From April 5, institutional and individual contractors that earn incomes from their crude oil and natural gas exploration and exploitation activities in Vietnam and parties to petroleum contracts that earn incomes from transfer of their capital contributions will have to register corporate income tax payment with tax offices in localities where their head executive offices are based.
As prescribed in Finance Ministry Circular No. 32/2009/TT-BTC of February 19, on tax on petroleum contractors, the above entities will also pay royalties on crude oil and natural gas, which will be determined by the partially progressive method on total volume of crude oil and gas actually extracted in a tax period. Such a total volume can be calculated by multiplying the average daily output of extracted oil and gas by the number of extraction days in a period.
When exporting oil and gas, they will be liable to export duty. However, they will enjoy import duty exemption for equipment imported for use in their exploring and extracting activities.
The taxable price of crude oil sold abroad not under “arm’s length” trading contracts will be determined by tax offices to be the average selling price of crude oil of the same category on the world market in three weeks: the week before, the week after and the week of sale. For natural gas, the taxable price will be the selling price of gas of the same type at places of gas delivery, taking into account relevant costs.-