How to determine the natural resource volume used for royalties calculation?

Pursuant to the Article 5, Circular No. 152/2015/TT-BTC, the natural resource volume used for royalties calculation is prescribed clearly for each case as follows:

1. In case the quantity, weight or volume of the actually exploited natural resources can be determined

The natural resource volume used for royalties calculation is the quantity, weight or volume of natural resources actually exploited in the tax period.

For exploited natural resources which can be processed into natural resource products of different grades, qualities or commercial values, the natural resource volume used for royalties calculation shall be determined by the volume of each type of natural resource having the same grade, quality or commercial value or converted into natural resource of the biggest selling volume to serve the determination of the natural resource volume used for calculation of royalties on the whole volume of exploited natural resources in a period.

2. For natural resources of which the actually exploited quantity, weight or volume cannot be determined because they contain different substances and impurities but are sold after sieving, sorting and classification

The  taxed natural resource volume shall be determined as follows:

-  For a natural resource from which different substances are obtained after sorting or classification, the natural resource volume used for royalties calculation shall be determined  based on the quantity, weight or volume of the natural resource or of each substance obtained after sorting or classification.

In case the soil, rock and waste obtained through the sorting and classification are sold, royalties on the sold quantity of natural resource in such waste shall be paid according to the sale price and corresponding tax rate of natural resource in the waste.

- For exploited natural resources which contain different substances (multi-metallic ores) and the volume of each substance cannot be determined through sieving, sorting and classification, the  volume of each substance for royalties calculation shall be determined based on the actually exploited volume of natural resources (ores) and the content of each substance in these natural resources.

Such content shall be determined according to sample ores inspected and approved by the competent state agency.

In case the content of each substance in the actually exploited natural resources is different from that in sample ores, the  volume for royalties calculation shall be determined based on results of the competent state agency’s inspection of the content of each substance in actually exploited natural resources.

For example: The volume of ores exploited by enterprise A in a month is 1,000 tons which contains different substances. According to the mining license and the contents of substances in the sample exploited ores that are approved by the National Mineral Reserves Assessment Council are as follows: Copper: 60%; silver: 0.2%; tin 0.5%.

The taxed natural resource volume of each substance is determined as follows:

Copper: 1,000 tons x 60% = 60 tons.

Silver: 1,000 tons x 0.2% = 2 tons.

Tin 1,000 tons x 0.5% = 5 tons.

The royalties calculation price of each substance shall be applied based on the volume of each substance in ores when calculating royalties. 

3. For exploited natural resources which are not sold but must be processed (domestic sale or export)

The volume of natural resources for royalties calculation shall be determined as follows:

For exploited natural resources which are not sold but must be processed before domestic sale or export, the volume of natural resources for royalties calculation is the actually exploited natural resource volume determined by converting from the volume of products processed in a period for sale based on the norm of used natural resources per product unit.

The norm of used natural resource per product unit shall be declared by the taxpayer based on the project approved by the competent authority and the applied processing technology, in which:

- If the sold product is a natural resource product, the volume of natural resources for royalties calculation shall be determined based on the norm of used natural resources per natural resource product unit.

- If the sold product is an industrial product, the volume of natural resources for royalties calculation shall be determined based on the norm of used natural resources per industrial product unit.

The identification of processed products as industrial or non-industrial products shall be carried out by a line ministry according to its competence.

4. For natural water used for hydropower generation

The volume of natural resource used for royalties calculation is the volume of electricity sold by the generator to buyers under electricity sale and purchase contracts or the volume of transmitted electricity in case no electricity sale and purchase contract is made. This electricity volume shall be determined by a metering system up to Vietnam’s measurement and quality standards and certified by the seller and buyer or the deliverer and recipient.

5. For natural mineral water, natural thermal water and bottled and canned purified natural water, natural water used for production or trading

The royalties calculation volume shall be determined in cubic meter (m³) or liter (l) according to the measuring system up to Vietnam’s measurement and quality standards.

Royalties payers shall install devices to measure the volume of exploited natural mineral water, natural thermal water and natural water for use as grounds for royalties calculation.  Installed devices must have inspection certificates granted by the Vietnamese agency in charge of metrology, quality and standardization and notified to tax agencies, together with the royalties declaration dossier of the royalties period after they are installed.

If it is impossible for objective reasons to install devices for measuring the exploited and used volume of water or to directly determine the volume used for royalties calculation, a presumptive volume of exploited natural resources may be determined in a royalties period.

Tax agencies shall coordinate with related local agencies in determining the presumptive volume of exploited natural resources for royalties calculation under this Circular.