The latest draft of a law on royalties has been recently posted on the Government’s portal www.chinhphu.vn for public comment before submission to the National Assembly at the October session for passage.
According to the 10-article draft law, subject to royalty are metal and non-metal minerals, crude oil, natural gas, coal gas, natural forest products, natural aquatic products, natural water and other natural resources.
Royalty payers, under the draft law, are all organizations and individuals that exploit natural resources in the mainland, islands, internal waters, territorial seas, exclusive economic zones and the continental shelf of Vietnam.
Compared to current regulations, the draft law sets higher royalty brackets on natural resources. Specifically, the royalty bracket applicable to coal, which is presently 4-6%, would be increased to 4-20%. The royalty rate imposed on gold would range 6-30% while that for rare earth would be 8-30%, instead of 9% and 12% as currently prescribed. Gems would be subject to a royalty bracket of 10-30%, a significant increase over the current 10-16%.
Particularly, petroleum and gas would be subject to a progressive tariff according to total actual output in each royalty period, of which the highest rate is 30% and 25%, respectively.
The draft law also provides for royalty exemption and reduction in some cases. Specifically, exploiters of offshore aquatic resources with high-capacity vessels would be exempt from royalty for five years after they are granted an exploitation permit and a 50% reduction of the payable royalty amount in the subsequent five years. Royalty exemption would be also offered for natural water used for generation of hydropower not to be fed into the national power grid, soil exploited for ground leveling for, and construction of, defense and security works, works used for humanitarian and charitable purposes, dikes, irrigation works and roads.
The draft law is expected to come into force in early 2010.-