THE GOVERNMENT No. 68/1998/ND-CP	SOCIALIST REPUBLIC OF VIETNAM Independence - Freedom - Happiness
	Hanoi, 03 September 1998

DECREE OF THE GOVERNMENT

MAKING DETAILED PROVISIONS FOR
IMPLEMENTATION OF THE ORDINANCE ON ROYALTIES
(Revised)

THE GOVERNMENT

Based on the Law on the Organisation of the Government dated 30 September 1992;

Based on the Revised Ordinance on Royalties No. 05/1998/PL-UBTVQH10 dated 16 April 1998;

Upon the proposal of the Minister of Finance,

DECREES

Chapter I

TAXPAYERS AND OBJECTS LIABLE TO ROYALTIES

Article 1.

All organisations and individuals in various economic sectors, including : State owned enterprises; shareholding companies; limited liability companies; co-operatives; collective groups; private companies, production and business private households, foreign invested enterprises or foreign parties to business co-operation contracts established under the Law on Foreign Investment in Vietnam; and other organisations and individuals, that conduct the exploitation of natural resources under any form shall be taxed in the form of royalties in accordance with the provisions contained in Article 1 of the Revised Ordinance on Royalties, except entities set out in Article 3 of this Decree.

Article 2.

All mineral resources located within the land territory, islands, internal waters, territorial sea, exclusive economic zones and continental shelf of the Socialist Republic of Vietnam shall be liable for royalties, including:

1. Metallic minerals;

2. Non-metallic minerals, including: minerals used as common building materials, soil exploited for filling, levelling and construction works, or used as materials and in other purposes; mineral water and natural thermal water as prescribed in the Mineral Law;

3. Oil: crude oil as mentioned in Clause 2 of Article 3 of the Petroleum Law;

4. Gas: natural as mentioned in Clause 3 of Article 3 of the Petroleum Law;

5. Products of natural forests: natural forest animals and plants, and other forest products;

6. Natural aquatic products: natural animals and plants found in the sea, rivers or lakes;

7. Natural water including: surface water, underground water, except mineral water and natural thermal water as provided for in Point 2 of this Article;

8. Other natural resources.

Article 3.

Where a Vietnamese party entering into a joint venture enterprise under the Law on Foreign Investment in Vietnam contributes its prescribed capital in the form of natural resources, the joint venture enterprise shall not be liable to pay royalties in respect of those resources.

Article 4.

Where an enterprise engaged in exploiting resources is established on the basis of a joint venture, business co-operation contract and product sharing contract, the royalties to be paid by the joint venture enterprise or by the foreign party must be specified in the joint venture contract and included in the products to be shared with the Vietnamese party. Upon sharing the exploited products, the Vietnamese party shall be liable to pay royalties to the State Budget in accordance with the provisions set out in the Law on Budget.

Chapter II

BASIS FOR CALCULATION OF ROYALTIES AND ROYALTY TARIFFS

Article 5.

The basis for the calculation of royalties shall be the quantity of the resources actually and commercially exploited, the taxable value, and the royalty rate.

Article 6.

The quantity of resources actually and commercially exploited to be used in the calculation of royalties shall be the quantity, weight or volume of resources actually exploited in the taxable period, regardless of the purposes of such exploitation.

Article 7.

1. The taxable value of a unit of production to be used in the calculation of royalties shall be the sale price of such unit at the exploitation place.

2. Where the resources of which the sale prices have not yet been determined, as such resources are exploited for further processing; or resources containing various substances, the taxable value shall be determined pursuant to one of the following bases:

- The sale price of other exploited resources which have equivalent value;

- The sale price of the pure products and the contents of the substance contained in the exploited resources or the price of the pure products and the content of each substance contained in the exploited resources;

- The sale price of goods which are produced from the exploited resources minus costs for production of such goods.

3. In respect of natural water used for generation of hydro-electricity, the taxable value shall be the sale price of commercial electricity; in respect of wood, the taxable value shall be the sale price at the second site

4. In respect of oil and gas, the taxable value shall be determined in accordance with the provisions of Article 47 of Governmental Decree No. 84-CP, dated 17 December 1996, stipulating detailed provisions for the implementation of the Petroleum Law.

The Ministry of Finance shall provide stipulations and guidelines on the methods of calculation of royalties as set out in this Article.

People's committees of provinces and cities under central authority shall provide detailed regulations on the taxable value of each type of resources in accordance with the guidance of the Ministry of Finance.

Article 8.

The Royalty Tariffs shall be adopted in conjunction with this Decree.

Depending on the value of each type of resources, the mining conditions and the needs of management for each type of resources in each specific period of time, the Ministry of Finance shall take the leading role in co-ordinating with the relevant ministries and branches to adjust the tax rates in the Royalty Tariffs issued in conjunction with this Decree in compliance with the general tax rates contained in Article 6 of the Revised Ordinance on Royalties.

Chapter III

DECLARATION, REGISTRATION, AND PAYMENT OF ROYALTIES

Article 9.

Organisations and individuals carrying out the exploitation of resources must fully implement the provisions on declaration, registration, and payment of royalties of Article 7 of the revised Ordinance on Royalties.

The Ministry of Finance shall provide detailed guidance on procedures of registration, declaration and payment of royalties.

Article 10.

Organisations which and individuals who carry out exploitation of resources must strictly comply with the regulations on book keeping, sale and purchase documents, and receipts, in accordance with the existing regulations.

Article 11.

Tax authorities at all levels must properly implement the duties and powers as set out in Articles 8, 9, 12, and 16 of the revised Ordinance on Royalties.

Chapter IV

REDUCTION OF AND EXEMPTION FROM ROYALTIES

Article 12.

Royalties shall be reduced or exempted in the following circumstances:

1. Projects enjoying preferential treatment under the Law on Promotion of Domestic Investment and the Government’s regulations on the implementation of the Law on Promotion of Domestic Investment and involved in the exploitation of mineral resources ( except oil and gas) shall be subject to maximum reduction of fifty (50%) per cent of royalties during the first three (3) years after the date of commencement of exploitation; in case in such projects the exploitation has been underway, then the reduction of royalties shall be granted in respect of the remaining time as from the effective date of the revised Ordinance on Royalties.

2. For any organisation or individual engaged in the exploitation of resources and suffering from calamity, war or accidents, which may cause losses to the declared and taxed resources, an exemption of royalties shall be considered in respect of the lost resources. Where the royalties have been paid, the paid amount shall be reimbursed, or debited to the amount of royalties payable of the next period if the organisation or individual so agrees.

3. Any organisation which or individual who carries out the exploitation of marine products in off shore areas by vessels of high capacity shall be subject to the exemption of royalties for the first five (5) years from date on which the organisation or individual is issued with the exploitation licence and be subject to the reduction of fifty (50%) per cent of royalties for the next five years.

The Ministry of Fishery shall issue licences for conducting exploitation of marine products in off shore areas to organisations and individuals, respectively.

Exemption from and reduction of royalties shall be considered annually. During the process of exploitation, if there is any change in respect of the conditions of royalty exemption or reduction, which may affect the preferential treatment given to organisation or individual who carries out the exploitation of marine products in off shore areas, such organisation or individual must promptly notify the nearest tax authority thereof for certification and confirmation. Any organisation which or individual who fails to notify of such change to continue enjoying royalty exemption and reduction shall be deemed to commit tax evasion and be dealt with in accordance with the provisions set out in Article 11 of the revised Ordinance on Royalties.

After the period of royalty reduction or exemption as referred to above, should any organisation or individual carrying out off shore exploitation of marine products still suffers from losses, such organisation or individual may be considered for reduction of royalties corresponding to the amount of losses of each year within a period of not exceeding five ( 5) consecutive years thereafter.

For the organisation or individual carrying out off shore exploitation of marine products before the effective date of the revised Ordinance on Royalties, royalty exemption and reduction shall be effective as of the effective date of this Ordinance and the duration for royalty exemption and reduction shall be calculated in full, in accordance with the above mentioned provisions.

4. Natural forest products such as timber, branch, fire wood, bamboo, teinosachyum duloa, dendrocalamus latifolius Munro, dendrocalamus patellaris Gambe, phyllostachys pubescens, bambusa procera A.chev, and etc., which are exploited by individuals for daily life utilization shall be exempt from royalties; Intentional forest destruction shall be dealt with in accordance with the current regulations.

The Ministry of Finance and the Ministry of Agriculture and Rural Development shall provide appropriate administrative measures to grant royalty exemption to the right subjects; encourage forestation and protection of forests; prevent illegal exploitation and destruction of natural forests.

5. Natural water used for generation of hydro-electricity, which is not integrated into the national electricity grid, shall be exempt from royalties.

6. Any organisation or individual engaged in the exploitation of soil for the following purposes shall be exempt from royalties:

- Levelling, filling and construction of works for the purposes of security and national defence;

- Levelling, filling and construction of dykes and irrigation works for the agricultural, forestry and fishery purposes;

- Levelling, filling and construction of works which are significant for humanity and charity purposes or for serving persons, who devoted to national revolution; land which is self-exploited and used within the allocated or leased areas;

- Levelling, filling and construction of infrastructure works in mountainous areas ( in mountainous districts) for the socio-economic development therein;

- Levelling, filling and construction of the national key projects, to be determined by the Government in respect of each specific case.

The Ministry of Finance shall stipulate provisions on the procedures, proceeding and authorities to consider royalty exemption and reduction as set forth in this Article.

Chapter V

DEALING WITH BREACHES AND REWARDS

Article 13.

Any organisation or individual, which commits any breach of royalties shall be dealt with in accordance with Articles 11 and 13 of the Revised Ordinance on Royalties.

Article 14.

Tax authorities and tax offices that fulfil their respective assigned tasks in an extraordinary manner; other organisations and individuals that achieve good results in the implementation of the Ordinance on Royalties; tax payers that show a good record in fulfilling their tax obligations shall be rewarded in accordance with the provisions of the Government.

Chapter VI

ORGANISATION OF IMPLEMENTATION

Article 15.

This Decree shall be of full force and effect fifteen (15) days after the date of signing. All previous provisions on royalties, which are contrary to this Decree, shall be hereby repealed.

For Foreign invested enterprises and foreign parties to business co-operation contracts that have paid royalties in accordance with the provisions set out in their investment licences prior to the effective date of the revised Ordinance on Royalties, such provisions shall continued to be applied for the duration set out in their respective investment licence.

Article 16.

The Minister of Finance shall provide guidance for the implementation of this Decree.

Ministers, heads of ministerial - level bodies, heads of governmental bodies, chairpersons of people's committees of provinces and cities under the central authority, shall be responsible for the implementation of this Decree.

ON BEHALF OF THE GOVERNMENT

FOR THE PRIME MINISTER

VICE PRIME MINISTER

(Signed and sealed)

Nguyen Tan Dung

ROYALTY TARIFF

PROVIDING DETAILED REGULATIONS FOR THE IMPLEMENTATION OF THE
REVISED ORDINANCE ON ROYALTIES

(Issued in conjunction with Decree No. 68/1998/ND-CP of the Government dated 3 September 1998)

GROUPS AND CATEGORIES OF MINERALS	ROYALTY RATES (%)
I. Metallic minerals
1. Ferrous metallic minerals (iron ores, manganese, titanium, and etc...)	2
2. Non - ferrous metallic minerals
- Placer gold	2
- Flake gold	3
- Rare earth	4
- Platinum, tin, wolfram, silver, antimony	5
- Lead, zinc, aluminium, bauxite, copper, nickel, cobalt, molybdenum, mercury, magnesium, vanadium, platinum	3
- Other non - ferrous metallic minerals	2
II. Non-metallic minerals (except natural thermal water, mineral water as stipulated in group 7)
1. Non-metallic minerals used as common building materials	1
- Soil exploited for levelling, filling and construction works
- Non-metallic minerals used as other common building materials (stone, sand, pebble, clay for bricks, and etc...)	2
2. Non-metallic minerals used for making high grade building materials (granite, dolomite, refractory clay, quartzite, and etc...)	3
3. Non-metallic minerals used in industrial production (pyrite, apatite, kaolin, mica, quartz crystal, limestone for lime calcination and for cement, silica sand, and etc...)	4
4. Coal: - Underground anthracite coal - Open cut anthracite coal - Lignite coal, coking coal - Other kinds of coal	1 2 3 2
5. Gemstones: a. Diamond, ruby, sapphire, emerald, alexandrite, precious black opal b. Aeroides, rhodolite, pyrop, beryl, spinel, topaz, crystal quartz (greenish purple, greenish yellow, orange), chrysolite, precious opal (white opal, fire opal), feldspar, nephrite. c. Other precious stones.	8 5 3
6. Other non-metallic minerals	2
III. Oil (1)
IV. Gas (2)
V. Products of natural forests
1. Logging timber of various kinds - Group I - Group II - Group III, IV - Group V, VI, VII, VIII	40 35 25 15
2. Mine support timber	15
3. Timber for paper production (snowbell, fat pine)	20
4. Mast timber, pile timber	20
5. Treated timber, mangrove timber	25
6. Branch, top, fire wood	5
7. Bamboo, teinosachyum duloa, dendrocalamus latifolius Munro, dendrocalamus patellaris Gambe, phyllostachys pubescens, bambusa procera A. chev.	10
8. Pharmaceutical materials: - Aquilaria, codonopsis, aloe - Anise-tree, cinnamon, amomum, amomum costatum roxb. - Other pharmaceutical materials	25 10 5
9. Other products of natural forest: - Birds, wild animals (of which exploitation is permitted) - Other products of natural forest	20 5
VI. Natural aquatic products - Peral, abalone, holothurian - Shrimp, fish, cuttle fish and other aquatic products	10 2
VII. Natural water
1. Natural mineral water, bottled and purified natural water	4
2. Natural water used for hydro-electricity generation	2
3. Natural water exploited to supply to manufacturing industries (not included in points 1 and 2): a. For being used as main or secondary materials for producing products b. For common use (in industrial hygiene, cooling, steaming, and etc... c. Natural water used for producing clean water for agriculture, forestry, fishery, salt production; natural water exploited from dug /drilled wells for daily life activities.	3 1 0
4. Natural water exploited for other purposes other than the stipulations in points 1, 2, and 3	0
VIII. Other natural resources - Salangane' nest - Other natural resources	20 10

Foot notes.

(1) and (2): Royalty rates in relation to oil and gas shall be subject to the Petroleum Law and Decree No. 84/CP dated 17 December 1996 of the Government providing detailed regulations on implementing the Petroleum Law.