Vietnam feasibility study - EITI

Meanwhile, in some other regions, the price for calculating natural resources tax was determined by
the price stated in the invoice at the time where the company sold minerals to its partner. Titanium in
Binh Dinh province is an example. Some stakeholders from both company and governmental agency
state that the method of determining price for calculating the natural resources tax was based on
the outward invoice of the company. Consequently, in the situation that the company comes to an
agreement with its partner to set a lower price on this invoice than market value to evade a part of
natural resources tax commonly occurred. Some representatives of the mining companies said that
the calculation method of natural resources tax was still complicated and unfair. They proposed the
state to calculate natural resources tax based on the mine reserves instead of production. They also
proposed the payment of tax to be made in one or several times. This issue is still being debated
amongst the stakeholders with no specific outcome.
In fact, the governmental agencies just conduct their monitoring activities as if they would have
signals of violation from the company itself. Hence, the situation in which the companies declare
by themselves their monthly or quarterly production to the taxation authorities, with no or little
production monitoring. This is a big gap in the extractive industry. Consequently, a huge amount of
mineral resources has been lost throughout the years and the state also loses considerable revenues
from this. As noted, the fact that the extractive companies do not declare their real production seems
to occur commonly in many locations. The unreported product is then smuggled, leading to a big
loss of revenues to the state. The situation of mineral smuggling as with coal, titanium, and iron that
has been mentioned on the press and discussed in the government in recent years in Vietnam has
been happening for years. This is despite state management agencies having strengthened their
supervision and inspection tasks in recent times (CAND, 2010; Xa Luan, 2011).
• Fee for the purchase and use of information and money refunded for the exploration fee using the
state budget
The state has issued provisions on the refund of survey and exploration fees, using capital from the
state budget, such as the Inter-ministerial Circular No. 96-TT/LB issued in 1993; the Law on Minerals
issued in 1996; Circular No. 46/TTLT-BTC-BCN dated 21/5/2002 replacing Circular No. 186//2009/TTLT-
BTC-BTN&MT dated 28/9/2009. However, in almost all surveyed provinces, the state has not managed
to collect these amounts or the received amount has been limited. For example, for the coal mines
in Quang Ninh, the state has almost not collected the refund so far. The main reasons are an unclear
division of responsibilities between MONRE and the local authorities about the collection mechanism,
and a poor law enforcement 5 . Another reason is because of the decision to assign the management of
all coal mines in Quang Ninh to the Vietnam Coal Corporation - TVN 6 under the Decision No. 481/CN-
QLTN dated 8/6/1995 of the Ministry of Industry, before the issuance of the Law on Minerals in 1996,
leading to confusion over the state management function and economic operation function of TKV.
When TKV started privatization, information about mines as well as previous expenses on exploration
using capital from the state budget were not recorded to assets of companies. Therefore, this revenue
was falled into some individuals, resulting a huge loss to the state.
*4: This report only refers to the situation of legal cheating in the mining sector, but does not mean to refer to some specific enterprises
or localities, especially for enterprises and localities in the interview list.
*5: In Quang Ninh so far, the state has not collected any fee refunded from the expense of exploration using capital from the state
budget. Meanwhile, almost all coal mines in the local area of Quang Ninh were investigated and explored with the capital from the
state budget.
*6: Vietnam Coal Corporation – TVN was established in 1994, under the direct management of the Ministry of Industry. In 2001, it was
changed to Vietnam National Coal-Mineral Industries Holding Corporation Limited -Vinacomin.
The Extractive Industries Transparency Initiative and the Implementation Perspective of Vietnam
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