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THE
GOVERNMENT
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SOCIALIST
REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
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No:
48/2000/ND-CP
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Hanoi,
September 12, 2000
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DECREE
DETAILING THE IMPLEMENTATION OF THE PETROLEUM LAW
THE GOVERNMENT
Pursuant to the September 30, 1992 Law on
Organization of the Government;
Pursuant to the Petroleum Law of July 6, 1993;
Pursuant to the June 9, 2000 Law Amending and Supplementing a number of
Articles of the Petroleum Law;
At the proposal of the Minister-Director of the Government’s Office,
DECREES:
Chapter I
GENERAL PROVISIONS
Article 1.- Scope of
regulation
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Article 2.- Objects of application
This Decree shall apply to the activities of
prospecting and exploring oil and gas, developing oil and gas fields and
exploiting oil and gas, including processing, gathering, storing and
transporting oil and gas from the exploitation areas to the places of delivery
and the petroleum service activities in the inland, islands, inland waters,
territorial waters, exclusive economic zones and continental shelf of the
Socialist Republic of Vietnam, as well as on projects, means and facilities in
service of petroleum activities as provided for in Article 47 of the Petroleum
Law.
Article 3.- Subjects
entitled to carry out petroleum activities
Organizations and individuals entitled to carry
out petroleum activities shall include:
1. Vietnam Oil and Gas Corporation;
2. Other State enterprises set up under the Law
on State Enterprises;
3. Enterprises set up under the Enterprises Law;
4. Foreign-invested enterprises in Vietnam;
5. Foreign organizations and individuals making
direct investments in Vietnam;
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Organizations and individuals defined in Clauses
2, 3, 4, 5 and 6 of this Article may conduct petroleum activities on the basis
of petroleum contracts signed with the Vietnam Oil and Gas Corporation.
Where petroleum activities are carried out
arbitrarily, the Vietnam Oil and Gas Corporation shall have to draw up plans to
submit them to the Prime Minister for approval and have to abide by the
provisions of the Petroleum Law, the State Enterprises Law, this Decree as well
as other relevant provisions of Vietnamese laws.
Article 4.- Term
definition
In this Decree, the following terms shall be
understood as follows:
1. "Fixed works" are works built and
installed fixedly and used in service of petroleum activities.
2. "Contractual area" is the area
determined on the basis of prospection and exploration lots as agreed upon in
the petroleum contracts or the remaining area after the return of area.
3. "Place of delivery" is the place
agreed upon in the petroleum contract, where the oil and gas ownership is
transferred to parties to the petroleum contract.
4. "Fair transaction contract" is the
transaction contract between the buyer and the seller in the market
relationship, excluding internal sale and purchase contracts of a company,
between Governments, between Governmental organizations, or any transaction and
exchange affected by irregular trade relations.
5. "Accompanied gas" is hydrocarbon in
gaseous form, which is separated in the course of crude oil exploitation and
processing.
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7. "Net oil and gas output" is the
output of oil and gas exploited and retained from the contractual area and
measured at the place of delivery.
Chapter II
PETROLEUM ACTIVITIES
Article 5.- Work plans
and programs
1. Organizations and individuals, when
conducting oil and gas prospection, exploration and exploitation activities
must draw up general plans, detailed plans for such activities, and submit them
to the oil and gas State management body for consideration and approval.
The time limit for consideration and approval
shall not exceed sixty (60) days for a general plan and thirty (30) days for
detailed plan from the date of receiving such plans.
2. Organizations and individuals, when
conducting oil and gas prospection, exploration and exploitation activities,
shall have to draw up yearly working plan corresponding to each period in
conformity with the commitments in the petroleum contracts regarding the time
limit, work contents, financing, and send them to the Vietnam Oil and Gas
Corporation for agreement on the implementation thereof.
Article 6.- Applicable
criteria
Organizations and individuals, when conducting
petroleum activities, shall have to apply Vietnamese criteria on safety,
environment, relevant techniques and technologies.
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The application of other criteria must be
permitted by the Ministry of Science, Technology and Environment.
Article 7.- Documents on
environment and safety
Organizations and individuals, before conducting
oil and gas prospection, exploration and exploitation activities, shall have to
compile and submit to the competent State bodies the following documents:
- The report on assessment of environmental
impacts;
- The safety control program and the evaluation
of risks enclosed with measures to limit incidents and damage;
- The contingency plans, including technical
solutions and the use of means and equipment to overcome incidents.
Article 8.- Requirements
on environment protection and safety
Organizations and individuals conducting oil and
gas prospection, exploration and exploitation activities shall have to perform
the following tasks to protect the environment and ensure the safety:
1. Setting up safety zones and maintain safety
signals for petroleum projects and machinery as well as equipment as provided
for in Article 11 of this Decree;
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3. Implementing programs for observation of
environmental changes, realizing environment protection plans and measures in
order to prevent pollution and overcome consequences of incidents which caused
environmental pollution according to the provisions of the environment
protection legislation;
4. Minimizing adverse or bad impacts on
environment such as soil, water, forest and/or air pollution, causing harms to
the flora and fauna systems, causing ecological imbalance or badly affecting
the living environment of people;
5. Updating data and finalizing the report on
evaluation of risks, the report on implementation of contingency plans;
6. Fully recording incidents and accidents which
have occurred;
7. Issuing emergency notices and promptly
applying remedial measures in case of accidents or incidents;
8. Applying measures to ensure labor safety.
Article 9.-
Responsibilities when incidents occur
Organizations and individuals conducting
petroleum activities shall be held responsible before law for the human,
material and environmental damage as well as for cleaning up and restoring the
environment which has been directly or indirectly affected by petroleum activities.
Article 10.-
Requirements on natural resources preservation
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Article 11.- Oil and
gas safety zones
The distance of safety zone for drilling and
exploiting works on the sea is five hundred meters (500m) outwards from the
outmost edge of the works or from the anchoring position for floating
facilities, except for special cases decided by the Prime Minister. Within two
(2) nautical miles from the outmost edge of the works, means and vessels are
not allowed to anchor. Persons who have no responsibility are not allowed to
infiltrate into the safety zones, except for special cases to be decided by the
Prime Minister.
The safety zone around the oil and gas
prospection, exploration and exploitation works on land shall be defined by the
oil and gas State management body, depending on the geographical and social
conditions of the places where petroleum activities are carried out.
Article 12.-
Regulations on drilling
While conducting the drillings, organizations
and individuals shall have to observe the following regulations:
1. Drilling according to designs or altered
designs which have already been approved;
2. Not to carry out drillings outside the
contractual areas;
3. Keeping all documents and specimen collected
in the course of drilling and submit them to the Vietnam Oil and Gas
Corporation;
4. Promptly notifying Vietnam Oil and Gas
Corporation of other natural resources discovered while drilling.
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Article 13.-
Regulations on oil and gas exploitation
Organizations and individuals exploiting oil and
gas shall have to abide by the current regulations on oil and gas exploitation,
strictly comply with the contents of the general plans as well as the field
development plans, which have already been approved; apply advanced technical
measures and use advanced equipment for optimum oil and gas recovery without
causing harms to the earths substrata, the ecological environment and the field
safety.
Article 14.- Right to
use equipment and means
The Vietnamese Government has the right to use
equipment and means in service of petroleum activities, including pipelines and
depots being managed and used by oil and gas exploiting organizations or
individuals, provided that they shall not obstruct petroleum activities and not
increase the costs for contractors.
Article 15.- Obligation
to dismantle works
Organizations and individuals conducting oil and
gas prospection, exploration and exploitation activities must draw up programs,
plans and cost estimates for the dismantlement of fixed works in service of oil
and gas prospection, exploration and exploitation activities and submit them to
the oil and gas State management body for approval. The dismantling expenses
shall be calculated into the costs of oil and gas recovery.
At the request of the oil and gas State
management body, organizations and individuals carrying out oil and gas
prospection, exploration and exploitation activities may not dismantle or may
dismantle only part of the above-said fixed works.
Article 16.- Petroleum
insurance
Organizations and individuals carrying out
petroleum activities shall have to buy insurance in accordance with the
provisions of Vietnamese law and international practices in the oil and gas
industry, particularly insurance for projects in service of petroleum
activities, environmental pollution insurance, human life insurance, property
insurance and the third party’s civil liability insurance.
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Article 17.- Vietnam
Oil and Gas Corporation’s responsibility to report
The Vietnam Oil and Gas Corporation shall have
to forward to the oil and gas State management body the following documents:
1. Annual and long-term planning and plans on
petroleum activities;
2. Quarterly and annual sum-up reports on the
work performance and results of the petroleum activities;
3. The reports on implementation of economic
and/or technical projects for petroleum activities;
4. Reports on important events and incidents
related to petroleum activities;
5. Other reports at the request of the oil and
gas State management body.
The time limit and content for each type of
document shall be stipulated by the oil and gas State management body.
Article 18.-
Information supply
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The competent State management bodies may
request contractors to supply information and reports when necessary, in
accordance with their respective State management functions.
Article 19.- Keeping
confidential information
Reports and information must be kept
confidential according to the provisions of Vietnamese law.
Organizations and individuals conducting
petroleum activities may use and keep in Vietnam the original documents,
specimen and reports; may temporarily export for re-import such documents and
specimen according to the regulations of competent State bodies.
Chapter III
PETROLEUM CONTRACTS
Article 20.- Forms of
petroleum contract
Petroleum contracts shall be signed in the
following forms:
- Production-sharing contracts;
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- Joint-venture contracts.
Besides the above contractual forms, the Vietnam
Oil and Gas Corporation and partners may opt for other contractual forms.
Article 21.- Operators
The nomination or hiring of operators shall be
agreed upon in the petroleum contracts or made in a separate document.
The scope of authorized operators’ activities
shall be agreed upon by contractual parties in the petroleum contracts or
documents on nomination or hiring of the operators.
The operators may represent the contractual
parties to conduct oil and gas prospection, exploration and exploitation
activities, exercise the rights and perform the obligations within the scope of
authorization under the agreement on nomination or hiring of operators, and
abide by other relevant provisions of Vietnamese law.
Article 22.- Joint
operation companies
A joint operation company is established to
represent the contractual parties to conduct oil and gas prospection,
exploration and exploitation activities, exercise the rights and perform the
obligations within the scope of authorization under the agreement on joint
operation, and abide by other relevant provisions of Vietnamese law.
The joint operation companies have their own
seals, may open accounts, recruit labor, sign economic contracts and conduct
other activities as authorized.
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Article 23.- Bidding
for lots
The oil and gas State management body shall
organize lots bidding according to the regulations on bidding for oil and gas
prospection, exploration and exploitation lots, issued by the Vietnamese Government.
Where only one partner participates in bidding
or for other special cases, the Prime Minister shall decide the appointment of
bidders at the proposal of the oil and gas State management body.
Article 24.-
Prospection and exploration stage
The prospection and exploration stage defined in
Article 17 of the Petroleum Law may be divided into small phases. The time
limits of small phases shall be agreed upon by the contractual parties.
Article 25.-
Prolongation of the prospection and exploration stage
Where the prospection and exploration stage
expires while the contractors have not yet fulfilled their working programs,
the time limit of the prospection and exploration stage may be prolonged according
to the provisions in Article 17 of the Petroleum Law. The contractors and the
Vietnam Oil and Gas Corporation must submit the documents stating clearly the
reasons for the prolongation to the Ministry of Planning and Investment for
consideration and approval before the end of the prospection and exploration
stage.
Article 26.- Retaining
areas where gas is discovered
The gas discovery of commercial value as
stipulated in Article 17 of the Petroleum Law means the gas discovery where,
through the reserve evaluation and preliminary assessment by the contractors,
the investment in exploitation shall yield results.
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Where the contractor deliberately delays or
lacks goodwill in reaching the agreement on the gas purchase and sale contract,
the permitted retaining of the area where gas is discovered may be suspended or
may not be considered for prolongation.
Article 27.-
Temporarily ceasing the exercise of a number of rights and obligations in the
petroleum contracts
1. Temporary cessation in case of force majeure.
Parties to a petroleum contract may agree upon
the mode of temporary cessation of exercising a number of rights and
obligations in the petroleum contract in case of force majeure circumstances
under the provisions in Article 17 of the Petroleum Law. The force majeure
circumstances shall be agreed upon by the contractual parties in the petroleum
contract.
Where the force majeure circumstance ends but
its consequences have not yet been overcome, the continuation of the temporary
cessation of exercising a number of rights and obligations in the petroleum
contract shall be considered and decided by the Prime Minister.
2. Temporary cessation in special cases.
Special cases of temporary cessation of
exercising a number of rights and obligations in petroleum contracts under the
provisions in Article 17 of the Petroleum Law mean cases of temporary cessation
for defense, security or other special reasons. The Prime Minister shall
consider and decide case by case at the proposal of the contractors and the
Vietnam Oil and Gas Corporation.
Article 28.- Return of
prospection and exploration areas
The contractors shall have to return the
prospection and exploration areas under the following regulations:
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2. The entire remaining contractual area shall
be returned after the conclusion of the prospection and exploration stage,
excluding areas being under deposit appraisal, field development or oil and gas
exploitation areas and areas retained under the provisions of Article 17 of the
Petroleum Law.
Contractors may voluntarily return areas at any
time during the prospection and exploration stage. The voluntarily returned
areas shall be subtracted from the obligation to return areas. The voluntary
return of areas shall not reduce the obligations already committed in the
petroleum contracts.
The returned areas must create simple geometric
forms.
Fixed works must be dismantled from the returned
areas under the provisions in Article 15 of this Decree.
Article 29.- Work
commitments
Contractors and the Vietnam Oil and Gas
Corporation must reach agreement on work programs in the prospection and
exploration stage with minimum commitments regarding the geographic survey
volume, drilling well volume and other general researches as well as
commitments regarding training, recruitment and technology transfer.
The cost estimate for the above-mentioned
minimum work commitments shall be considered the minimum financial commitment.
A contractor shall be considered as having fulfilled the minimum financial
commitment when the minimum work commitments have already been fulfilled.
Where contractors ask for the termination of the
petroleum contracts but have not yet fulfilled the minimum work commitments,
they shall have to return to the Vietnam Oil and Gas Corporation a sum of money
corresponding to the work volume committed to perform but not yet completed,
which is calculated according to the minimum financial commitment.
Article 30.- Early
exploitation
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Article 31.- Work to be
done after discovery of oil and gas
After discovering oil and gas, contractors shall
have to promptly notify and report on the research results, evaluation and
relevant documents to the oil and gas State management body and the Vietnam Oil
and Gas Corporation.
Contractors and the Vietnam Oil and Gas
Corporation shall have to reach agreement in the petroleum contracts on terms
regarding grounds to determine wells of commercial value, time limit for
submitting the well reserve appraisal programs, outline plans and field
development plans.
Contractors shall have to notify the reserve
appraisal results to the Vietnam Oil and Gas Corporation. If the appraisal
results show that the wells are of commercial value, the contractors are
entitled to declare commercial discovery.
Contractors and the Vietnam Oil and Gas
Corporation shall have to submit to the oil and gas State management body the
deposit reports and the field development plans for submission to the Prime
Minister for approval.
After the field development plans are approved,
if the contractors fail to proceed with the field development and oil and gas exploitation
according to the time limits prescribed in the written approval, the oil and
gas State management body is entitled to recover the fields.
Article 32.- Using
petroleum for exploitation activities
In the course of oil and gas exploitation, contractors
may use oil and gas exploited from the contractual areas for prospection,
exploration and exploitation activities at the levels suitable to the
international practices in petroleum industry.
Article 33.- Periodical
reports
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The above reports must also include information
on oil and gas volume used in service of exploration and exploitation, the
volume of oil and gas lost or burned off.
Article 34.- Using
accompanied gas
Contractors may use accompanied gas exploited in
the contractual areas as fuel in service of petroleum activities at fields or
for back injection into wells.
Accompanied gas shall be burnt off only when so
permitted by the oil and gas State management body.
The Vietnamese Government shall be entitled to
use the accompanied gas free of charge, which the contractors intend to burn
off if this does not obstruct the contractors activities. In that case, the
contractors shall have to create conditions for the above work to go smoothly.
Article 35.- Oil and
gas field stretching beyond the contractual areas
Where oil and gas fields stretch beyond the
contractual areas to blocks neither opened to bidding nor having bidders
appointed, the Vietnam Oil and Gas Corporation and the contractors shall
elaborate projects for cooperation in exploiting such entire fields and submit
them to the Prime Minister for approval.
Article 36.- Field
consolidation
Where oil and gas fields of the contractual
areas stretch into the areas of blocks already opened to bidding, having
bidders already appointed or with petroleum contracts being already signed, the
concerned parties shall agree to draw up projects for joint exploitation of the
entire field and submit them to the Prime Minister for approval.
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RIGHTS AND OBLIGATIONS
OF ORGANIZATIONS AND INDIVIDUALS CONDUCTING PETROLEUM ACTIVITIES
Article 37.- Right to
sign contracts in service of petroleum activities
Organizations and individuals conducting oil and
gas prospection, exploration and exploitation activities shall have the right
to sign goods purchase and sale contracts, petroleum service contracts with
subcontractors or with other organizations and individuals in service of
petroleum activities
Contractors and subcontractors shall have to
priotise the purchase of goods made and supplied by Vietnam; priotise the
signing of service contracts with Vietnamese organizations and/or individuals
on the principle of ensuring the competitiveness in prices and quality.
Article 38.- Regimes
towards laborers
Contractors must work out the labor rules, wage
scales, regime of bonus and allowance payment and other regimes for the
laborers in conformity with the provisions of Vietnamese legislation on labor,
taking into account international practices in the petroleum industry; work out
the payroll tables, the annual plans for labor recruitment and training.
Article 39.-
Recruitment and signing of labor contracts
Foreign organizations and individuals conducting
petroleum activities must priotise the employment of Vietnamese laborers and
may recruit foreigners to perform jobs which Vietnamese laborers remain unable
to do, but have to channel funding and work out plans for training so that
Vietnamese laborers can soon replace the foreigners.
The labor recruitment must comply with the
provisions of Vietnamese legislation on labor.
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Article 40.- Rights to
open accounts and buy foreign currencies
1. Contractors being foreign organizations or
individuals may open accounts in Vietnam and overseas. When opening accounts
overseas, the contractors shall have to register it with Vietnam State Bank.
2. After fulfilling the tax obligations under
the provisions of Vietnamese law, the contractors being foreign organizations
and individuals may transfer or retain abroad their incomes from the sale of
oil and gas belonging to recovery costs, their profits and other lawful incomes
in the course of petroleum activities.
3. Contractors being foreign organizations and
individuals may buy foreign currencies at commercial banks or credit
institutions licensed to trade in foreign currencies in Vietnam to satisfy the
requirements of current transactions or other licensed transactions under the
provisions of Vietnamese legislation on foreign exchange management.
Article 41.- Ensuring
the balance of foreign currencies
1. Important projects ensured with foreign
currency balance are oil and gas exploitation projects of contractors being
foreign organizations and individuals, with all or part of oil and gas being
sold on the Vietnamese market in service of particularly important projects
investing under the Vietnamese Governments programs, and projects with oil and
gas sold at the request of the Vietnamese Government as provided for in Clause
9 of Article 30 of the Petroleum Law.
2. The foreign currency amounts balanced by the
Vietnamese Government under the provisions in Clause 1 of this Article are the
foreign currency deficit amounts after the contractors being foreign
organizations and individuals have bought at commercial banks and credit
institutions licensed to trade in foreign currencies in Vietnam, which,
however, must not exceed the amounts of Vietnam dong earned by the contractors
from the sale of oil and gas on the Vietnamese market.
3. The conversion of Vietnam dong into freely
convertible foreign currency(ies) shall be made at the exchange rates of the
commercial banks announced at the time of conversion.
Article 42.- The duty
to sell crude oil on the Vietnamese market
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The crude oil volume to be sold on the
Vietnamese market at the request of the Vietnamese Government is determined in
percentage (%) between the crude oil volume under such contractors ownership
and the total crude oil volume owned by all contractors exploiting oil and gas
in Vietnam.
The price of crude oil sold at the request of
the Vietnamese Government is the selling price at the international competitive
price.
Article 43.- Rights and
obligations of joint-venture enterprises
Where a petroleum contract is signed in form of
joint-venture contract, the joint-venture enterprises may enjoy rights and
perform obligations agreed upon in the joint-venture contract, the rights and
obligations of the contractors are prescribed in this Chapter and the
corresponding provisions of the Law on Foreign Investment in Vietnam.
Chapter V
PROVISIONS ON TAXATION
AND FINANCE
Article 44.- Natural
resource tax on crude oil
Organizations and individuals exploiting crude
oil shall have to pay natural resource tax.
The natural resource tax on crude oil shall be
determined on the basis of gradual progress of the total crude oil output
actually exploited in each tax payment period, calculated according to the
average daily crude oil output of the entire contractual area.
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Exploitation
output
Investment
encouragement projects
Other
projects
Up to 20,000 barrels/day
4%
6%
Over 20,000 to 50,000 barrels/day
6%
8%
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8%
10%
Over 75,000 to 100,000 barrels/day
10%
15%
Over 100,000 to 150,000 barrels/day
15%
20%
Over 150,000 barrels/day
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25%
Article 45.- Natural
resource tax on natural gas
Organizations and individuals exploiting natural
gas shall have to pay the natural resource tax.
The natural resource tax on natural gas shall be
determined on the basis of gradual progress of the total gas output actually
exploited in each tax payment period, calculated according to the average daily
gas output exploited from the entire contractual area.
The index of natural resource tax on natural gas
is stipulated as follows:
Exploitation
output
Investment
encouragement projects
Other
projects
Up to 5 million m3/day
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0%
Over 5 million m3 to 10 million m3/day
3%
5%
Over 10 million m3/day
6%
10%
Article 46.- Natural
resource tax calculation prices
The price for calculation of natural resource tax
on crude oil is the average price of crude oil sold at the time of receipt and
delivery under the fair transaction contracts in the tax payment period.
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Where oil or gas is not sold under the fair and
straight transaction contract, the natural resource tax calculation price shall
be determined by the Finance Ministry on the basis of the market price, taking
into account the oil or gas quality, location and other relevant factors.
Article 47.- Natural
resource tax payment mode
The natural resource tax shall be paid in oil
and gas or in cash, or partly in cash and partly in oil and gas, depending on
the tax offices’ options.
The tax offices shall notify organizations and
individuals exploiting oil and/or gas 6 months in advance of the natural
resource tax payment in cash or in oil and gas.
The natural resource tax shall be temporarily
paid monthly and settled quarterly.
If the natural resource tax is collected in oil
and/or gas, the tax payment location shall be the delivery place. Where the tax
office request that the natural resource tax be paid at other location, the tax
payers shall be entitled to subtract the transport expenses and other direct
expenses arising from the change of tax payment location from the natural
resource tax amount to be paid.
Article 48.- Enterprise
income tax
Organizations and individuals conducting oil and
gas prospection, exploration and exploitation shall have to pay enterprise
income tax.
The bases for calculation of enterprise income
tax shall be the total taxable income in the tax payment period and the tax
rates prescribed in Article 33 of the Petroleum Law.
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The income from oil and gas prospection,
exploration and exploitation activities is equal to the turnover minus the
expenses related to oil and gas prospection, exploration and exploitation
activities in the tax payment period as prescribed in Articles 49 and 50 of
this Decree.
Other incomes shall include:
1. Difference between security purchase and sale;
2. Income from property ownership and use
rights;
3. Proceeds from assignment;
4. Earnings from deposits, capital lending;
5. Difference from foreign currency sale;
6. Recovered bad debts which had been written
off from accounting books;
7. Collection of payable debts whose creditors
cannot be identified;
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9. Other incomes.
Article 49.- Turnover
Turnover from oil and gas prospection,
exploration and exploitation activities, which serve as basis for determination
of the income liable to enterprise income tax is the total value of oil and gas
sold under a fair transaction contract.
Where oil and gas is sold not according to the
fair transaction contract, the turnover used for determination of income liable
to enterprise income tax shall be determined by way of multiplying the sold oil
and gas volume by the price set by the Finance Ministry according to the
provisions in Article 46 of this Decree.
Article 50.- Expenses
subtracted for determination of income liable to enterprise income tax
The expenses to be subtracted for determination
of income liable to enterprise income tax shall include:
1. Expenses permitted to be recovered under the
agreement in the petroleum contracts;
2. Natural resource tax;
3. Export tax;
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5. Contributions as financial support for social
and charity purposes.
Article 51.- Expenses
not to be calculated into recoverable expenses
The expenses not to be calculated into
recoverable expenses shall include:
1. Expenses arising before the petroleum
contracts take effect, except where they have been agreed upon in the petroleum
contracts or approved by the competent State management bodies;
2. Assorted petroleum royalties and other
commitments, which shall not be recovered as agreed upon in the petroleum
contracts;
3. The interests on loans for investment in exploration,
field development and oil and gas exploitation;
4. Fines and compensation for damage and losses
incurred due to the faults of such organizations or individuals;
5. The payment of natural resource tax, export
tax, value added tax, enterprise income tax in Vietnam and foreign countries
and tax on profit transfer abroad;
6. Losses indemnified by the insurance;
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8. Unreasonable or invalid expenses which cannot
be evidenced in the auditing, tax settlement and inspection.
Article 52.- Enterprise
income tax exemption and reduction
Organizations and individuals conducting oil and
gas exploration and exploitation under projects where investment in oil and gas
activities is encouraged shall be entitled to enterprise income tax exemption
for the first year after the taxable income is generated and fifty-percent
(50%) reduction of their taxable enterprise income tax amount for the following
year.
The Prime Minister shall decide the specific
cases entitled to enterprise income tax exemption for the first two years after
the taxable income is generated and fifty-percent (50%) reduction of the
taxable enterprise income tax amount for two subsequent years.
Article 53.- Mode of
enterprise income tax payment
The enterprise income tax shall be collected in
cash and temporarily paid every quarter and settled every year.
Article 54.- Import tax
exemption
1. The following goods items which are imported
directly by organizations and/or individuals conducting oil and gas
prospection, exploration and exploitation activities or by entrusted agents
shall be exempt from import tax:
- Equipment, machinery, special-use transport
means necessary for petroleum activities, special-use transport means for
conveyance of workers (cars of 24 or more seats, water transport means),
including components, details, spare parts, support auxiliaries, moulds,
accessories accompanying machinery, special-use transport means, the above-said
transport means;
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- Medical equipment and emergency medicines for
use on drilling platforms and floating works when they are approved by the
Health Ministry;
- Goods temporarily imported for re-export in
service of petroleum activities;
- Office furniture and equipment in service of
petroleum activities.
2. Goods prescribed in Clause 1 of this Article,
which are imported by subcontractors and/or other organizations and/or individuals
for supply to organizations and individuals conducting oil and gas prospection,
exploration and exploitation activities through petroleum services contracts or
goods supply contracts, shall be exempt from import tax.
Article 55.- Value
added tax
1. The following goods items imported directly
by organizations and/or individuals conducting oil and gas prospection,
exploration and exploitation activities or by entrusted agents shall not be
liable to value added tax:
- Equipment, machinery and their spare parts,
special-use transport means which cannot be produced at home yet, but are
necessary for oil and gas prospection, exploration and exploitation activities.
Where a complete synchronous equipment and
machinery line, which is imported and not liable to value added tax, include
equipment and/or machinery which can be produced in the country, the value
added tax shall not be imposed on such complete synchronous equipment and
machinery line;
- Imported supplies which cannot be produced in
the country but are necessary for exploration and exploitation activities as
well as field development;
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2. Goods prescribed in Clause 1 of this Article,
which are imported by subcontractors as well as other organizations and/or
individuals for supply to organizations and/or individuals conducting oil and
gas prospection, exploration and exploitation activities through oil and gas
services contracts or goods supply contracts, shall not be liable to value
added tax.
Article 56.-
Retrospective collection of tax arrears
Goods exempt from import tax under the
provisions of Article 54 or not liable to value added tax under the provisions
of Article 55 of this Decree, if being:
1. Assigned in Vietnam not for the purpose of
servicing the petroleum activities, they must be permitted by the Trade
Ministry and subject to retrospective payment of import tax as well as other
kinds of tax according to the provisions of Vietnamese law.
2. Assigned in Vietnam for the purpose of
servicing the petroleum activities, they must be permitted by the Trade
Ministry, exempt from retrospective payment of import tax but subject to the
payment of other kinds of tax according to the provisions of Vietnamese law;
3. Transferring the ownership over supplies and
equipment to the Vietnam Oil and Gas Corporation as agreed upon in the
petroleum contracts, the contractors shall be exempt from retrospective payment
of import tax and other taxes, but the Vietnam Oil and Gas Corporation shall
have to pay taxes and charges related to the property ownership transfer and
pay the levies for use of capital with regard to the amount of capital being
the value of assets received from the contractors.
Article 57.-
Determination of lists of equipment, machinery and supplies, which can be
produced in the country
The Ministry of Planning and Investment shall
issue the lists of equipment, machinery, special-use transport means and
supplies, which can be produced in the country, for use as basis for import tax
exemption under the provisions in Article 54 and the determination of goods not
liable to value added tax under the provisions in Article 55 of this Decree.
Article 58.- Export tax
exemption
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2. The oil and gas volume belonging to the
natural resource tax of the State, when being exported, shall not be liable to
export tax.
Article 59.- Enterprise
income tax paid due to transfer of petroleum contract- participating capital
1. Contractors being foreign organizations or
individuals conducting oil and gas prospection, exploration and exploitation
activities shall have to pay enterprise income tax on income generated from the
transfer of capital participating in the petroleum contracts according to the
provisions of the Law on Foreign Investment in Vietnam.
2. Vietnamese organizations and individuals
conducting oil and gas prospection, exploration and exploitation activities
shall have to pay enterprise income tax on the income generated from the
transfer of the capital participating in the petroleum contracts according to
the Enterprise Income Tax Law.
Article 60.- Taxes to
be paid by subcontractors
Subcontractors and other organizations or
indivi-duals that sign contracts for supply of goods and services to
organizations and/or individuals conducting oil and gas prospection,
exploration and exploitation activities shall have to pay assorted taxes
according to the current law provisions, except for case of import of goods
prescribed in Article 54 and Article 55 of this Decree.
Article 61.- Tax
calculation year
The tax calculation year for organizations and
individuals conducting oil and gas prospection, exploration and exploitation
activities shall commence on January 1st and end on December 31st of the
calendar year.
Organizations and individuals conducting oil and
gas prospection, exploration and exploitation activities may request the Finance
Ministry to permit the application of their own 12-month fiscal years for the
enterprise income tax calculation and payment.
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Organizations and individuals conducting oil and
gas prospection, exploration and exploitation activities shall have to register
their applicable accounting regimes with the Finance Ministry and submit to the
inspection of the financial bodies.
Article 63.- Financial
reports
Organizations and individuals conducting oil and
gas prospection, exploration and exploitation activities shall have to sent
their annual financial reports to the investment license- granting bodies, the
oil and gas State management body, the Finance Ministry and the General
Department of Statistics within 3 months from the end of the fiscal year.
Before being sent to the above-said bodies, the
financial reports must be audited by a Vietnamese auditing company or other
independent auditing companies licensed to operate in Vietnam according to the
provisions of Vietnamese legislation on audit.
Chapter VI
THE STATE MANAGEMENT
OVER PETROLEUM ACTIVITIES
Article 64.- The
Government’s and the Prime
Minister’s competence for
State management over petroleum activities
1. The Government shall exercise the unified State
management over petroleum activities. The Government shall perform the
following tasks and exercise the following powers:
- Issuing legal documents on management of
petroleum activities;
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- Deciding on cooperation in petroleum
activities in areas overlapping with foreign countries;
- Deciding plans for international cooperation
on oil and gas prospection, exploration and exploitation;
- Considering and deciding other matters
according to its competence.
2. The Prime Minister shall perform the
following tasks and exercise the following powers:
- Issuing lists of blocks; determining and
adjusting boundaries of blocks;
- Representing the Government in approving
petroleum contracts;
- Representing the Government in considering and
deciding on the transfer of rights and obligations of petroleum contracts;
- Considering and deciding on appointment of
bidders in order to select partners for signing petroleum contracts;
- Considering and deciding on other matters
according to his/her competence.
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The oil and gas State management body in charge
of petroleum shall perform the function of State management over petroleum
activities according to the Government’s
regulations; have the following tasks and powers:
1. Drafting and submitting to the competent
State bodies for promulgation or promulgating according to its jurisdiction the
legal documents on petroleum;
2. Drafting and submitting to the Government for
approval the strategies and planning for development of petroleum industry;
3. Drafting and submitting to the Government for
approval development plans and important petroleum investment projects;
4. Submitting to the Government the policies of
encouraging oil and gas exploration and exploitation;
5. Submitting to the Prime Minister for decision
the appointment of bidders to select partners for signing petroleum contracts;
6. Examining, inspecting and supervising petroleum
activities;
7. Deciding on other matters under its
competence for State management over petroleum activities.
Article 66.- Competence
of the ministries, the ministerial-level agencies, the agencies attached to the
Government and the provincial-level People’s
Committees for State management over petroleum
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2. The ministries, the ministerial-level
agencies, the agencies attached to the Government and the provincial-level
People’s Committees shall,
within the ambit of their respective jurisdiction, have to settle or coordinate
with the oil and gas State management body, the Ministry of Planning and
Investment and concerned bodies in settling matters regarding land, rational
use of water sources, particularly aquaculture areas, marine creature
preservation areas, health resort and tourist areas and other matters related
to the carrying out of petroleum activities.
Chapter VII
INSPECTION OF PETROLEUM
ACTIVITIES
Article 67.-
Specialized inspection
Petroleum activity inspection is the specialized
inspection which aims to ensure the observance of the Petroleum Law and legal
documents related to petroleum activities. The oil and gas State management
body shall perform the function of petroleum specialized inspection and issue
decisions on petroleum activity inspection.
An inspection decision shall include the
following principal contents:
- The composition of the inspection team;
- The inspected subjects;
- The inspection contents;
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- The inspection duration;
- The requirements on inspected subjects.
Article 68.- Rights and
responsibilities of inspection teams
1. The inspection teams shall have the following
rights:
- To bring along necessary technical means in
service of inspection activities.
- To request the inspected subjects to supply
necessary documents within a given time limit. If past such time limit the inspections’ requests are not met, the
inspection teams shall issue decisions on application of other necessary
measures to gather materials according to the provisions of Vietnamese law.
- To issue decisions on temporary suspension of
petroleum activities when there appear dangers of accidents, serious human and
material losses and damage to environment.
The temporary suspension duration must not
exceed 15 days. Within 24 hours from the time the decision is issued, the
inspection team shall have to notify its decision to the competent State
management bodies and propose handling measures. Within 15 days from the date
the inspection team issues the suspension decision, the competent State
management bodies shall have to issue the handling decision.
- To propose the competent State management
bodies to handle acts of breaching the legislation on petroleum.
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Article 69.- Decisions
of inspection teams
Upon the conclusion of inspection, the decisions
of the inspection teams shall be notified to the inspected subjects and sent to
the competent State management bodies.
Where the inspected subjects disagree with the
decisions of the inspection teams, the former shall, within 30 days after the
receipt of such decisions, be entitled to lodge their complaints to the
competent State management bodies.
Within 30 days after the receipt of the written
complaints, the competent State management bodies shall have to reply about the
settlement of such complaints.
Article 70.- Executing
decisions of the inspection teams
The inspected subjects must abide by the
decisions of the inspection teams. In case of complaint, the inspected subjects
still have to abide by the decisions of the inspection teams while awaiting the
results of complaint settlement.
Where the inspection teams’ decisions are not executed by
the inspected subjects, the latter shall be handled according to the provisions
of legislation on handling of administrative violations.
Chapter VIII
HANDLING OF VIOLATIONS
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1. The levels of pecuniary penalty against acts of
violation prescribed in Article 43 of the Petroleum Law are detailed as
follows:
a) Conducting illegal petroleum activities shall
be subject to a fine of up to USD 100,000 (one hundred thousand);
b) Failing to abide by the technical process,
criteria and regulations on oil and gas exploration and exploitation, causing
damage to petroleum natural resources or environment, or damage to the property
of the State and/or individuals shall, apart from the compensation to the
damage, be subject to a fine of up to USD 100,000 (one hundred thousand).
c) Conducting oil and gas prospection,
exploration and exploitation activities beyond the contractual areas without
permission of the oil and gas State management body shall be subject to a fine
of up to USD 50,000 (fifty thousand);
d) Falsely declaring and/or evading natural
resource tax, enterprise income tax and other kinds of tax shall, apart from
the full payment of outstanding tax amounts, be subject to the payment of fines
for false declaration and/or evasion of tax under the provisions of Vietnamese
law;
e) Failing to notify the oil and gas State
management body and the Vietnam Oil and Gas Corporation of other natural
resources than petroleum or antiques, valuable property discovered in the
contractual areas shall be subject to a fine of up to USD 10,000 (ten thousand)
and the confiscation of such specimen, antiques and/or property;
f) Obstructing inspection activities shall be
subject to a fine of up to USD 10,000 (ten thousand).
2. In addition to the above-prescribed fine
levels, organizations and individuals committing acts of administrative
violation shall also be subject to other forms and measures of administrative
sanction under the provisions of the legislation on handling of administrative
violations.
Article 72.- Competence
to handle violations
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1. The head of the oil and gas State management
body shall handle the violations and decide the fine levels prescribed at
Points a, b, c, d and e of Clause 1, Article 71 of this Decree.
2. Heads of inspection teams shall handle the
violations and decide the fine levels prescribed at Point f, Clause 1, Article
71 of this Decree.
Chapter IX
IMPLEMENTATION PROVISIONS
Article 73.- Law
application
For petroleum contracts signed before the June
9, 2000 Law amending and supplementing the Petroleum Law comes into force, the
contractual parties shall continue with the rights and obligations agreed upon
in the petroleum contracts.
The provisions of the June 9, 2000 Law amending
and supplementing the Petroleum Law shall also apply to petroleum contracts
already signed; such application shall be effected only after this Law takes
effect.
Article 74.- Effect of
Decree
This Decree takes effect 15 days after its
signing and replaces Decree No.84/CP of December 17, 1996. The previous
regulations on petroleum activities which are contrary to this Decree shall all
be annulled.
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Article 75.-
Responsibility for implementation
The ministers, the heads of the
ministerial-level agencies, the heads of the agencies attached to the
Government, the presidents of the People’s
Committees of the provinces and centrally-run cities and the Vietnam Oil and
Gas Corporation shall have to implement this Decree.
ON BEHALF OF THE GOVERNMENT
PRIME MINISTER
Phan Van Khai