Particularly the deadline for payment of
export duty on crude oil: Not later than the 35th day from the date the customs
office gives certification of the exported crude oil. In case the 35th day
falls on a holiday, the deadline for payment of export duty is the day
following that holiday.
Article 11. Import duty exemption
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III. ENTERPRISE
INCOME TAX (EIT)
Article 12. Objects liable to EIT
Incomes from crude oil or natural gas survey,
exploration and exploitation activities and other incomes of taxpayers are
liable to EIT.
Article 13. EIT calculation period
1. The EIT calculation period is the calendar
year. In case taxpayers apply a fiscal year other than the calendar year which
has been approved by the Ministry of Finance, the tax period is that fiscal
year.
2. The first EIT calculation period is
counted from the first day of petroleum survey, exploration or exploitation
activities to the last day of the calendar year or fiscal year.
3. The last EIT calculation period is counted
from the starting day of the calendar year or fiscal year to the termination
dale of the petroleum contract.
4. In case the tax period of the first year
or the last year is shorter than 3 months, it may be added up with the tax
period of the following year or previous year to form an EIT calculation
period. The EIT period of the first year or the last year must not exceed 15
months.
Article 14. Determination of taxable income
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=
Turnover from crude
oil or natural gas survey, exploration and exploitation in tax period
-
Deductible expenses
in tax period
+
Other incomes in
tax period
1. Turnover from crude oil or natural gas
survey, exploration and exploitation means the whole value of crude oil or
natural gas actually sold under arm’s length trading contracts in the tax
period.
In case crude oil or natural gas is not sold
under arm’s length trading contracts, turnover from crude oil or natural gas
survey, exploration and exploitation is determined by multiplying the
corresponding volume of crude oil or natural gas by the sale price determined
by tax offices as guided in Article 5, Part I of this Circular.
2. Deductible expenses upon determination of taxable
income:
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- Actually paid expenses related to crude oil
or natural gas survey, exploration and exploitation activities which, however,
must not exceed the expense determined by multiplying sales of crude oil or
natural gas by the expense recovery percentage agreed upon in the petroleum
contract. In case the petroleum contract contains no agreement on the expense
recovery percentage, the expense recovery percentage used as a basis for
determination of deductible expenses is 35%.
- Expenses have all lawful invoices and
vouchers as prescribed by law.
3. Non-deductible expenses upon determination
of taxable income:
- To-be-recovered expenses exceeding the
percentage agreed upon in the petroleum contract. In case the petroleum
contract contains no agreement on the expense recovery percentage, the expense
recovery percentage used as a basis for determination of non-deductible
expenses is 35%.
Expenses not allowed to be treated as
to-be-recovered expenses as provided for in the petroleum contract.
Other expenses not allowed to be treated as
deductible expenses as prescribed by the current law on EIT.
4. In cases where as agreed upon in the
petroleum contract, each contractor directly pays expenses for the procurement
of goods and services related to petroleum survey, exploration and exploitation
activities and sells crude oil or natural gas, these expenses shall be
transferred to the taxpayer for calculation as deductible expenses upon
determination of taxable incomes by the way whereby each contractor shall issue
value-added invoices indicating the cost value and value-added tax (if any).
5. Other expenses in the tax period comply
with the Law on EIT and current guiding documents.
Article 15. Determination of the payable EIT amount
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Payable EIT amount
in tax period
=
Taxable income in
tax period
x
EIT rate
In which:
+Taxable income in the tax period is
determined under the guidance in Article 14, Section III, Part II of this
Circular.
+ The EIT rate is prescribed in Article 10 of
the Law on EIT.
2. For petroleum contracts signed in the form
of product-sharing contract or joint-execution contract: In case each
contractor specifies the EIT amount to be paid separately, the payable EIT amount
of each contractor shall be determined by multiplying the total payable EIT
amount (determined under the above guidance) by the petroleum profit percentage
of each contractor to the petroleum contract.
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1. EIT shall be temporarily calculated on a
quarterly basis or upon each sale and finalized according to the tax period.
2. Before or in the course of conducting
crude oil or natural gas exploitation activities, if taxable incomes are
generated from other business activities, taxpayers shall declare and pay EIT
in accordance with the current law on EIT.
3. If each contractor to the petroleum
contract separately determines its payable EIT amount, taxpayers shall make EIT
declaration (specifying the payable EIT amount of each contractor) and pay EIT
for each contractor. Tax payment vouchers shall be written with the name and
the payable EIT of each contractor.
4. Declaration and payment of temporarily
calculated EIT
For petroleum contracts for which the
percentage of temporarily calculated EIT under the guidance below, EIT shall be
temporarily calculated upon each sale.
4.1. Determination of the temporarily
calculated EIT amount:
Temporarily
calculated EIT amount
=
Sales of crude oil
or natural gas
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Temporarily
calculated EIT percentage
In which:
+ The sales of crude oil or natural gas are
the whole value of net oil and gas output sold under the arms’ length trading
contract of each sale.
In case crude oil or natural gas is not sold
under arm’s length trading contracts, the turnover from the sale of crude oil
or natural gas shall be determined by multiplying the corresponding volume of
crude oil or natural gas by the sale price determined by tax offices under the
guidance in Article 5, Part I of this Circular.
+ The temporarily calculated EIT percentage
is determined as follows:
Percentage of
temporarily calculated EIT
=
100%
-
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-
Percentage of
temporarily calculated royalty
-
Export duty
percentage
x
EIT rate
Taxpayers shall determine by themselves the
percentage of temporarily calculated EIT and notify it to local tax offices
where they make tax registration within the time limit for the notification of
the percentage of temporarily calculated royalty stated in Article 9, Section I,
Part II of this Circular.
Example: Determining the percentage of
temporarily calculated EIT for crude oil exploitation:
Presumably:
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+ The temporarily paid royalty percentage
(according to the example in Article 9 above): 18.18%
+ The temporarily paid export duty percentage
(according to the example in Article 10 above): 8.18%
+ The EIT rate: 50%
The percentage of temporarily calculated EIT is:
(100% - 35% - 18.18% - 8.18%) x 50% = 19.32%
In case of paying temporarily calculated EIT
for income from natural gas exploitation, the percentage of temporarily
calculated EIT is determined similarly as above.
4.2. Declaration and payment of temporarily
calculated EIT:
4.2.1. In case taxpayers can determine the
temporarily calculated EIT for each sale:
a/ The dossier of temporarily calculated EIT
declaration is the temporarily calculated EIT declaration, made according to
form No. 01/TNDN-DK issued together with this Circular (not printed herein).
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c/ The time limit for payment of temporarily
calculated EIT is the time limit for submission of dossiers of temporarily
calculated EIT declaration.
4.2.2. In case EIT is temporarily calculated
on a quarterly basis. EIT declaration and payment shall be made under the law
on tax administration.
4.2.3. Taxpayers shall notify local tax
offices where they make tax registration of whether the temporarily calculated
EIT is paid upon each sale or on a quarterly basis.
5. EIT finalization
5.1. A dossier of EIT finalization
declaration comprises:
An EIT finalization declaration, made
according to form No. 02/TNDN-DK issued together with this Circular (not
printed herein)
The financial statement of the year or the
financial statement up to the time of termination of the petroleum contract.
5.2. Time limit for submission of EIT finalization
declaration dossiers:
Within 90 days from the last day of the
calendar year or fiscal year.
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In case the 90th or the 45th day falls on a
holiday, the deadline for submission of EIT finalization declaration dossiers
is the day following that holiday.
5.3. Tax payment according to EIT
finalization declaration dossiers:
Based on EIT finalization declaration
dossiers:
- If the temporarily calculated EIT amount in
the tax period is larger than the payable tax amount, the surplus EIT amount
shall be subtracted from the tax amount to be paid in the next payment of
temporarily calculated EIT or taxpayers shall carry out procedures for being
refunded the surplus EIT amount in accordance with current legal provisions on
tax administration, if there is no subsequent EIT payment period.
- If the amount of temporarily calculated EIT
in the tax period is smaller than the payable tax amount, taxpayers shall pay
the deficient tax amount to state treasuries within the time limit for
submission of dossiers of EIT finalization declaration.
IV. TAXES ON INCOME
FROM THE TRANSFER OF CAPITAL AMOUNTS CONTRIBUTED FOR PARTICIPATION IN PETROLEUM
CONTRACTS
Article 17. Taxable objects
1. Transfer of the capital amount contributed
for participation in a petroleum contract means the transfer of a part or whole
of the capital amount already invested in crude oil or natural gas survey,
exploration and exploitation activities by an organization or individual (the
transferor) to one or several other organizations or individuals (the
transferee), including the case of transferring only rights and obligations in
the petroleum contract. The transferee of the capital amount contributed for
participation in a petroleum contract will have obligations and interests of a
contractor conducting petroleum survey, exploration and exploitation
activities.
2. Income from the transfer of the capital
amount contributed for participation in a petroleum contract from the
transferor to the transferee is subject to EIT under the guidance in Section IV,
Part II of this Circular.
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1. Determination of the payable EIT amount:
The EIT on income from the transfer of the
capital amount contributed for participation in a petroleum contract is
determined as follows:
Payable EIT amount
=
Taxable income
x
EIT rate
1.1. Determination of taxable incomes:
Taxable income
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Transfer price
-
Purchase price of
transferred capital amount
-
Transfer expenses
In which:
+ The transfer price is the total actual
value according to the market price received by the transferor under the
transfer contract.
In case the capital transfer contract
provides for installment or deferred payment, the transfer price is exclusive
of interests on installment or deferred payments within the time limit
prescribed in the transfer contract.
In case the transfer contract does not state
a payment price or the tax office has grounds to believe that the payment price
is not determined according to the market price, the tax office may examine and
request the parties to the transfer to supply information relating to the
determination of the present and future value of the capital amount contributed
for participation in the petroleum contract before these parties decide on the
transfer and carry out the transfer and fix the payment value of the contract
on the basis of reference to the market price, the price of possible sale to a third
party and the sale prices under similar transfer contracts
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In case the contractor further transfers the
transferred capital amount, the prime cost of the capital amount to be
transferred at each subsequent time is the transfer value of the preceding
transfer contract plus expenses accounted as recovered expenses which are added
by the contractor (if accompanied with valid vouchers) subtracting expenses
already recovered (if any).
In case the accounting of the petroleum
contract is made in a foreign currency and the contractor transfers the capital
amount contributed for participation in the petroleum contract in that foreign
currency, the transfer price and the purchase price of the transferred capital
amount shall be determined in that foreign currency. In case the accounting of
the petroleum contract is made in Vietnam dong but the contractor transfers the
capital amount contributed for participation in the petroleum contract in a
foreign currency, the transfer price shall be converted into Vietnam dong at the
exchange rate at the time of transfer and the purchase price of the transferred
capital amount shall be determined in Vietnam dong at the exchange rate at the
time of contribution of capital to the petroleum contract or the time of
re-purchase of the capital amount contributed for participation in the
petroleum contract.
+ Transfer expenses are actually paid
expenses directly related to the transfer and accompanied with vouchers
accepted by tax offices. In case transfer expenses arise overseas, these original
vouchers must be certified by a notary office or independent audit organization
in the country where these expenses arise and translated into Vietnamese (with
the certification of a competent representative).
Transfer expenses include: expenses for completion
of legal procedures necessary for the transfer; charges and fees to be paid
upon carrying out transfer procedures; expenses for transaction, negotiation
and conclusion of the transfer contract and other expenses with valid vouchers.
1.2. EIT rate:
The EIT rate applicable to income from
capital transfer is the tax rate prescribed in the Law on EIT applicable to
business establishments which do not conduct petroleum survey, exploration and
exploitation activities.
1.3. EIT exemption and reduction are not applicable
to income from capital transfer.
Article 19. Declaration and payment of EIT on incomes from capital
transfer
1. For transferors being foreign
organizations or individuals participating in petroleum contracts
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1.2. For income from capital transfer, a
dossier of tax declaration comprises:
- A declaration of enterprise income tax on
income from capital transfer, made according to form No. 03/TNDN-DK issued
together with this Circular (not printed herein);
A copy of the transfer contract. For a
foreign-language transfer contract, such principal details as the transferor,
the transferee, transfer time, transfer contents, rights and obligations of
each party; contractual value; time, mode and currency for payment, must be
translated into Vietnamese;
A copy of the decision approving the transfer
of capital, made by a competent authority;
- A copy of the written certification of the
executive, joint-administration company or parties to the joint-venture of
expenses allowed to be recovered which are the prime cost of the transferred
capital amount of the transferor;
- Original vouchers of expenses.
In case of necessity to supplement the
dossier, tax offices shall notify taxpayers promptly on the date of receiving
the dossier, if directly receiving the dossier, or within 3 working days after
the date of receiving the dossier sent by post or e-transaction.
1.3. The deadline for submission of tax declaration
dossiers is the 10th day from the date a competent authority approves the
transfer of capital.
1.4. The place of submission of tax
declaration dossiers: At tax offices where taxpayers defined in Article 2, Part
I of this Circular make declaration and payment of enterprise income tax for
crude oil and natural gas survey, exploration and exploitation activities.
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V. OTHER TAXES,
CHARGES AND FEES
In the course of conducting production and
business activities, taxpayers shall pay other taxes, charges and fees not yet
specified in this Circular according to current legal provisions on taxes,
charges and fees.
Part III.
ORGANIZATION
OF IMPLEMENTATION
Article 20. Effect
1. This Circular takes effect 45 days from
the date of its signing and applies to the enterprise income tax period from
2009 and to the payment of royalties for petroleum contracts signed from the
effective dale of the Government’s Decree No. 05/2009/ND-CP of January 19, 2009,
detailing the implementation of the Ordinance on Royalties (amended) and the
Ordinance Amending and Supplementing Article 6 of the Ordinance on Royalties
(amended), except petroleum contracts for which the Prime Minister has approved
the specific royalty rates before the effective date of the Government’s Decree
No. 05/2009/ND-CP, and replaces the Finance Ministry’s Circular No. 48/2001/TT-BTC
of June 25, 2001, guiding the implementation of tax provisions applicable to
organizations and individuals conducting petroleum survey, exploration and
exploitation under the Petroleum Law.
2. Petroleum contracts signed before the
effective date of the Government’s Decree No. 05/2009/ND-CP of January 19, 2009,
detailing the implementation of the Ordinance on Royalties (amended) and the
Ordinance Amending and Supplementing Article 6 of the Ordinance on Royalties
(amended), under which natural resources have been exploited and royalties have
been paid according to their investment licenses or petroleum contracts, the
provisions of their investment licenses or petroleum contracts will apply. For
petroleum contracts not yet concluded but already approved by the Prime
Minister before the effective date of the above-said Decree which contain
agreements on royalties, the agreements of the contracts approved by the Prime
Minister will apply.
3. Petroleum contracts with investment
licenses granted before the effective date of Petroleum Law No. 10/2008/QH12
and Enterprise Income Tax Law No. 14/2008/QH12 which are currently entitled to
enterprise income tax incentives under their granted investment licenses will
further enjoy tax incentives (preferential tax rates and tax exemption and
reduction duration) for the remaining period.
Taxpayers shall base on the provisions of
their investment licenses or the Prime Minister’s decisions on the level and
duration of enterprise income tax exemption and reduction to determine the
exempted or reduced tax amounts and the payable enterprise income tax amounts
upon temporary calculation and finalization of enterprise income tax.
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Incomes eligible for enterprise income tax
exemption or reduction do not include other incomes defined in Clause 5,
Article 14, Section III, Part II of this Circular.
4. In case treaties and inter-governmental
agreements which the Vietnamese Government has signed or acceded to contain
provisions on taxes applicable to crude oil or natural gas survey, exploration
and exploitation activities which are different from those of this Circular,
organizations and individuals conducting crude oil or natural gas survey,
exploration and exploitation activities shall pay taxes under these treaties or
inter-governmental agreements.
Any difficulties and problems arising in the
course of implementation should be promptly reported to the Ministry of Finance
for timely settlement.
FOR THE MINISTER OF
FINANCE
VICE MINISTER
Do Hoang Anh Tuan