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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:
48/2001/TT-BTC
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Hanoi,
June 25, 2001
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CIRCULAR
GUIDING THE IMPLEMENTATION OF TAX PROVISIONS APPLICABLE TO
ORGANIZATIONS AND INDIVIDUALS CONDUCTING OIL AND GAS PROSPECTION, EXPLORATION
AND EXPLOITATION ACTIVITIES UNDER THE PETROLEUM LAW
Pursuant to the Petroleum Law
passed by the National Assembly of the Socialist Republic of Vietnam on July 6,
1993, the Law Amending and Supplementing a Number of Articles of the Petroleum
Law, passed by the National Assembly of the Socialist Republic of Vietnam on
June 9, 2000 and the Government’s
Decree No. 48/2000/ND-CP of September 12, 2000 detailing the implementation of
the Petroleum Law;
Pursuant to the Law on Foreign Investment in Vietnam passed by the National
Assembly of the Socialist Republic of Vietnam on November 12, 1996, the Law
Amending and Supplementing a Number of Articles of the Law on Foreign Investment
in Vietnam passed by the National Assembly of the Socialist Republic of Vietnam
on June 9, 2000 and the Government’s
Decree No. 24/2000/ND-CP of July 31, 2000 detailing the implementation of the
Law on Foreign Investment in Vietnam;
Pursuant to the current tax laws and ordinances of the Socialist Republic of
Vietnam and the Government’s
Decrees detailing the implementation of the tax laws and ordinances;
Pursuant to the Government’s
Decree No. 178/CP of October 28, 1994 defining the tasks, powers and
organizational structure of the Finance Ministry;
The Finance Ministry hereby guides the implementation of tax provisions
applicable to organizations and individuals conducting oil and gas prospection,
exploration and exploitation activities under the Petroleum Law as follows:
Part One
GENERAL PROVISIONS
1. The guidances in this
Circular shall apply to organizations and individuals conducting oil and gas
prospection, exploration and exploitation activities in Vietnam under the
provisions of the Petroleum Law and the Government’s
Decree No. 48/2000/ND-CP of September 12, 2000 detailing the implementation of
the Petroleum Law (hereinafter called Decree No. 48/2000/ND-CP for short).
2. Organizations and individuals
conducting oil and gas prospection, exploration and exploitation activities
shall comply with the tax provisions guided in this Circular according to each
petroleum contract, concretely:
- For petroleum contracts signed
in the form of production-sharing contract, the operators shall have to represent
the contractors to declare and pay tax (hereinafter referred collectively to as
tax payers).
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- For petroleum contracts signed
in the form of joint-venture contract for the establishment of joint-venture
enterprises having Vietnamese legal person status, the joint-venture enterprises
shall be the tax payers.
For cases where Vietnam Oil and
Gas Corporation conducts-
the oil and gas prospection, exploration and exploitation activities by itself,
Vietnam Oil and Gas Corporation shall be the tax payer.
3. Where an organization or
individual conducts oil and gas prospection, exploration and exploitation
activities under different petroleum contracts, the implementation of tax
provisions under this Circular’s
guidance shall be effected separately according to each petroleum contract.
4. Where the contractors
participating in petroleum contracts in form of production-sharing contract or
joint-administration contract receive the contractual shares divided in oil and
gas and take responsibility to consume their divided shares of oil and gas, the
declaration and payment of taxes on petroleum activities shall comply with
separate guidance.
5. Where international treaties
and/or inter-governmental agreements, which the Vietnamese government has
signed, contain tax provisions for oil and gas prospection, exploration and
exploitation activities different from the tax provisions in this Circular, the
tax payment by organizations and individuals conducting oil and gas
prospection, exploration and exploitation shall comply with the signed international
treaties and/or inter-governmental agreements.
Part Two
GUIDING THE
IMPLEMENTATION OF TAX PROVISIONS
I. NATURAL
RESOURCE TAX
1. Taxation
objects:
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Where in the course of
exploiting crude oil and natural gas, organizations and/or individuals
conducting oil and gas prospection, exploration and exploitation activities are
allowed to exploit other natural resources subject to natural resource tax as
provided for by law on natural resource tax, the tax payment shall comply with
current legislation.
2. Determining
payable tax amounts:
The natural resource tax on
crude oil and natural gas shall be determined on the basis of partial progress
of the total net crude oil and natural gas output exploited in the period of
tax payment calculated according to the daily average crude oil and natural gas
output exploited from the entire contractual areas.
Determining payable natural
resource tax in oil and gas:
The
natural resource tax in crude oil, natural gas
=
Daily
average taxable crude oil or natural gas output in the tax payment period
x
The
natural resource tax rate
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The
number of days’ exploiting
crude oil or natural gas tax in the payment period
In which:
- The daily average crude oil or
natural gas output liable to natural resource tax is the total net crude oil or
natural gas output liable to natural resource tax, exploited in the tax payment
period, divided by the number of the exploitation days in the tax payment
period.
- The natural resource tax rate:
prescribed at the Natural Resource Tax Index, Article 44, Article 45 of Decree
No.48/2000/ND-CP, concretely:
For crude oil:
Exploitation
output
Projects
with investment incentives
Other
projects
Up to 20,000 barrels/day
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6%
Over 20,000 barrels to 50,000
barrels/day
6%
8%
Over 50,000 barrels to 75,000
barrels/day
8%
10%
Over 75,000 barrels to 100,000
barrels/day
10%
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Over 100,000 barrels to
150,000 barrels/day
15%
20%
Over 150,000 barrels/day
20%
25%
For natural gas:
Exploitation
output
Projects
with investment incentives
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Up to 5 million m3/day
0%
0%
Over 5 million m3
to 10 million m3/day
3%
5%
Over 10 million m3/day
6%
10%
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The natural resource tax rates
for crude oil or natural gas exploited under the petroleum contracts with
investment incentives shall be based on the list of petroleum projects with
investment incentives, decided by the Prime Minister.
- The number of days exploiting
crude oil or natural gas in the tax payment period is the number of days of
carrying the activity of exploiting crude oil or natural gas in the tax payment
period, excluding days on which production stops due to any reasons.
Example 1. Determining
the payable natural resource tax in crude oil for cases of crude oil
exploitation:
Presumably:
+ Total net crude oil exploited
in the tax payment period : 15,600,000 barrels;
+ The number of production days
in the tax payment period : 78 days;
+ The daily average crude oil
output liable to natural resource tax in the tax payment period: 200,000
barrels/day (15,600,000 barrels: 78 days);
+ Crude oil exploited under
contracts not on the list of projects with investment incentives (where crude
oil is exploited under contracts on the list of projects with investment
incentives, it is calculated similarly with the natural resource tax rate applicable
to projects with investment incentives).
The natural resource tax in
crude oil payable in the tax payment period:
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Example 2: Determining
the payable natural resource tax in natural gas for cases of natural gas
exploitation:
Presumably:
+ The total net natural gas
output exploited in the tax payment period: 858,000,000 m3;
+ The number of production days in
the quarter: 78 days;
+ The daily average natural gas
output liable to natural resource tax in the tax payment period: 11,000,000 m3
(858,000,000 m3 : 78 days);
+ The natural gas exploited
under contracts not on the list of projects with investment incentives (for
cases where the natural gas is exploited under contracts on the list of
projects with investment incentives, it shall be calculated similarly with the
natural resource tax rates applicable to projects with investment incentives).
The natural resource tax in
natural gas payable in the tax payment period:
{(5,000,000 x 5%) + (1,000,000 x
10%)} x 78 days = 27,300,000 m3.
3. Tax
declaration, payment and final settlement:
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The natural resource tax payment
period shall be quarter (3 months) according to calendar year.
- The first natural resource tax
payment period shall last from the first day of oil and gas exploitation till
the last day of a quarter.
- The last natural resource tax
payment period shall last from the first day of a quarter till the day the oil
and gas exploitation ends.
3.1. Temporary payment of
natural resource tax:
3.1.1. The temporarily paid
natural resource tax amount shall be determined as follows:
The
temporarily paid natural resource tax amount
=
The
crude oil or natural gas output actually delivered for sale
x
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x
Price
for calculation of temporarily paid natural resource tax
In which:
- The crude oil or natural gas
output actually delivered for sale is the net crude oil or natural gas output
already delivered for sale.
- The percentage of temporarily
paid natural resource tax shall be determined under the guidance below:
The
temporarily paid natural resource tax percentage
=
The
natural resource tax projected for payment in oil and gas in a year
x
100%
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+ The natural resource tax
projected to be paid in oil and gas in a year shall be determined under the
guidance at Point 2, Section I, Part Two of this Circular, on the basis of oil
and gas output projected to be exploited in the year.
+ The oil and gas output liable
to natural resource tax in a year shall be the net oil and gas output projected
to be exploited in the year.
At least 60 days before the end
of the calendar year, the tax payers shall have to forward to the Finance
Ministry the projected net oil and gas output to be exploited and the projected
number of days of oil and gas exploitation of the following year.
Basing itself on the net oil and
gas output, the projected annual exploitation and the natural resource tax
index for crude oil and natural gas, before December 15 every year, the Finance
Ministry or the bodies authorized by the Finance Ministry shall determine and
notify the tax payers of the percentage of temporarily paid natural resource
tax for next year.
Where in the course of temporary
payment of natural resource tax, the projected oil and gas output and the
projected number of oil and gas exploitation days in the last six months of the
year are at variance with the reported plans, thus increasing or reducing the
percentage of temporarily paid resource tax by 15% or more as against the
temporarily paid natural resource tax percentage already notified by the
Finance Ministry, the tax payers shall have to report such to the Finance
Ministry before May 31 for re-determination of the temporarily paid resource
tax percentage in the last 6 months.
Example 3: Determining
the temporarily paid natural resource tax percentage:
- Determining the temporarily
paid natural resource tax percentage for crude oil:
Presumably:
+ The net crude oil output
projected to be exploited in the year: 62,400,000 barrels;
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+ The daily average taxable
crude oil output: 200,000 barrels/day;
+ The natural resource tax
projected to be paid in the year (to be determined as guided at Point 2,
Section I, Part Two of this Circular): 10,093,200 barrels.
The percentage of temporarily
paid natural resource tax from crude oil exploitation is:
10,093,200
x
100%
=
16.175%
62,400,000
- Determining the temporarily
paid natural resource tax percentage for natural gas:
Presumably:
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+ The projected number of
exploitation days in the year: 312 days;
+ The daily average natural gas
output liable to natural resource tax: 11,000,000 m3;
+ The natural resource tax
projected to be paid in the year (determined as guided at Point 2, Section I,
Part Two of this Circular): 109,200,000 m3.
The percentage of temporarily
paid natural resource tax from natural gas exploitation is:
109,200,000
x
100%
=
3.181%
3,432,000,000
- The price for calculation of
temporarily paid natural resource tax is the oil and gas selling price at the
delivery and reception place up on each delivery for sale under square
transaction contracts. Where oil and gas are not sold under square transaction
contracts, the tax offices of the localities where the tax payers register tax
(hereinafter called collectively the local tax offices) shall determine the
price for natural resource tax calculation according to the following principles:
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- For natural gas: The local tax
offices shall determine the natural resource tax calculation price on the basis
of the selling price of natural gas of the same category on the market, the
delivery and reception place as well as other relevant factors. When necessary,
the tax offices may consult with the Oil and Gas Corporation of Vietnam on the
determination of natural resource tax calculation price for the natural gas.
3.1.2. Time limits for natural
resource tax declaration and temporary payment:
- For crude oil exploitation:
Within 35 days as from the date
of delivering crude oil for sale, the tax payers shall have to make and send to
the tax offices the declaration on temporary payment of natural resource tax
(made according to set form) and at the same time temporarily pay the natural
resource tax as declared for the crude oil output actually delivered for sale
into the State Treasury.
- For natural gas exploitation:
Not later than the 10th day of
the following month, the tax payers shall make and send the declaration on
temporary payment of resource tax (made according to set form) and pay the
natural resource tax on the net natural gas output exploited in the previous
month into the State Treasury according to the time limits inscribed in the tax
notices, but must not be later than the 25th of the following month.
Past the above time limits, if
the tax payers still fail to send the declarations on temporary payment of
natural resource tax and enclose documents thereon to the tax offices, the
latter may set the natural resource tax amounts and notify the tax payers of
the natural resource tax amount to be temporarily paid, issue decisions on
sanction against the late tax declaration and payment according to the current
law provisions and notify the time limits for the payment of natural resource tax
set by the tax offices and fines (if any).
3.2. Final settlement of natural
resource tax:
The natural resource tax shall
be settled on the basis of net oil and gas output actually exploited in the
period of tax payment, concretely as follows.
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3.2.1a. Determining the natural
resource tax to be paid in crude oil in the tax payment period:
The
natural resource tax to be paid in crude oil in the tax payment period
=
The
daily average crude oil output liable to natural resource tax in the tax
payment period
x
The
natural resource tax rate
x
The
number of crude oil exploitation days in the tax payment period
3.2.1b. Determining the
percentage of natural resource tax in crude oil of the exploitation output in
the tax payment period:
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=
The
natural resource tax to be paid in crude oil in the tax payment period
x
100%
The
crude oil output exploited in the tax payment period
3.2.1c. Determining the natural
resource tax in crude oil delivered for sale in the tax payment period:
The
natural resource tax in crude oil delivered for sale in the tax payment period
=
The
crude oil output delivered for sale
x
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3.2.1d. Determining the natural
resource tax in crude oil not yet delivered for sale in the tax payment period
for use as basis for settling the natural resource tax in crude oil to be paid
for the subsequent tax payment period:
The
natural resource tax in crude oil not yet delivered for sale in the tax
payment period
=
The
natural resource tax in crude oil not yet delivered for sale in the previous
tax payment period
+
The
natural resource oil payable in the tax payment period
-
The
natural resource tax in crude oil delivered for sale in the tax payment period
3.2.1e. Determining the payable
amount from the natural resource tax crude oil delivered for sale in the tax
payment period:
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=
The
natural resource tax in crude oil delivered for sale in the tax payment period
x
The
natural resource tax calculation price for crude oil
In which:
- The natural resource tax in
crude oil delivered for sale in the tax payment period shall be determined as
guided at Point 3.2.1c above;
- The natural resource tax
calculation price for crude oil is the weighted average price of crude oil sold
at the delivery place under the square transaction contract in the tax payment
period.
Example 4: Determining
the natural resource tax calculation price:
Presumably: The crude oil output
allowed for sale in the quarter (10,000,000 barrels) is delivered for sale in
three lots: Lot 1 of 2,000,000 barrels sold at the price of USD 18/barrel; lot
2 of 2,000,000 barrels sold at the price of USD 20/ barrel; lot 3 of 6,000,000
barrels sold at the price of USD 14/barrel.
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(2,000,000
x 18) + (2,000,000 x 20) + (6,000,000 x 14)
=
=
USD 16/barrel
10,000,000
Where crude oil is not sold
under square transaction contracts, the natural resource tax calculation price
shall be determined as guided at Point 3.1. Section I, Part Two of this
Circular.
3.2.1f. Determining the
underpaid (or overpaid) amount from the natural resource tax crude oil
delivered for sale in the tax payment period:
The
underpaid (or overpaid) amount from the natural resource tax in crude oil
delivered for sale in the tax payment period
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The
underpaid (or overpaid) amount from the natural resource tax in crude oil
delivered for sale in the previous tax payment period
+
The
amount from the natural resource tax in crude oil to be paid in the tax
payment period
-
The
natural resource tax amount temporarily paid in the tax payment period
In which:
The amount of money from the
sale of natural resource tax-
in crude oil underpaid (or overpaid) in the previous tax payment period shall
be determined according to the natural resource tax settlement declaration of
the previous tax payment period.
- The amount of money from the
sale of natural resource tax in crude oil to be paid in the tax payment period
shall be determined under the guidance at Point 3.2.1e, Section I, Part Two of
this Circular.
- The temporarily paid natural
resource tax amount shall be determined under the guidance at Point 3.1,
Section I, Part Two of this Circular.
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3.2.2a. Determining the natural
resource tax in natural gas to be paid in the tax payment period:
The
natural resource tax in natural gas to be paid in the tax payment period
=
The
daily average natural gas output liable to natural resource tax in the tax
payment period
x
The
natural resource tax rate
x
The
number of days of natural gas exploitation in the tax payment period
3.2.2b. Determining the amount
to be paid from the natural resource in tax natural gas delivered for sale in
the tax payment period:
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=
The
natural resource tax in natural gas to be paid in the tax payment period
x
The
natural resource tax calculation price for natural gas
In which:
- The natural resource tax in
natural gas to be paid in the tax payment period shall be determined as guided
at Point a above;
- The natural resource tax
calculation price for natural gas is the selling price under the square
transaction contract at the delivery and receipt place in the tax payment
period.
Where the natural gas is not
sold under square transaction contracts, the natural resource tax calculation
price shall be determined as guided at Point 3.1, Section I, Part Two of this
Circular.
3.2.2c. Determining the
underpaid (or overpaid) amount from the sale of natural resource tax in natural
gas in the tax payment period:
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=
The
underpaid (or overpaid) amount from the sale of natural resource tax in
natural gas in the previous tax payment period
+
The
amount from the sale of natural resource tax in natural gas to be paid in the
tax payment period
-
The
natural resource tax amount temporarily paid in the tax payment period
In which:
- The underpaid (or overpaid)
amount from the sale of natural resource tax in natural gas in the previous tax
payment period shall be determined according to the natural resource tax
settlement declaration of the previous tax payment period.
- The amount from the sale of
natural resource tax in natural gas to be paid in the tax payment period shall
be determined as guided at Point 3.2.2b, Section I, Part Two of this Circular.
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Within the first 40 days of the
following quarter, the tax payers shall have to declare and send to the tax
offices the natural resource tax settlement of the previous tax payment period
(made according to the set form).
Upon the tax settlement, if the
temporarily paid tax amount in the tax payment period is larger than the
payable tax amount, the overpaid tax amount shall be cleared against the
payable tax amount of the next tax payment period; if the temporarily paid tax
amount is smaller than the payable tax amount, the tax payers shall have to
fully pay the outstanding tax amount into the State Treasuries at the time when
the resource tax settlement sheet is submitted. Where tax payers are detected
as having falsely declared the natural resource tax settlement, the tax offices
shall, within 7 days after receiving the resource tax settlement, notify such
tax payers in writing of the official tax amounts that would be paid in the
previous tax payment period and the deadline for making the resource tax
settlement.
Past the above-said 40 day- time
limit, if the tax payers still fail to send to the tax offices the resource tax
settlement of the previous tax payment period, the tax offices may fix the tax
amounts to be paid for the previous tax payment period, notify the tax payers
of the fixed tax amounts, the temporarily paid tax amounts in the tax payment
period, the overpaid tax amounts deducted into the payable tax amount of the
next tax payment period (if any), or the outstanding tax amount to be paid as
well as of the decisions on sanction against the late tax declaration and
payment according to the current law provisions and the deadline for payment of
the outstanding tax and fines (if any).
Where there is no subsequent tax
payment period while the temporarily paid natural resource tax amount is larger
than the tax amount payable in the tax payment period, the Finance Ministry
shall refund the overpaid tax amounts to the tax payers. The dossiers of
requesting the tax reimbursement shall comply with the guidance in Circular
No.25/2000/TT-BTC of March 30, 2000 of the Finance Ministry, including:
+ The official dispatch
requesting the reimbursement of overpaid tax amount. The official dispatch must
clearly state the reasons for such tax reimbursement request; the name, tax
code, address, account number of the tax reimbursement requester;
+ The list of the tax amounts
paid in the final tax payment period, enclosed with vouchers on money payment
into the State Treasuries (the copies certified by the tax reimbursement
requester) and the written certification of the State Treasuries of the paid
tax amounts (clearly inscribing the tax amounts paid into chapters, categories,
items, grades as provided for by the Budget Index);
+ The tax office’s notice on natural resource tax
settlement of the final tax payment period, clearly inscribing the overpaid
natural resource tax amount to be refunded (copies certified by the tax
reimbursement requester).
The dossiers requesting the tax
reimbursement shall be addressed to the local tax offices where the tax payers
have registered their tax payment. The tax offices shall check the dossiers. If
the tax reimbursement- requesting dossiers are complete and valid, the tax
offices shall, within 7 days, have to forward the tax reimbursement dossiers to
the Finance Ministry (The General Department of Tax) so that the latter shall
consider and issue decisions on tax reimbursement. Where the tax reimbursement
dossiers are incomplete and invalid, the tax offices shall, within 5 days,
notify such in writing to the tax reimbursement requesters.
Within 15 days after receiving
the complete and valid dossiers, the Finance Ministry shall issue decisions on
tax reimbursement for the tax reimbursement requesters.
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Organizations and individuals
conducting oil and gas prospection, exploration and exploitation activities shall
pay export tax and import tax according to the provisions of the current Law on
Import Tax and Export Tax. Besides, the Finance Ministry guides a number of
specific contents as follows:
1. Crude oil export tax:
The crude oil export tax shall
be determined as follows:
The
crude oil export tax amount
=
The
exported crude oil volume
x
The
tax calculation price
x
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In which:
The exported crude oil volume
is the net crude oil actually exported.
The tax calculation price is
the crude oil selling price under the square transaction contract. Where crude
oil is not sold according to the square transaction contract, the export tax
calculation price shall be determined as guided at Point 3.1, Section I, Part
Two of this Circular.
- The crude oil export tax
percentage:
The
crude oil export tax percentage tax
=
100%
-
The
temporarily paid natural resource percentage current
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The
crude oil export tax rate according to the Export Tariff
Example 5. Determining
the export tax percentage for exported crude oil:
Presumably:
+ The temporarily paid natural
resource tax according to the above-mentioned example 3: 16.175%
+ The crude oil export tax rate according
to the current Export and Import Tariff: 4%
The crude oil export tax
percentage:
3.353% = {(100% - 16.175%) x 4%}
Before December 15 every year,
the Finance Ministry or the bodies authorized by the Finance Ministry shall
base themselves on the temporarily paid natural resource tax percentage and the
crude oil export tax rate to notify the percentage of export tax temporarily
paid for each petroleum contract. Where there is change in the projected oil
and gas output to be exploited in the last 6 months, thus requiring the
readjustment of the percentage of the temporarily paid natural resource tax as
guided at Point 3.1, Section I, Part Two of this Circular, the Finance Ministry
shall re-determine and re-notify the crude oil export tax percentage.
For contracts on petroleum being
under exploitation, if the tax payers have already paid the export tax for the
crude oil volume being the natural resource tax of the net crude oil output
exported as from July 1, 2000, the already paid export tax amount for the
natural resource tax crude oil not subject to export tax shall be deducted into
the payable export tax amounts of the subsequent tax payment periods. In order
to supply basis for determining the export tax amount already paid for the
natural resource tax in crude oil of the net crude oil output, exported as from
July 1, 2000, the tax payers shall have to send their dossiers to the Finance
Ministry (the General Department of Tax), including:
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+ The list of export tax amounts
and copies of vouchers on payment of crude oil export tax already paid for the
net crude oil output actually exported according to the goods export and import
declarations as from July 1, 2000;
+ The settlement of natural
resource tax for the net oil and gas output, exploited as from July 1, 2000.
2. Crude oil export tax declaration
and payment:
The procedures for crude oil
export tax declaration and payment shall comply with the provisions of the
legislation on export tax and import tax.
The time limit for crude oil
export tax payment shall be 35 days as from the date the customs offices carry
out the procedures for crude oil export.
Past the above-said time limit,
if tax payers still fail to declare and pay export tax, the customs offices
shall apply measures to handle the violations of the regulations on declaration
and late payment of export tax according to the provisions of the legislation
on export tax and import tax.
3. Export tax exemption:
3.1. Organizations and
individuals conducting oil and gas prospection, exploration and exploitation
activities that directly import or entrust the import of, goods, shall be
exempt from the import tax for import goods mentioned in Article 54 of Decree
No. 48/2000/ND-CP.
Basing itself on the investment
license, working program, annual budget and list of supplies which can be
produced at home, promulgated by the Ministry of Planning and Investment, the
Trade Ministry shall approve the list of duty-free import goods, duty-free
goods temporarily imported for re-export in service of the oil and gas
prospection, exploration and exploitation activities of each petroleum contract.
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3.2. Subcontractors, other
organizations and individuals, that directly import or entrust the import of,
goods shall be exempt from import tax for goods mentioned in Article 54 of
Decree No. 48/2000/ND-CP, which are imported to supply for organizations and/or
individuals conducting oil and gas prospection, exploration and exploitation
through petroleum service contracts or goods supply contracts, signed with the
organizations and/or individuals conducting oil and gas prospection,
exploration and exploitation activities.
The dossiers to be produced to
the Customs office for import tax exemption shall include:
+ The official dispatch
requesting the import tax exemption;
+ Documents related to goods
import (as provided for import goods);
+ Certification by the organizations
and/or individuals conducting oil and gas prospection, exploration and
exploitation of the quantity, categories and specifications of goods exempt
from import tax, which are used for oil and gas prospection, exploration and
exploitation activities under the signed petroleum service contracts or goods
supply contracts;
+ The petroleum service
contracts or the goods supply contracts signed with organizations and/or
individuals conducting oil and gas prospection, exploration and exploitation
activities (the copies certified by units). Where goods are imported many
times, they shall be presented only upon the first importation;
+ The list of goods exempt from
import tax, granted by the Trade Ministry to organizations and/or individuals
conducting oil and gas prospection, exploration and exploitation activities
(the copies certified by organizations or individuals conducting oil and gas
prospection, exploration and exploitation activities). Where goods are imported
many times, such list shall be produced only upon the first importation;
+ The contract on import or
entrusted import of goods in service of oil and gas prospection, exploration
and exploitation activities (the copies certified by the units). Where goods
are imported many times, such contract shall be produced only upon the first
importation.
Upon the expiry of the time
limit for the performance of the goods supply contract or the service provision
contract, the subcontractors or other organizations and individuals shall have
to make tax settlement with the customs offices where the import tax exemption
procedures are carried out and notify the organizations and/or individuals
conducting oil and gas prospection, exploration and exploitation activities of
the quantity and value of goods exempt from import tax and actually used for
oil and gas prospection, exploration and exploitation activities. The volume of
goods exempt from import tax but not used for oil and gas prospection,
exploration and exploitation activities must be subject to the retrospective
collection of import tax according to the provisions of the current legal
documents on export tax and import tax.
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The import tax exemption guided
at this Point 3.2 shall apply to goods supply contracts signed with organizations
or individuals conducting oil and gas prospection, exploration and exploitation
activities as from the effective date this of Circular.
4. Declaration
and retrospective payment of import tax:
4.1. If the import duty-free goods
mentioned in Article 54 of Decree No. 48/2000/ND-CP are used for purposes other
than those entitled to import tax exemption or sold on the Vietnamese market,
the permission of the Trade Ministry is required. Organizations and individuals
conducting oil and gas prospection, exploration and exploitation must
retrospectively pay the already exempted import tax amounts.
For goods imported at the time
when the Special Consumption Tax Law has not come into force and already exempt
from import tax, but used for purposes other than the primary purposes, or sold
on the Vietnamese market at the time the Special Consumption Tax Law takes
effect, apart from the retrospective payment of import tax (at the tax rate
available at the time of retrospective payment), the organizations and
individuals conducting oil and gas prospection, exploration and exploitation
activities shall have to pay the special consumption tax for goods subject to
special consumption tax.
Within 2 working days as from
the date the goods are used for purposes other than those entitled to tax
exemption, or the goods-selling date inscribed on relevant vouchers and
invoices, the organizations and individuals conducting oil and gas prospection,
exploration and exploitation activities shall have to make declarations with
the customs offices of the provinces or centrally-run cities where their
headquarters are located or with the customs offices of the localities where
goods are sold, or with the customs offices where the goods import declarations
have been registered (according to the set form). Past the above time limit, if
they fail to make the declarations, they shall be sanctioned under the
provisions of the Import Tax and Export Tax Law as well as the Special
Consumption Tax Law.
The retrospectively paid import
tax shall be determined on the tax calculation bases including the tax rate,
the exchange rate, the tax calculation rate at the time of retrospective
payment.
In the course of managing the
tax collection from the organizations and individuals conducting oil and gas
prospection, exploration and exploitation activities, the tax offices shall
have to supervise the use of duty-free import goods; upon the detection of
cases where the goods are used not for the right purposes or already sold, apart
from the collection of value added tax according to the provisions of the Law
on Value Added Tax, the directors of the provincial/municipal Tax Departments
may issue decisions to retrospectively collect the import tax or special
consumption tax (if any) and impose sanctions according to the provisions of
the Law on Export Tax and Import Tax and the Law on Special Consumption Tax.
4.2. If import duty-free goods
mentioned in Article 54 of Decree No. 48/2000/ND-CP are assigned to other
organizations and/or individuals conducting oil and gas prospection,
exploration and exploitation activities under the already approved petroleum
contracts, the Trade Ministry�s
permission is required. The organizations and individuals conducting oil and
gas prospection, exploration and exploitation activities are exempt from
retrospective payment of import tax.
Within 2 working days after the
assignment of import duty-free goods, the organizations and/or individuals
conducting oil and gas prospection, exploration and exploitation activities
that own the assigned goods shall have to declare such with the customs offices
of the provinces or centrally- run cities where they are headquartered, or with
the customs offices of the localities where goods are assigned or with the
customs offices where the import declarations are registered. The customs
offices shall base themselves on the actual goods assignment to issue decisions
on import tax exemption and send one copy of such decisions to the customs
offices where the subjects re-purchasing the goods have registered the goods
import to serve as basis for deduction from the list of duty-free import goods
granted by the Trade Ministry to the goods re-purchasers.
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Within two working days after
the import duty-free goods are transferred to Vietnam Oil and Gas Corporation,
the organizations and/or individuals conducting oil and gas prospection,
exploration and exploitation activities shall have to declare such with the
customs offices of the provinces or centrally-run cities where they are
headquartered, or with the customs offices of the localities where goods are
transferred, or the customs offices where the import declarations are
registered. The customs offices shall base themselves on the actual goods
transfer to issue decisions on import tax exemption.
III. VALUE
ADDED TAX (VAT)
Organizations and individuals
conducting oil and gas prospection, exploration and exploitation shall pay VAT
according to the provisions of the current VAT Law. Besides, the Finance
Ministry guides a number of specific contents as follows:
1. Organizations and individuals
conducting oil and gas prospection, exploration and exploitation, that directly
import or entrust the import of, goods, shall not have to pay VAT on imported
goods not subject to VAT as prescribed in Article 55 of Decree No.
48/2000/ND-CP. The procedures and dossiers produced to the customs offices for
non-payment of VAT shall comply with the current law provisions on VAT.
In order to supply basis for
determining imported supplies not liable to VAT, annually, the organizations
and individuals conducting oil and gas prospection, exploration and
exploitation activities shall have to send official dispatches committing to
the petroleum contracts in the period of prospection, exploration and field
development to the customs offices where the goods import procedures are
carried out. Within 30 days before the end of the prospection, exploration and
field development period, the organizations and individuals conducting oil and
gas prospection, exploration and exploitation activities shall have to notify
the customs offices of the time of ending the field development period and
embarking on the exploitation.
The determination of the import
supplies which cannot be produced at home yet and are necessary for exploration
and field development activities and not liable to VAT as provided for in
Article 55 of Decree No. 48/2000/ND-CP shall apply to goods import declarations
as from July 1, 2000 and not apply to petroleum contracts being in the
exploitation period and conducting additional prospection, exploration and
field development.
2. Subcontractors and other
organizations and individuals that directly import or entrust the import of,
goods shall not have to pay VAT on VAT-free import goods specified in Article
55 of Decree No. 48/2000/ND-CP to supply them for organizations and/or
individuals conducting oil and gas prospection, exploration and exploitation
activities through petroleum service contracts or goods supply contracts signed
with organizations and/or individuals conducting oil and gas prospection,
exploration and exploitation activities.
The dossiers produced to the
customs offices for non-payment of VAT shall be the same as those on import tax
exemption stated at Point 3.2, Section II, Part Two of this Circular.
The customs offices shall base
themselves on the above-mentioned dossiers, the actual goods import, the list
of equipment, machinery, special-use transport means and supplies, which can be
produced at home, promulgated by the Ministry of Planning and Investment as
well as the commitment to the petroleum contract in the period of prospection,
exploration and field development (applicable to cases of importation of
supplies) to determine the goods items not liable to VAT.
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IV.
ENTERPRISE INCOME TAX (EIT)
1. Taxation
objects:
The entire income from oil and
gas prospection, exploration and exploitation activities and other incomes of
organizations and individuals conducting oil and gas prospection, exploration
and exploitation shall be liable to enterprise income tax.
2. Determining
the taxable income:
The
taxable income in the tax calculation year
=
Income
from oil and gas prospection exploration and exploitation in the tax
calculation year
+
Other
incomes
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2.1.1. The turnover from oil and
gas prospection, exploration and exploitation activities is the entire value of
oil and gas output actually sold under square transaction contracts in the tax
calculation year.
Where oil and gas are not sold
under the square transaction contracts, the turnover from oil and gas
prospection, exploration and exploitation activities shall be determined by way
of multiplying the corresponding oil and gas volume by the selling prices set
by the tax offices as guided at Point 3.1, Section I, Part Two of this Circular.
2.1.2. Expenses related to oil
and gas prospection, exploration and exploitation to be subtracted when
determining the taxable income shall include:
2.1.2a. Expenses allowed to be
recovered in the tax calculation year are those actually arising, directly
related to oil and gas prospection, exploration and exploitation activities
within the scope of the petroleum contract, and audited annually.
When determining the taxable
income in the tax calculation year, the tax payers may subtract the actually
arising expenses allowed to be recovered but not beyond the percentages agreed
upon in the petroleum contracts. Where the petroleum contracts contain no
agreement on expense recovery percentages, the expense recovery percentage to
be subtracted upon the determination of taxable income shall be 35%.
The expense amounts considered
to be expenses allowed to be recovered shall be agreed upon by the parties in
the petroleum contracts, but include the following principal expenses:
- The costs of raw materials, materials,
fuels, energy, machinery, equipment, transport means, working instruments,
goods actually used for oil and gas prospection, exploration and exploitation
activities;
- Wage, remuneration and amounts
of wage and remuneration character; mid-shift meal and allowances, subsidies
paid to Vietnamese and foreign laborers on the basis of labor contracts or
collective labor agreements in conformity with the provisions of the Vietnamese
legislation on labor;
- Expenses for scientific and
technological research; expenses for innovations and modification; expenses for
environmental protection; expenses for maintenance of warehouses, buildings,
fire prevention and fighting; expenses for education, training and health care;
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+ Electricity, water, postal
services, auditing rent, printing of documents;
+ Expenses for liability
insurance, property insurance under contracts signed with Vietnam insurance
companies or other insurance companies licensed for lawful operation in Vietnam
(hereinafter called the insurance enterprises). For insurance operations under
the international practices, which the organizations and individuals conducting
oil and gas prospection, exploration and exploitation activities are obliged to
participate in, but at the time when the insurance demand arises the insurance
enterprises fail to satisfy such arising insurance demand, the organizations
and individuals conducting oil and gas prospection, exploration and
exploitation activities may participate in the insurance at foreign insurance
companies. The expenses for insurance participation shall be accounted as
expenses allowed to be recovered.
+ Procurement expenses or
payment for the use of technical documents, services, techniques; expenses for
transfer of technology, copyright, patents, trademarks under technology
transfer contracts, license contracts, already approved by the Ministry of
Science, Technology and Environment or competent bodies.
+ Expenses for renting assorted
machinery, equipment, means in service of oil and gas prospection, exploration
and exploitation activities under renting contracts;
+ Expenses for consultancy under
consultancy hiring contracts and expenses for other services hired from outside;
- Expenses for dismantling fixed
constructions in services of oil and gas prospection, exploration and
exploitation activities.
- Expenses directly related to
the consumption of oil and gas such as the cost of maintenance, the costs of
loading, unloading, transport, depot and yard renting.
- Expenses for management and
administration, including expenses for general management and administration
directly related to oil and gas prospection, exploration and exploitation
activities arising in Vietnam.
- VAT already paid for goods
and/or services used for the production of or trading in VAT-free goods and/or
services.
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2.1.2b. Natural resource tax and
export tax must be paid in the tax calculation year.
2.1.2c. The petroleum commission
agreed upon in the petroleum contracts such as signature commission, commercial
discovery commission, production commission actually arising in the tax payment
period. Particularly the petroleum commissions arising before the commercial
production shall be distributed according to the time limits applicable to
depreciation of intangible fixed assets as currently provided for by the
Finance Ministry, when determining the taxable income.
2.1.2d. The donations and
financial assistance amounts contributed for social and/or charity purposes to
Vietnamese organizations and individuals such as donations for overcoming the
consequences of natural calamities, unexpected accidents, contributions to the
fund in support of Vietnamese hero mothers, martyrs’
families, people with meritorious services to the revolution, supportless
disabled persons, to funds against social evils-related diseases.
All the above-listed expenses
must be evidenced by valid vouchers; any expense without vouchers or with
invalid vouchers shall not be accounted as expenses when determining income
liable to enterprise income tax.
2.2. Other incomes in the tax
calculation year include:
2.2.1. The difference between
securities purchase and sale after minus the expenses related to securities
trading;
2.2.2. Income from the right to
own, the right to use property, including:
+ Income from property leasing;
+ Income from the use of or the
right to use intellectual property;
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For cases of property loss or
damage due to subjective causes, the loss amounts related to such property must
not be accounted into other incomes and the subjects liable to make
compensations therefor according to law provisions must be determined.
2.2.3. Income from property
transfer, liquidation;
2.2.4. Loan interests, deposit
interests, including the deposit interest arising from the capital-calling
amounts of contractors, which have not yet been used for oil and gas
prospection, exploration and exploitation activities.
2.2.5. Foreign currency trading
difference, exchange rate difference under the guidance of the Finance Ministry;
2.2.6. Income from bad debts
which have been already written off from the accounting books and now reclaimed.
2.2.7. Payable debts whose
creditors cannot be identified.
2.2.8. Income from oil and gas prospection,
exploration and exploitation activities and other incomes related to oil and
gas prospection, exploration and exploitation activities from the previous
years which have not yet been included in the financial reports of those years
and have been detected this year.
2.2.9. Incomes from other
turnovers related to oil and gas prospection, exploration and exploitation
activities such as the proceeds from the sale of oil and gas in the period of
trial production before commencing the commercial production; the proceeds from
the sale of supplies not used up while the costs of these supplies have already
been accounted as expenses to be recovered; revenues from the sale of discard
materials, charges collected from customers for use of means and material
foundations in the course of oil and gas purchase and other revenues, after
subtracting the expenses for the generation of taxable incomes.
2.2.10. Other incomes such as
bonuses from customers, gifts, presents.
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The
enterprise income tax amount payable in the tax calculation year
=
The
taxable income in the tax calculation year
x
The
enterprise income tax rate
In which:
- The taxable income in the tax
calculation year shall be determined as guided at Point 2 of this Section IV.
- The enterprise income tax rate
is prescribed in Article 33 of the Petroleum Law and specifically inscribed in
the investment licenses or the petroleum contracts but approved by the
investment licenses.
For petroleum contracts signed
in form of production-sharing contract or joint- administration contract: The
enterprise income tax amount to be paid by each contractor shall be equal to
the payable enterprise income tax amount (determined under the above guidance)
multiplying by (x) the divided petroleum profit of each contractor in the
petroleum contract.
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The enterprise income tax shall
be temporarily paid on a quarterly basis and settled according to the tax calculation
year. The enterprise income tax calculation year shall commence on January 1
and end on December 31. Where a tax payer applies the fiscal year other than
the calendar year, which has been approved by the Finance Ministry, the tax
calculation year shall be such fiscal year.
The first tax calculation year
shall be determined as from the first day of carrying out the oil and gas
prospection, exploration and exploitation activities till the last day of such
calendar year or the last day of such fiscal year.
The final enterprise income tax
calculation year shall be counted from the starting day of the calendar year or
the starting day of the fiscal year till the day the petroleum contract
terminates.
4.1. Temporary payment of tax:
For petroleum contracts with the
percentage of temporarily paid enterprise income tax amounts being determined
as guided below, the temporary payment of enterprise income tax shall be made
upon each delivery for sale.
4.1.1. Determining the
temporarily paid enterprise income tax amount:
The
temporarily paid EIT amount
=
Turnover
of oil and gas delivered for sale
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The
temporarily paid EIT percentage
In which:
- The turnover from oil and gas
sale is the total value of the net oil and gas output sold under the square transaction
contract of each delivery for sale.
- Where oil and gas are not sold
under the square transaction contract, the turnover from oil and gas
prospection, exploration and exploitation activities shall be determined by way
of multiplying the corresponding oil and gas output by the selling price set by
the tax office as guided at Point 3.1, Section I, Part Two of this Circular.
The temporarily paid enterprise
income tax percentage shall be determined under the following guidance:
The
temporarily paid EIT percentage
=
100%
-
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-
The
temporarily paid natural resource tax percentage
-
The
export tax percentage
x
The
EIT rate
Example 6: Determining the
temporarily paid EIT percentage for crude oil exploitation:
Presumably:
+ The percentage of expenses
allowed to be recovered: 35%
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+ The temporarily paid export
tax percentage (according to Example 5): 3.353%.
+ The enterprise income tax
rate: 50%.
The temporarily paid enterprise
income tax percentage shall be:
(100% - 35% - 16.175% - 3.353%)
x 50% = 22.736%.
In case of temporary payment of
enterprise income tax from natural gas exploitation, the temporarily paid
enterprise income tax percentage shall be determined similarly as above.
Annually, the Finance Ministry
or the body authorized by the Finance Ministry shall notify the temporarily
paid enterprise income tax percentage for each petroleum contract together with
the temporarily paid natural resource tax percentage and the crude oil export
tax payment percentage.
4.1.2. Tax declaration and
temporary payment:
- Where enterprise income tax is
temporarily paid upon each delivery for sale, the organizations and individuals
conducting oil and gas prospection, exploration and exploitation shall make and
send to the tax offices the declaration on the temporary payment of enterprise
income tax (made according to set form) and pay the declared tax amount
together with the temporary payment of natural resource tax as guided at Point
3.1, Section I, Part Two of this Circular.
- Where enterprise income tax is
temporarily paid on the quarterly basis, the enterprise income tax declaration
and temporary payment shall be effected as follows:
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After receiving the declarations,
the tax offices shall check them, determine the tax amount temporarily paid for
the whole year and divide it for each quarter to notify the tax payers of the
temporarily paid tax amount. Where tax payers fail to declare or declare
unclearly the bases for determining the tax amount temporarily paid for the
whole year, the tax offices may fix the temporarily paid tax amount.
Where there appear big changes
in the taxable income in the tax calculation year, the tax offices shall
readjust the temporarily paid tax amount. The readjustment shall be made at the
request of the tax payers after the latter make the financial reports for the
first 6 months of the tax calculation year.
The tax payers shall temporarily
pay the enterprise income tax quarterly according to the tax payment notices of
the tax offices and on the last day of the quarter at the latest. Upon the end
of the tax calculation year or upon the termination of the contract, the
settlement shall be made according to reality.
- Where each contractor pays tax
separately, the administrators or the joint administration companies shall
determine the enterprise income tax amount to be paid by each contractor, make
and send to the tax offices the declaration on temporary payment of enterprise
income tax (made according to set form) for each contractor and pay tax on
behalf of each contractor.
- Before conducting oil and gas
exploitation activities, the tax payers shall only have to declare and pay the
enterprise income tax for other production and business activities.
4.2. Settlement of enterprise
income tax:
The settlement of enterprise
income tax shall be carried out annually according to the provisions in Part
Three of this Circular.
5. Tax
exemption and reduction:
The tax offices shall base
themselves on the stipulations in the investment licenses or the Prime Minister’s decisions on the duration of
enterprise income tax exemption or reduction to determine the tax amounts to be
exempt or reduced; as well as the payable tax amounts for the tax payers.
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V. TAX ON
INCOME FROM THE TRANSFER OF CAPITAL AMOUNTS CONTRIBUTED FOR PARTICIPATION IN PETROLEUM
CONTRACTS
1. Vietnamese organizations
conducting oil and gas prospection, exploration and exploitation activities,
which transfer their capital amounts contributed for participation in the
petroleum contracts and have incomes shall have to pay enterprise income tax on
the income earned from the transfer of their capital amounts in the petroleum
contracts according to the provisions of the legislation on enterprise income
tax.
2. Foreign organizations and
individuals conducting oil and gas prospection, exploration and exploitation
activities, that transfer their capital amounts in the petroleum contracts and
have incomes shall have to pay tax on the incomes earned from the transfer of
capitals for participation in the petroleum contracts according to the
provisions of the Law on Foreign Investment in Vietnam and the guidance in this
Circular.
The taxes on the income from the
transfer of capital contributed for participation in the petroleum contracts
shall include the enterprise income tax and the tax on transfer of profit
abroad, specifically:
2.1. The enterprise income tax:
The income earned from the
transfer of capital amounts in the petroleum contracts shall be liable to the
enterprise income tax as provided for by the Law on Foreign Investment in
Vietnam.
The
payable enterprise income tax
=
The
taxable income
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The
enterprise income tax rate for income from capital transfer
2.1.1. Taxable income:
The
taxable income
=
The
transfer value
-
The
initial value of the transferred capital amount
-
The
transfer expenses
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- The transfer value is
determined as the total actual value the transferor earns under the transfer
contract. Where the transfer contract fails to specify the payment price or the
tax office has grounds to determine that the payment price has not been
determined at the market price, the tax office may check and fix the payment
price of the contract on the basis of reference to the market prices or the
price of possible sale to the third party and the similar transfer contracts.
- The initial value of the
transferred capital amount is determined on the basis of accounting books and
vouchers on expenses allowed to be recovered by the Contractor being a party to
the petroleum contract at the time of capital transfer, after subtracting the
already recovered expenses (if any), recognized by the foreign Contractors to
the petroleum contract and Vietnam Oil and Gas Corporation.
Where the subsequent contractors
further transfer the capital amounts for participation in the petroleum
contracts, the initial value of the capital amount to be transferred each
subsequent time is determined as equal to the transfer value of the preceding
transfer contract plus the expenses allowed to be additionally recovered (if
any), which is determined according to the principles stated in this clause.
- Transfer expenses are the
actual expenses directly related to the transfer, according to the original
vouchers recognized by the tax offices. Where the transfer expenses arise
overseas, such original vouchers must be affirmed by a notary office or an
independent audit of the country where the expenses arise.
The transfer expenses shall
include: the expense for carrying out necessary legal procedures for the
transfer; charge and fee amounts payable when carrying out the transfer
procedures; the expenses for transactions, negotiations and signing of transfer
contracts, etc., evidenced by vouchers.
2.1.2. The tax rate:
The rate of enterprise income
tax on income from capital transfer shall be 25%.
2.1.3. Tax declaration and
payment:
The capital transferor shall be
the payers of income tax on the transfer of capital amounts in the petroleum
contracts but the capital transferee shall have to deduct the tax amount to be
paid by the transferor and remit it into the State budget.
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In cases where the declaration
and calculation of the payable tax amount are found inaccurate, the tax offices
shall, within 5 working days after receiving the declarations, have to notify
the payable tax amounts to the capital transferor or request the capital
transferor to supply necessary documents for the accurate determination of the
payable tax amount.
2.2. Tax on transfer of profits
abroad:
Foreign organizations and
individuals conducting oil and gas prospection, exploration and exploitation
activities that have incomes from the capital transfer, after paying tax on
income from the capital transfer as guided at Point 2.1 above, when
transferring profits abroad or retaining their profits overseas, shall have to
pay tax on transfer of profits abroad under the guidance in Section VI below.
VI. TAX ON
TRANSFER OF PROFITS ABROAD
1. Taxation
objects:
The after-enterprise income tax
profits (including income from capital transfer) of foreign organizations and
individuals or overseas Vietnamese, that conduct oil and gas prospection,
exploration and exploitation activities, if being transferred out of Vietnam or
retained outside Vietnam, shall be liable to tax on transfer of profits abroad
as provided for in the Law on Foreign Investment in Vietnam.
Where foreign organizations and
individuals or overseas Vietnamese that conduct oil and gas prospection,
exploration and exploitation activities in Vietnam use the profits earned from
oil and gas prospection, exploration and exploitation activities to buy goods
in Vietnam and transfer them abroad, or to pay debts for their parent
companies, or use their divided profits to cover the expenditures of their
parent companies’
representative offices in Vietnam, or transfer them from their accounts for
unclear purposes, they shall all be considered as having transferred their
profits abroad and have to pay tax on transfer of profits abroad.
Where foreign organization or
individuals or overseas Vietnamese transfer profits abroad in oil and gas, the
profits subject to tax on transfer of profits abroad shall be determined as
equal to the oil and gas volume subject to tax on transfer of profits abroad
multiplying (x) by the oil and gas selling price under the square transaction
contract. Where oil and gas are not sold under the square transaction contract,
the oil and gas selling price shall be determined by the tax offices under the
guidance at Point 3.1, Section I, Part Two of this Circular.
2. The tax
payers:
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Foreign organizations and
individuals or overseas Vietnamese conducting oil and gas prospection,
exploration and exploitation activities, that transfer abroad their profits in
oil and gas shall, apart from having to pay tax on transfer of profits abroad,
also have to pay the oil and gas export tax. The payment of oil and gas export
tax shall comply with the guidance in Section II, Part Two of this Circular.
3.
Determining payable tax amounts:
The payable amount of tax on
transfer of profit abroad is determined as equal to the profit amount
transferred abroad or considered to be transferred abroad or the profit amount
retained by the investors outside the Vietnamese territory multiplying (x) by
the rate of the tax on transfer of profits abroad prescribed in the investment
license. Where the granted investment license fails to specify the rate of tax
on transfer of profit abroad, such rate shall comply with the provision in
Article 50 of Decree No. 24/2000/ND-CP of the Government detailing the
implementation of the Law on Foreign Investment in Vietnam.
For cases where the investment
licenses issued before July 1, 2000 specify a rate of tax on profit transfer
abroad higher than that prescribed in Article 50 of the Government�s Decree No. 24/2000/ND-CP of
July 31, 2000, the payers of tax on transfer of profits abroad shall file their
applications to the investment-licensing bodies for the adjustment of their
investment licenses. Pending the official adjustment, if transferring profits
abroad, the tax payers shall file their applications to the local Tax
Departments, clearly stating the conditions for enjoying the new tax rate and
declare and pay tax at the new rate. The new profit transfer tax rate shall
apply to the profit amounts transferred abroad as from July 1, 2000. Where tax
payers have already paid the profit transfer tax for the profit amounts
transferred abroad as from July 1, 2000 at a tax rate higher than that
prescribed in Article 50 of the Government�s
Decree No. 24/2000/ND-CP of July 31, 2000, the overpaid tax amount shall be
cleared against the payable tax amount of the subsequent profit transfer.
Where foreign organizations and
individuals or overseas Vietnamese conducting oil and gas prospection, exploration
and exploitation activities earn profits from the transfer of their capital for
participation in the petroleum contract before the commercial output is
achieved, when transferring their profits abroad, the tax rate therefor must be
determined according to the expense amounts actually recovered at the time of
transfer in accordance with the provisions in Article 50 of Decree No.
24/2000/ND-CP.
4. Tax
payment procedures:
The tax on transfer of profits
abroad shall be collected upon each transfer of profit abroad. Where the
profits are used to pay debts for parent companies, to cover the expenditures
of the parent companies’
offices in Vietnam, the tax payers shall declare and pay tax on transfer of
profits abroad monthly. Where profits are retained outside Vietnam according to
each delivery for sale, the tax payers shall declare and pay tax together with
the declaration and temporary payment of natural resource tax and/or enterprise
income tax.
Before transferring their
profits abroad or on the 5th of the following month at the latest, for cases
where profits are used for purposes considered as transfer of profits abroad,
or retained outside Vietnam, the tax payers shall have to make and submit the
tax declaration to the tax offices (made according to set form), and at the
same time pay the declared tax amounts into the State treasuries.
Within 5 days after receiving
the declaration forms, the tax offices shall check them and, if detecting any
errors in the declarations, shall have to issue notices on the payable tax
amounts to the tax payers. The tax payers shall have to additionally pay the
outstanding tax amounts into the State Treasuries according to the tax offices� notices. Where past the
prescribed time limits for submission of the declarations the tax payers still
fail to submit the declarations, the tax offices may fix the payable tax
amounts, issue tax notices and impose sanction for late declaration and payment
of tax.
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Annually, within 90 days after
the end of the fiscal year, foreign organizations and individuals or overseas
Vietnamese conducting oil and gas prospection, exploration and exploitation
activities shall have to report to the tax offices on their divided profit
amounts, the use of profits and the payment of tax on transfer of profits
abroad for the divided profit amounts of the previous years. Where the tax
payers have already paid tax on the transfer of profits abroad but in fact do
not transfer the profits abroad or do not use them for purposes considered to
be the transfer of profits abroad, they shall be entitled to deduct the already
paid profit transfer tax amounts into the payable tax amount of the subsequent
tax payment or to be refunded the paid tax amounts. The dossiers requesting the
reimbursement of paid tax amount shall include:
+ The official dispatch
requesting the reimbursement of the paid tax amount. Its contents must clearly
state the reasons therefor, the name, address and account number of the subject
entitled to the reimbursement of the paid tax amount.
+ The list of the paid tax
amounts, enclosed with vouchers on payment of money into the treasuries (copies
thereof) and the treasuries’
certification of the paid tax amounts (clearly inscribing the tax amounts paid
into chapters, categories, items, grades as prescribed by the State budget
index).
+ The certification by the bank
where the tax reimbursement requester opens account for deposit of the profit
amount for which the tax on transfer of profits abroad has been paid that the
tax reimbursement requester has not yet transferred abroad the profit amount
which has already been declared and taxed.
The dossiers requesting the tax
reimbursement shall be sent to the local tax offices where the tax payers have
registered the tax payment. The tax offices shall check the dossiers. If the
tax reimbursement- requesting dossiers are found complete and valid, the tax
offices shall, within 7 days, have to send the tax reimbursement dossiers to
the Finance Ministry (The General Department of Tax) for issuing decisions on
tax reimbursement. Where the tax reimbursement- requesting dossiers are
incomplete and invalid, the tax offices shall, within 5 days, notify the tax
reimbursement requesters thereof in writing.
Within 15 days after receiving
the complete and valid dossiers, the Finance Ministry shall issue decisions to
reimburse tax to the requesters.
VII. OTHER TAXES,
CHARGES AND FEES
In the course of production and
business activities, organizations and individuals conducting oil and gas
prospection, exploration and exploitation shall have to pay taxes, charges and
fees such as the license tax, the special consumption tax, the copyright income
tax, the land, water or sea surface rent, registration fee� according to the provisions
in current legal documents.
Part Three
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I. ANNUAL
TAX SETTLEMENT
At the end of every fiscal year,
the tax payers shall have to make and send tax settlement reports to the tax
offices. The annual tax settlement shall be carried out with the contents
guided below:
1. Within 90 days after the end
of a fiscal year, the tax payers shall have to submit the reports on production
and business situation, the accounting reports already audited by Vietnam Oil
and Gas Corporation or an independent audit licensed to operate in Vietnam, the
enterprise income tax settlement reports and the reports on settlement of
assorted taxes paid in the year, to the local tax offices.
Within 10 days as from the
above-prescribed date of submitting the tax settlement reports, the tax payers
shall have to pay the outstanding tax amounts according to the settlement
report into the State budget. If failing to make such payment after those 10
days, apart from the full payment of the outstanding tax amount, the tax payers
shall also have to pay a fine for the late payment thereof as prescribed. In
case of overpayment, they may deduct the overpaid amount from the tax amount to
be paid subsequently.
Tax payers are not allowed to
clear the overpaid amount of one tax against the underpaid amount of another
tax when making the annual tax settlement.
2. Basing themselves on the
production and business reports as well as the financial settlement reports of
the tax payers, the Tax Departments of the provinces and centrally-run cities
shall recalculate each kind of tax to be paid by the tax payers in the fiscal
year, and at the same time compare them with the periodical tax declarations in
the year, the temporarily paid tax amounts in order to determine the accuracy
of the tax declarations as well as tax settlement reports. Where tax reports
are made inaccurately, the tax offices shall organize the inspection of the tax
payment by each tax payer.
II.
INSPECTION OF THE ANNUAL TAX PAYMENT SITUATION
In the course of tax management
over petroleum contracts, the provincial/municipal Tax Departments shall have
to organize tax inspections regularly or irregularly when necessary. Before
conducting the inspections, the tax offices shall have to issue inspection
decisions, clearly stating the inspection contents and time limits. The
inspection decisions shall be addressed to tax payers 3 days before the
inspections start. In cases where contents other than those inscribed in the
inspection decisions need to be inspected or the inspection duration needs to
be prolonged, the tax offices shall have to make additional inspection decisions.
The inspection results must be
recorded in writing with the signatures of competent representatives of tax
payers or organizations authorized to pay tax for them and representatives of
the tax offices which conduct the inspection. These inspection records must be
sent by the tax offices to the Finance Ministry (the General Department of Tax)
together with the financial reports as well as the reports on the situation of
tax payment by tax payers (copies thereof).
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Annually, the
provincial/municipal Tax Departments may coordinate with Vietnam Oil and Gas
Corporation in conducting periodical inspection through auditing campaigns of
the tax payment by tax payers. In the course of regular inspection of tax payment,
if the tax offices deem it necessary to conduct separate inspections according
to the regulations on inspection over the tax payers, they may proceed with the
inspection steps as guided above.
The contents of regular
inspection of the tax payment by tax payers shall include:
+ The inspection of tax payment
by tax payers in the tax declaration forms and the tax settlement reports. In
case of detecting that the tax payment declaration is inaccurate or the payable
tax amount is not fully declared, they shall request the concerned tax payer to
produce accounting books and relevant vouchers in order to determine accurately
the payable tax amount and issue a notice requesting the tax payer to fully pay
the outstanding tax amount within 5 days, to be deducted from the subsequent
tax payment or guide the tax payer to carry out procedures for tax
reimbursement (if any).
+ Inspection of the expenses
allowed to be recovered: accrual of the amount of expenses allowed to be
recovered; expenses already recovered; accrual of expenses not yet recovered.
Within 30 days after ending the
regular inspection of the situation of tax payment by tax payers according to
each petroleum contract, the provincial/municipal Tax Departments shall have to
make sum-up reports to the Finance Ministry (the General Department of Tax) on
the results of the inspection of the above contents together with the copy of
the auditing record of each petroleum contract.
III. MAKING
TAX SETTLEMENT WHEN PETROLEUM CONTRACTS EXPIRE OR TERMINATE AHEAD OF TIME BY
DECISIONS OF THE LICENSING BODIES
Within 45 days after the
investment-licensing body issues decision on the expiry or ahead-of- time
termination of a petroleum contract, the tax office should promptly proceed
with the following tasks:
+ Conducting the inspection of
the tax settlement report: determining the arising tax amount, the tax amount
already paid, the tax amount to be further paid, the overpaid tax amount (if
any) in order to notify the tax payers to pay them into the State budget or
guide them to carry out procedures for tax reimbursement request.
+ Giving certification to tax
payers being foreign organizations and individuals (if so requested) of the
enterprise income tax amounts, the tax amount on transfer of profits abroad,
tax on income from the transfer of capital in the petroleum contracts, the
personal income tax amount already paid in Vietnam;
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Part Four
TAX PAYMENT CURRENCIES
AND OTHER GUIDANCES
I. TAX
PAYMENT CURRENCIES
Where oil and gas are sold in US
dollars or freely convertible foreign currencies, the currencies for payment of
taxes related to petroleum activities, including natural resource tax, export
tax, enterprise income tax, shall be the US dollars or freely convertible
foreign currencies actually collected.
Where oil and gas are sold in
Vietnam dong, the currency for payment of taxes related to petroleum activities
shall be the Vietnamese currency.
The conversion from foreign
currencies into Vietnam dong or vice versa shall be made at the average
transaction exchange rates on the inter-bank foreign currency market announced
daily on Nhan Dan (People) paper. In cases where Nhan Dan paper is not
published or does not announce the exchange rates, the applicable conversion
exchange rates shall be those of the preceding day.
The budget revenues from oil and
gas prospection, exploration and exploitation activities shall be accounted
into the Budget Index according to the current regulations.
II. PLACES
FOR TAX DECLARATION AND PAYMENT
1. Granting of tax codes:
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For petroleum contracts signed
in forms of product contract or joint-administration contract, the
administrators or the joint-administration companies shall have to fully
declare the contractors participating in the petroleum contracts into the list
of attached units and declare the subcontractors into the list of contractors,
enclosed with the tax declaration forms. The contractors shall make tax
declaration and registration according form 02-DK-TCT issued together with
Circular No. 79/1998/TT-BTC. The tax offices where the administrators or the
joint administration companies make the tax registration shall grant tax codes
applicable to the tax payers being enterprises to contractors being the
administrators or the joint administration companies and grant tax codes
applicable to the tax payers being units attached to enterprises to each
contractor, including contractors being Vietnamese enterprises participating in
the petroleum contracts in their capacity as contractors. Where a contractor
participates in many petroleum contracts, the contractor shall be given tax
code for each petroleum contract.
The tax offices where tax payers
make tax registration shall have to grant tax codes within 15 days as from the
date of receiving the tax registration papers, which have been fully and
accurately declared according to regulations.
When petroleum contracts expire
or terminate ahead of time, the tax payers shall notify the tax offices where
they make tax registration of the decisions of the Ministry of Planning and
Investment on the contract termination. The provincial/municipal Tax
Departments shall have to notify the cancellation of tax codes for the
terminated petroleum contracts. The tax codes already granted to such petroleum
must not be used and granted to other tax payers. Where a contractor transfer
the entire rights and obligations in the petroleum contract to another subject,
such subject shall have to make registration with the tax office so as to be
allowed to use the tax code granted to the previous contractor. If the
contractor transfer part of the contractual rights and obligations to another
subject, the new subject participating in the petroleum contract shall make
registration with the tax office so as to be granted the tax code.
2. Tax declaration and payment
locations:
2.1. The places for tax payment
registration shall be the Tax Departments of the localities where the tax
payers locate their head offices.
2.2. For petroleum contracts
signed before the promulgation of this Circular, the places for tax payment
declaration shall comply with the current guidance.
III.
RESPONSIBILITIES OF ORGANIZATIONS AND INDIVIDUALS CONDUCTING OIL AND GAS
PROSPECTION, EXPLORATION AND EXPLOITATION ACTIVITIES
1. To strictly comply with the
procedures for registration of tax code granting, tax registration with the tax
offices under the guidance in this Circular. Within 5 days at most as from the
time they relocate their executive offices, to carry out procedures for tax
registration with the provincial/municipal tax offices (according to set form).
2. In the course of production
and business activities, to strictly abide by the regulations on tax
declaration and tax settlement.
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4. To fully produce accounting
books, vouchers and necessary documents related to tax calculation and tax
settlement when so requested by the tax offices.
5. To pay tax fully and on time
as prescribed.
6. Upon the decisions on the
expiry of the oil and gas prospection, exploration and exploitation operation
or the ahead-of-time termination of the petroleum contracts, to notify such to
the tax offices and submit the tax settlement reports on time.
IV.
RESPONSIBILITIES AND POWERS OF TAX OFFICES
1. To guide the tax payers to
make tax registration and declaration strictly according to the prescribed
regime, notify the tax payers of the accounts, budget index for payment of
assorted taxes.
2. To check the tax declaration
forms, examine accounting books, vouchers and necessary documents for tax
calculation, to request tax payers to answer unclear matters related to the tax
calculation.
3. To calculate and notify
payable tax amounts to tax payers. To fix payable tax amounts in cases where
the tax payers fail to voluntarily make registration within the prescribed time
limits or make inadequate and inaccurate declaration or fail to supply fully,
accurately information related to the tax calculation or where the revenues are
affected by the financial and trade relations not under the square transaction
contracts.
4. To inspect the annual tax
payment situation as provided for in Section I1, Part Three of this Circular.
5. To make written records of
and handle tax-related violations within their competence prescribed by law.
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7. To inspect the registration
of accounting regimes to be applied by the tax payers and inspect the
implementation of the registered accounting regimes.
8. To certify tax amounts
already paid by foreign organizations and individuals conducting oil and gas
prospection, exploration and exploitation, if so requested by these subjects.
V. HANDLING
VIOLATIONS AND SETTLING COMPLAINTS
1. The violations of tax
legislation shall be sanctioned as follows:
- Failure to strictly comply
with the provisions on tax registration as provided for at Point 1, Section II,
Part Four of this Circular shall be subject to sanctions as prescribed in the
Government’s Decree No.
22/CP of April 17, 1996 on sanctioning administrative violations in the field
of tax and the current guiding documents.
- Failure to strictly comply
with the provisions on tax payment declaration shall be subject to fines as
prescribed in the Ordinance on Handling of Administrative Violations, Decree
No. 22/CP of the Government and the current guiding documents.
- False declaration of tax money
shall be fined up to 5 times the falsely declared tax amount.
- Late payment of tax shall be subject
to a fine equal to 0.1% (one thousandth) of the late paid tax amount for each
day of late payment.
2. Competence to handle
violations and complaints
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- Tax payers complaints about
tax shall be considered and settled by the tax offices which directly collect
tax. If the involved parties disagree with the settlement by the tax offices
they may lodge their complaints to the superior tax offices and the Finance
Ministry or initiate lawsuits according to law provisions.
Pending the settlement of the
complaints, the complainants must strictly abide by the decisions of the tax
offices.
VI. ORGANIZATION
OF IMPLEMENTATION
This Circular takes effect 15
days after its signing, replaces the Finance Ministry’s
Circular No. 35/1998/TT-BTC of March 21, 1998 guiding the procedures for import
tax exemption for organizations and individuals conducting petroleum activities
under the Petroleum Law, replaces the previous guidances contrary to the
guidances in this Circular and applies to the settlement of natural resource
tax, export tax and enterprise income tax of the 2000 fiscal year.
Where petroleum contracts signed
and granted the investment licenses before the Petroleum Law takes effect
otherwise provide for the tax rates, the exemption and reduction of enterprise
income tax, the agreements in such petroleum contracts shall apply, other taxes
and fees shall comply with the guidance in this Circular. Particularly the
petroleum contract for block 05.1 (Big Bear field) shall be exempt from export
tax for four years as from 1999 and pay natural resource tax at the tax rate
under the direction of the Prime Minister in Official Dispatch No. 1295/VPCP of
March 29, 1999.
The payment of tax on transfer
of profits abroad by the Russian party to the Vietsovpetro joint venture shall
continue to comply with the guidance in Official Dispatch No. 2270/TC-TCT of
May 13, 1999 of the Finance Ministry.
The provincial/municipal Tax
Departments shall have to organize the implementation of, disseminate and guide
tax payers to implement, the provisions of this Circular.
The Tax Departments shall have
to arrange officials to work on full-time basis for the management of the
collection of various taxes from organizations and individuals conducting oil
and gas prospection, exploration and exploitation activities under the
Petroleum Law. This management body shall have to monthly, quarterly and
annually report to the Finance Ministry (the General Department of Tax) on the
tax collection and make other reports in service of the general requirement of
managing the organizations and individuals conducting oil and gas prospection,
exploration and exploitation activities assigned to them for management.
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FOR
THE MINISTER OF FINANCE
VICE MINISTER
VU VAN NINH