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STANDING COMMITTEE OF NATIONAL ASSEMBLY |
SOCIALIST REPUBLIC OF VIETNAM Independence - Freedom - Happiness |
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No.
05-1998-PL-UBTVQH10 |
Hanoi, 16 April 1998 |
ORDINANCE ON ROYALTIES
(As
Amended)
In order to contribute to the protection, exploitation and utilisation of natural resources in an economic, reasonable and effective manner, thus contributing to the environmental protection and ensuring the revenue of the State Budget;
Pursuant to the 1992 Constitution of the Socialist Republic of Vietnam;
Pursuant to the Resolution on the Program for Formulation of Laws and Ordinances of the Xth Legislature of the National Assembly at its 2nd Session;
This Ordinance provides for royalties.
Chapter I
TAXPAYERS AND TAXABLE RESOURCES
Article 1.
1. Natural resources found within the land territory, islands, internal waters, territorial sea, exclusive economic zone and continental shelf of the Socialist Republic of Vietnam fall under the ownership of the entire people and are subject to uniform management by the State.
2. All organisations and individuals engaged in the exploitation of natural resources provided for in Clause 1 of this Article shall be liable to paying royalties, except the organisations and individuals mentioned in Article 3 of this Ordinance.
Article 2.
Royalties as provided for in this Ordinance shall be applicable in respect of the following:
1. Metallic mineral resources;
2. Non - metallic mineral resources, including minerals used as common construction materials, exploited soil, mineral water, and natural thermal water;
3. Oil;
4. Gas;
5. Products of natural forests;
6. Natural marine products;
7. Natural water, except for mineral water and natural thermal water mentioned in Clause 2 of this Article;
8. Other natural resources.
Article 3.
Where a Vietnamese party in a joint venture enterprise, established under the Law on Foreign Investment in Vietnam, makes its contribution to the enterprise’s prescribed capital in the form of natural resources, the joint venture enterprise shall not be liable to paying royalties in respect of the resources contributed by the Vietnamese party to the prescribed capital.
Chapter II
BASIS FOR CALCULATION OF ROYALTIES AND ROYALTIES TARIFF
Article 4.
The basis for calculation of royalties shall be the volumes of commercial resources actually exploited, the taxable value, and the royalty rate.
Article 5
The taxable value shall be the selling price of each unit of resource products at the mining site.
Where the selling price of the exploited resource is not available, the Government shall provide for the taxable value.
The taxable value of natural water used in hydro-electricity production shall be the selling price of commercial electricity.
Article 6
The tariff of royalties shall be as follows:
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No. |
Group and kind of resources |
Royalty rates (%) |
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New rate |
Former rate |
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1 |
Metallic minerals (except for gold and rare earth) - Gold - Rare earth |
1-5 2-6 3-8 |
2-10 2-15 |
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2 |
Non-metallic minerals (except for gemstones and coal) - Gemstones - Coal |
3-8 1-3 |
3-15 |
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3 |
Oil |
6-25 |
6-20 |
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4 |
Gas |
0-10 |
10-40 |
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5 |
Products of natural forests: a. Assorted timber (except for branch timber and tree-top timber) - Branch timber and tree-top timber |
1-5 |
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b. Pharmaceutical materials (except for sandalwood, codonopsis and aloe) - Sandalwood, codonopsis and aloe |
20-25 |
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c. Other products of natural forests |
5-20 |
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6 |
Natural marine products (except for holothurian, abalone and pearls) - Holothurian, abalone and pearls |
6-10 |
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7 |
Natural water (except for bottled or canned filtered natural mineral water and natural water) - Natural water used in hydro-electricity production - Bottled or canned filtered natural mineral water and natural water |
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8 |
Other natural resources (except for salangane's nests) - Salangane's nests |
10-20 |
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Chapter III
DECLARATION, REGISTRATION AND PAYMENT OF ROYALTIES
Article 7.
Organisations and individuals engaged in the exploitation of resources shall be responsible for:
1. Declaring and registering in the stipulated form for submission to the tax office no later than ten (10) days after the date on which exploitation activities are permitted.
In the case of any consolidation, merger, division, demerger, dissolution, bankruptcy or changes in activities of exploitation, the organisations or individuals engaged in the exploitation of resources shall make a declaration to the tax office at least five (5) days prior to the consolidation, merger, division, demerger, dissolution, bankruptcy or change.
2. Complying with all standards applicable to records, invoices and books of account in accordance with the State provisions applicable to each activity.
3. Submitting royalty declaration forms on a monthly basis to the tax office within the first ten (10) days of the following month; in the case of any month in which no royalties are incurred, the establishment engaged in the exploitation of resources shall still declare and submit a declaration form to the tax office. Organisations and individuals engaged in the exploitation of resources shall make full declaration using the stipulated royalty declaration form and shall be responsible for the accuracy of the declaration.
4. Providing documents, books of account, invoices and records at the request of the tax office.
5. Paying royalties in full and on time to the State Budget in accordance with the tax notice issued by the tax office. The time limit for tax payment prescribed in the tax notice shall be no later than the twenty fifth day of the following month.
Article 8.
The tax office shall have the following powers and duties:
1. To guide the establishments engaged in the exploitation of resources to comply strictly with the regulations in relation to registration, declaration, and payment of royalties;
2. To notify the amounts to be paid by the establishments engaged in the exploitation of resources and the time limit for tax payment;
3. To examine and inspect the declaration and payment of royalties and tax finalisation by the establishments engaged in the exploitation of resources;
4. To deal with administrative offences in relation to taxation and to solve complaints relating to royalties;
5. To request taxpayers to provide books of account, invoices, records and other relevant documents related to the calculation and payment of royalties; to request the credit institutions, banks and other organisations and individuals concerned to provide documents relating to the calculation and payment of royalties;
6. To keep and use the information and documents provided by the establishments engaged in the exploitation of resources and other sources in accordance with the applicable regulations.
Article 9.
1. The tax office shall have the right to determine and fix the level of royalties to be paid by organisations and individuals engaged in the exploitation of resources where:
a. the regulations related to the standards applicable to books of account, invoices and records are not complied or improperly complied;
b. no declaration is made or the declaration is not submitted within the time limit stipulated in the notice or the declaration submitted does not contain the proper basis for calculation of royalties;
c. there is a refusal to provide the accounting books, invoices, vouchers and other necessary documents related to the calculation of the royalties;
d. any exploitation of resources without business registration.
2. The tax office shall determine the amount of royalties to be paid on the basis of its actual investigation of activities of exploitation of organisations or individuals engaged in the exploitation of resources or the royalties payable by organisations or individuals engaged in the exploitation of the same resources and scales.
Where an individual exploiting resources disagrees with the royalty rate fixed by the tax office, he or she shall be entitled to lodge a complaint with the direct superior tax office. Pending solution, the complainant shall pay the royalties at the fixed rate.
Chapter IV
REDUCTION OF AND EXEMPTION FROM ROYALTIES
Article 10.
Organisations or individuals engaged in the exploitation of resources shall be eligible for the exemption from or reduction of royalties in the following cases:
1. Investment projects entitled to the project incentives provided for by the Law on Promotion of Domestic Investment and engaged in the exploitation of resources (except for oil and gas) shall be granted royalty reduction of no more than fifty per cent (50) for the first three years from the commencement of exploitation;
2. Organisations or individuals which suffer loss of exploited resources already included in the declaration of royalty payment, as the result of unforeseeable natural disasters, epidemics or wars, shall be exempted from royalties in respect of the lost resources;
3. Deep-sea exploitation of marine products by high capacity fishing vessels shall be exempted from royalties for the first five years and shall be granted a fifty (50) per cent reduction for five subsequent years. Where difficulties are encountered, further reduction of royalties shall be considered for a period of between one and five subsequent years. In cases where any deep-sea exploitation of marine products has been carried out prior to the date on which the Ordinance comes into force, the duration of exemption from or reduction of royalties shall commence from the date on which this Ordinance comes into force and shall be calculated in full in accordance with the stipulated duration of exemption from or reduction of royalties;
4. Products of natural forests exploited by individuals for daily activities, such as branch timber, tree-top timber and bamboo, shall be exempted from royalties;
5. Natural water used in hydro-electricity production which is not supplied to the national grid, shall be exempted from royalties;
6. Soil exploited for the purpose of construction of national security and defence projects; projects having humane or welfare significance; construction of dykes, irrigation works, road projects, and for a number of other purposes provided for by the Government, shall be exempted from royalties.
The Government shall make detailed provisions on the exemption from and reduction of royalties provided for in this Article.
Chapter V
BREACHES AND REWARDS
Article 11.
Organisations or individuals engaged in the exploitation of resources and committing breaches of the Ordinance on Royalties shall be dealt with as follows:
1. Any organisation or individual failing to comply with the provisions on registration, declaration, tax payment, standards applicable to books of accounts, records and invoices provided for in Article 7 of this Ordinance shall, depending on the nature or the seriousness of breaches, be subject to administrative penalties for taxation offences.
2. Any organisation or individual delaying in the payment of any amount of tax or any fine, as stipulated the tax authority, in addition to paying in full the royalties or fine, shall be liable to further penalty of one tenth of one (0.1) per cent of the amount for each day of delay.
3. Any organisation or individual making a false declaration or evading tax shall, in addition to paying in full the taxes stipulated by this Ordinance, depending on the nature or the seriousness of breaches, be subject to a fine equivalent to between one to five times the amount of tax evaded. Where a large amount of tax is evaded or where a person, who has previously been administratively dealt with for a taxation offence, re-commits either of these offences or another serious offence, the offender shall be prosecuted for criminal responsibility in accordance with the provisions of the law.
4. Any organisation or individual failing to make royalty payment or fines, stated in a notice or penalty decision, shall be dealt with as follows:
a. Deposits of the organisation or individual exploiting resources at a bank, treasury or credit institution, shall be debited for payment of the taxes or fines. The bank, treasury or credit institution shall, on the basis of the penalty decision issued by the tax office or other competent authorities, be responsible for debiting the amount of taxes to the State Budget prior to recovery of debts;
b. Goods and physical evidence shall be retained as security for full payment of any taxes or fines;
c. Assets shall be seized, in accordance with the provisions of the law, as security for full payment of any outstanding amount of taxes or fines.
Article 12.
1. The head of the tax office directly responsible for the management of collection of taxes shall have the power to deal with the offences of taxpayers provided for in Clauses 1, 2 and 3 of Article 11 of this Ordinance.
2. The head of the department or division of taxation directly responsible for the management of collection of taxes shall be entitled to take the measures provided for in Clause 4 of Article 11 of this Ordinance and send the documentation of the offences to the competent authorities for dealing with the offences provided for in Clause 3 of article 11 of this Ordinance, in accordance with the provisions of the law.
Article 13.
1. Any tax officer or individual, who takes advantage of his or her position and authority to use illegally or appropriate any amount of taxes or fines, shall repay to the State all the amounts illegally used or appropriated and shall, depending on the nature or the seriousness of the offence, be subject to disciplinary action, administrative penalty, or prosecution for criminal responsibility, in accordance with the provision of the law.
2. Any tax officer, who is irresponsible or deals with a case incorrectly, resulting in damage to the taxpayers, shall pay compensation to the person affected in accordance with the law and shall, depending on the nature or the seriousness of the offence, be subject to disciplinary action or prosecution for criminal responsibility in accordance with the provisions of the law.
3. Any tax officer or individual, who takes advantage of his or her position and authority to support or protect the breacher of the provisions of the Ordinance on Royalties, or who behave in a manner which is contrary to the provisions of this Ordinance, shall, depending on the nature or the seriousness of the offence, be subject to disciplinary action or prosecution for criminal responsibility in accordance with the provisions of the law.
4. Any individual, who obstructs or incites others to obstruct the implementation of the Ordinance on Royalties, shall, depending on the nature or the seriousness of the offence, be subject to administrative penalty or prosecution for criminal responsibility in accordance with the provisions of the law.
Article 14.
Tax offices and tax officers carrying out satisfactorily their assigned duties; organisations and individuals having made notable achievements in the implementation of the Ordinance on Royalties; and taxpayers having satisfactorily fulfilled their tax obligations shall be rewarded.
The Government shall make detailed provisions on rewards.
Chapter VI
COMPLAINTS AND TIME - LIMITS
Article 15.
Taxpayers shall have the right to lodge complaints with the competent authority against any tax officer or tax office in respect of incorrect application of the Ordinance on Royalties.
A complaint shall be lodged with the tax office directly responsible for the management of collection of taxes within thirty (30) days from the date of receipt of the notice or penalty decision from a tax officer or tax office
Pending resolution of the complaint, the complainant shall comply with the notice or penalty decision of the tax office. In the case where the complainant continues to make a further complaint, such further complaint shall be lodged in accordance with the provisions of the applicable law.
Article 16.
1. The tax office which receives a complaint shall consider and resolve it within a time limit of fifteen (15) days from the date of receipt of the complaint. In more complicated cases, the period may be extended up to thirty (30) days. If the case falls outside its power, the tax office must send the documentation or report to the competent authority for resolution and notify the complainant within a time limit of ten(10) days from the date of receipt of the complaint.
2. The tax office receiving a complaint shall have the right to request the complainant to provide documents and information relating the complaint. If the complainant refuses to provide the documents and information without proper reasons, the tax office shall be entitled to refuse to consider and resolve the complaint.
3. The tax office shall refund any amount of tax or fine wrongly collected within a time limit of fifteen (15) days from the date of receipt of a decision of the superior tax office or competent authority in accordance with the provisions of the law.
4. In the event that a fraudulent declaration, tax evasion or mistake in relation to taxation is discovered and concluded, the tax office shall be responsible for collecting any outstanding amounts of tax or fine or refunding any wrongly collected amounts of tax within the last five years from the date of uncovering the fraudulent declaration, tax evasion or mistakes in relation to taxation. Where any organisation or individual exploiting resources fails to make a declaration for tax payment, the time limit for collection of outstanding amounts of taxes or fines shall be from the date of its commencement of business.
5. The head of the superior tax office shall be responsible for resolving all tax complaints lodged by the taxpayers against the inferior tax office.
The decision of the Minister of Finance on resolution of the tax complaint shall be the final one.
Chapter VII
ORGANISATION OF IMPLEMENTATION
Article 17.
The Government shall direct the implementation of the Ordinance on Royalties throughout the country.
Article 18.
The Minister of Finance shall be responsible for organising and inspecting the implementation of the Ordinance on Royalties throughout the country; for resolving all complaints and petitions in relation to royalties under its powers.
Article 19.
People's committees at all levels shall, depending on the scope of their respective responsibilities and powers, direct the implementation and supervise the observance of the Ordinance on Royalties within their respective localities.
Chapter VIII
IMPLEMENTING PROVISIONS
Article 20.
The Ordinance on Royalties (as amended) shall enter into force as of the 1st of June, 1998 and replace the Ordinance on Royalties issued on 30 March 1990.
Enterprises with foreign owned capital, those with foreign parties operating on the basis of business contracts signed prior to the date of promulgation of this Ordinance and which have been engaged in the exploitation of resources and paid royalty charges or royalties prescribed in their investment permits shall continue to abide by the provisions of the contracts
Article 21.
The Government shall provide detailed regulations and guidelines for the implementation of this Ordinance.
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ON BEHALF OF THE STANDING COMMITTEE OF THE NATIONAL ASSEMBLY CHAIRMAN (Signed and sealed) Nong Duc Manh
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