Circular No. 22/2010/TT-BTC dated February 12, 2010 of the Ministry of Finance guiding implementation of Decree No. 100/2009/ND-CP of the Government dated November 09, 2009 on collection of a surcharg
Article 1. Applicable scope and applicable entities
1. This Circular guides collection of a surcharge from petroleum contractors on their share of profit oil when crude oil prices increase.
2. Petroleum contractors prescribed in this Circular means Vietnamese or foreign organizations and individuals conducting petroleum operations in Vietnam in accordance ..ith the Laiv on Petroleum (hereinafter referred to as contractors).
Article 2. Taxpayers1
1. In the case of a petroleum contract executed in the form of a production sharing contract, the taxpayer shall be the operator representing the contractors to such contract.
2. In the case of a petroleum contract executed in the form of a joint operating agreement the taxpaver shall De the joint operating company representing the contractors to such contract
3. In the case of a petroleum contract executed in the form of a joint venture contract, the taxpayer shall be the joint venture enterprise representing the contractors to such contract.
4. In the case of Vietnam Oil and Gas Group or a corporation or company under such Group which itself undertakes a petroleum operation, the taxpayer shall be Vietnam Oil and Gas Group or the corporation or company which is the subsidiary of such Group.
Article 3. Currency for payment of the surcharge
1. Where crude oil is sold for US dollars or a freely convertible foreign currency, the currency for payment of the surcharge shall be US dollars or the freely convertible foreign currency.
2. Where crude oil is sold for Vietnamese dong (VND), the currency for payment of the surcharge shal be VND.
3. Where crude oil is sold for both US dollars or a freely convertible foreign currency and VND. the currency for payment of the surcharge shall be VND.
4. US dollars or a freely convertible foreign currency shall be converted into VND for payment of the surcharge at the average interbank rate published by the State Bank of Vietnam as at the date of payment of the surcharge.
Article 4. Location for registration, declaration and payment of the surcharge
The location for registration, declaration and payment of the surcharge shall be the tax department of the locality in which the main operating office of the taxpayer is located, except for cases where registration declaration and payment of the surcharge is made at some other location pursuant to separate guidelines of the Ministry of Finance.
Article 5. Objects subject to the surcharge
The entire volume of the shared profit oil of a contractor for a quarter shall be the object subject to the surcharge, in which:
1. Profit oil means the remaining crude oil after deducting royalties [natural resources tax) and recoverable petroleum [operational] costs from the actual volume of oil in accordance with the Law on Petroleum. In a case where the petroleum contract does not stipulate a percentage of recoverable petroleum costs, such percentage for the purpose of determining the volume of profit oil shall be 35%, except in the case of a petroleum field which continues to be exploited after termination of the petroleum contract.
2. Shared profit oil of the contractor for a quarter means the profit oil as prescribed in clause 1 above which is distributed to the contractor pursuant to the signed petroleum contract.
3. In the case where Vietnam Oil and Gas Group or a corporation or company under such Group itself undertakes a petroleum operation, then the object subject to the surcharge is the entire volume of profit oil receivable for a quarter by Vietnam Oil and Gas Group or the corporation or company vhich is the subsidiary of such Group.
Article 6. Determining amount of surcharge payable
1. Applicable to encouraged petroleum investment projects, a surcharge rate of 30".. shall be payable quarterly on the volume of shared profit oil of a contractor for a quarter when the average crude oil
selling price of the quarter actually increases by more than 20% of the base price of the same year" as follows:
Average crude oil selling price of the quarter
Base price in the same year
Volume of shared profit oil of contractor for the quarter
(a) Average crude oil selling price of the quarter means the price .vhich the contractor itself calculates based on statistical data on actual daily selling prices of each quarter, in which
- First quarter is from 1 January to end of 31 March;
- Second quarter is from 1 April to end of 30 June:
- Third quarter is from 1 July to end of 30 September;
- Fourth quarter is from 1 October to end of 31 December
(b) Base price in the same year means the price level forecast in the approved field development plan corresponding to the year of implementation. If such approved field development plan is amended or supplemented as compared to the initial plan, then the base price in the same year means the price level forecast in such amended or supplemented approved field development plan corresponding to the year of implementation. If a field continues to be exploited after termination of the petroleum contract, the base price in the final year of the contract shall apply.
(c) Encouraged petroleum investment project means a project carrying out a petroleum operation in a deep-sea and remote offshore area or in a region with especially difficult geographical or geological conditions in accordance with the list of blocks decided by the Prime Minister of the Government.
Example of determining the amount of surcharge payable in the case of an encouraged petroleum investment project:
- Base price in the year is: 50 US dollars/barrel.
- Volume (produced) by the field' 24 million barrels/year.
- Recoverable petroleum [operational] costs' 35% of turnover
- Natural resources tax: 8% of turnover,
- Profit distributed to the investor country: 50%
- Profit distributed to the contractor: 50%
On the basis of the above figures, the average shared profit oil of a contractor for a quarter shall be determined as follows:
Crude oil prices forecast in the year shall be determined as follows:
Based on the above figures, the contractor must pay a surcharge for the third and fourth quarters specifically calculated as follows:
For the third quarter:
Surcharge payable for the third quarter
Average crude oil selling price of the quarter
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