Vietnam feasibility study - EITI

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30 II.2 - fInancIal lIaBIlITY Of THe OIl anD Gas cOmPanY Oil and gas activities are regulated in the Law on Petroleum in 1993 and its revised and supplemented versions in 2000 and 2008. Apart from the obligations provided for by those laws and similar obligations for taxes, charges and fees applicable to mining activities, the enterprises are also required to pay other taxes and fees. II.2.1 fees Fee for the purchase and use of petroleum information As provided for in the Petroleum Law, petroleum exploring and exploiting enterprises are obliged to pay a fee to the state for the use of information about petroleum. This fee will be negotiated in the petroleum exploration and exploitation contract and PVN shall negotiate and collect this fee on behalf of the host country. types of bonuses As petroleum exploitation is a relatively special activity and petroleum activities in Vietnam are almost all carried out offshore, closely connecting it to the economic, politic and security of sovereignty situation of the nation. The Vietnam Oil and Gas Group (PVN) is assigned by the State to represent and perform activities of exploration, exploitation and related business activities. Business activities in the petroleum area are conducted under the production sharing contracts (PSC), bidding, etc. There are three main types of bonuses to be paid to the state budget, including: • Signature bonus; • Commercial finding bonus; and • Production bonus. Norm and form for collecting these bonuses are directly mentioned in the petroleum exploitation contracts. environmental protection fee applicable to crude oil and natural gas The Decree No. 82/2009/ND-CP of the Government providing for environmental protection fee applicable to mineral exploitation provides that the fee applicable to “crude oil shall be VND 100,000/ ton and for natural and coal gas VND 50/m 3 . For natural gas collected during the exploitation of crude oil (associated gas) in particular, the fee shall be VND 35/m 3 .” Unlike minerals, 100% of the environmental protection fees in petroleum activities are paid directly to the central budget. II.2.2 Profit sharing Foreign enterprises shall be responsible for distributing a part of their profits called petroleum interest to the host country. Rate and form of profit distribution shall be stipulated in the relevant contracts, depending on the specific lot and cooperation project. PVN shall be the authorized unit to directly collect these amounts from petroleum exploitation contracts. II.2.3 Taxes natural resources tax Specific tax rate applicable to crude oil and natural gas are determined progressively for each part by the output of crude oil, natural gas and coal gas, which is produced in an average day. Specifically, Circular No. 32/2009/TT-BTC of MOF provides for the natural resources tax rate applicable to crude oil and natural gas as follows: The Extractive Industries Transparency Initiative and the Implementation Perspective of Vietnam
table 8. schedule of natural resources tax rates applicable to crude oil and natural gas Exploitation output Investment incentive projects Project Crude oil Up to 20,000 barrels/day More than 20,000 barrels to 50,000 barrels/day 8% 10% More than 50,000 barrels to 75,000 barrels/day 10% 12% More than 75,000 barrels to 100,000 barrels/day 12% 17% More than 100,000 barrels to 150,000 barrels/day 17% 22% More than 150,000 barrels/day 22% 27% natural gas Up to 5 million m3 /day 0% 0% More than 5 million m3 to 10 million m3 /day 3% 5% More than 10 million m3 /day 6% 10% Corporate income tax For petroleum exploiting enterprises, the applicable tax rate shall be 50% of the petroleum exploitation project and 32% of the petroleum exploitation project, which is subject to an investment incentive in accordance with Article 48 of the Decree No. 48/2000/ND-CP and Circular No. 32/2009/TT-BTC guiding the implementation of provisions on taxes applicable to entities and individuals carrying out petroleum search, exploration and exploitation. II.2.4 Other financial obligations mine clearance fund Article 13 of the Petroleum Law No. 10/2008/QH12 stipulates that “During the performance of petroleum activities, after finishing each step or each phase or upon terminating a petroleum contract, the relevant entities and individuals carrying out the petroleum activities shall clear fixed construction works, equipment and means of serving the petroleum activity, which are no longer used and recover the environment in accordance with provisions of applicable laws”. The deposit to mine clearance fund shall be implemented in accordance to the provisions of the Decree No. 40/2007/QD-TTg of the Prime Minister. Based on the Decree, the enterprises shall be obliged to deduct an amount of money on an annual basis and based on the reserves and exploited output to the fund under PVN’s management for serving the petroleum clearance activity upon finishing the exploitation under the following formula: Annual production x (Total expense on clearance - Ending deducted balance) Annual payment = Remaining recoverable reserves Financial liabilities of the oil and gas company are presented in Figure 2 below. The Extractive Industries Transparency Initiative and the Implementation Perspective of Vietnam 31
Page 1 and 2: The Extractive Industries Transpare
Page 3: The Extractive Industries Transpare
Page 6 and 7: 6 tAbles And FIguRes Table 1. Statu
Page 8 and 9: 8 The Extractive Industries Transpa
Page 10 and 11: 10 exeCutIVe summARy Vietnam has a
Page 12 and 13: 12 EITI because it would benefit as
Page 14 and 15: 14 cHaPTer I. OvervIew Of mIneral r
Page 16 and 17: 16 According to calculations, oil a
Page 18 and 19: 18 etc. The Nghi Son oil refinery c
Page 20 and 21: 20 MOF has the role to manage these
Page 22 and 23: 22 I.4 General cOmmenT Vietnam is d
Page 24 and 25: 24 for collection and creation of i
Page 26 and 27: 26 II.1.2 Tax responsibilities Tax
Page 28 and 29: 28 fines. These contents are guided
Page 32 and 33: 32 Exploration Exploitation Process
Page 34 and 35: 34 cHaPTer III. real sITuaTIOn Of T
Page 36 and 37: 36 Payments The Extractive Industri
Page 38 and 39: 38 • Environmental protection fee
Page 40 and 41: 40 This is the biggest source of re
Page 42 and 43: 42 activities. The support to fishe
Page 44 and 45: 44 tax, personal income tax, are no
Page 46 and 47: 46 Smith (2004) claims that transpa
Page 48 and 49: 48 fee - collecting organizations a
Page 50 and 51: 50 v.1 - HIsTOrY anD THe DevelOPmen
Page 52 and 53: 52 EITI and lobbying Vietnam to imp
Page 54 and 55: 54 EITI report of Nigeria indicates
Page 56 and 57: 56 to 16,000 billion VND 12 ). Of t
Page 58 and 59: 58 The extractive companies would b
Page 60 and 61: 60 punishment once discovering the
Page 62 and 63: 62 To clarify the way of operation
Page 64 and 65: 64 vI.4 - cOnclusIOn In recent year
Page 66 and 67: 66 ReFeRenCe • BP. (2010). BP Sta
Page 68 and 69: 68 The Extractive Industries Transp
Page 70 and 71: 70 Annex d the semi-structured ques
Page 72 and 73: 72 Annex F data collection table of
Page 74: 74 II. Challenges/Barriers in enfor

Vietnam feasibility study - EITI

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