Circular No. 38/2017/TT-BTNMT dated October 16, 2017 of the Ministry of Natural Resources and Environment on methods for conversion from taxable price of resource royalty for determining price used for calculating fees for granting the mineral right

THE MINISTRY OF NATURAL RESOURCES AND ENVIRONMENT 

Circular No. 38/2017/TT-BTNMT dated October 16, 2017 of the Ministry of Natural Resources and Environment on methods for conversion from taxable price of resource royalty for determining price used for calculating fees for granting the mineral right

Pursuant to Law on mineral No. 60/2010/QH12 dated November 17, 2010;

Pursuant to Law on resource royalty No. 45/2009/QH12 dated November 25, 2009 and Law on amendments to certain article of tax laws No. 71/2014/QH13 dated November 26, 2014;

Pursuant to the Government’s Decree No. 203/2013/ND-CP dated November 28, 2013 calculation methods and fees for granting the mineral right;

Pursuant to the Government’s Decree 158/2016/ND-CP dated November 29, 2016 providing guidelines for certain articles of Law on mineral;

Pursuant to the Government’s Decree No. 36/2017/ND-CP dated April 04, 2017 on functions, duties, powers and organizational structure of the Ministry of Natural Resources and Environment;

At the request of Director of the Vietnam General Department of Geology and Minerals and Director of Legal Affairs;

The Minister of Natural Resources and Environment promulgates the Circular on methods for conversion from taxable price of resource royalty for determining price used for calculating fees for granting the mineral right.

Article 1. Scopeof adjustment

This Circular provides guiding the Clause 5 Article 69 of the Government’s Decree No. 158/2016/ND-CP dated November 11, 2016 on guidelines for certain articles of Law on mineral.

Article 2.Subject of application

This Circular applies to:

1. Mineral authorities and other regulatory authorities engaged in calculation of fees for granting the mineral right.

2.Organizations and individuals extracting minerals.

Article 3. Determination of prices used for calculating fees for granting the mineral right

1.Formula for determining price used for calculating fees for granting the mineral right (G):

G = G_tnx K_qd

In which:

a) G: price used for calculating fees for granting the mineral right which is converted from the taxable price of resource royalty (hereinafter referred to as “taxable price”) in accordance with regulations of law on resource royalty at the time of calculation of fee for granting the mineral right (unit: VND/unit of mineral reserve)

b)G_tn: the taxable price which is issued by the People s Committee of a province and is applicable at the time of calculation of fee for granting the mineral right (unit: VND/unit of resources);

c) K_qd: the coefficient of conversion from the taxable price (unit: VND/unit of resources) to price used for calculating fee for granting the mineral right (VND/ unit of mineral reserve) (hereinafter referred to as “conversion coefficient”).

2.Principle for determining K_qd:

a) K_qdshall depend on mineral quality or the taxable price prescribed in Point b Clause 1 or theloose coefficient (H_n) prescribed in Point e Clause 3 of this Article;

b) Cases requiring determination of K_qdare specified in Article 4 of this Circular and K_qdshall be equal to 1 in the cases prescribed in Article 5 of this Circular;

c) Determination of K_qd of each mineral group or type shall comply with regulations in Articles 6 and 7 of this Circular;  

d)K_qdshall be rounded to the nearest one thousandth;

Example:If K_qdwhich is 0.2532133, it shall be rounded into 0.253

dd) Parameters for determiningK_qdare prescribed in Clause 3 of this Article.

3.Parameters for determining K_qdinclude:

a) C_m: the average content of metal in a mine which shall be determined by dividing total metal reserves by total reserves of metal ores specified in the approval decision issued by the council of national mineral reserve assessment or People’s Committee of the province or specified in the report on mineral exploration and is calculated as follows:

C_m= Q_kl: Q_q

Where:

-Q_kl: the approved total metal reserve;

-Q_q: total reserve of metal ores specified in the approval decision or report on results of mineral exploration.

Example: The approval decision for the metal reserve specifies that the reserve of copper ores is 1,936,000 metric tons and the copper reserve is 20,659 metric tons.  According to the above-mentioned formula, the average content of copper (C_m) shall be calculated as follows:

C_m=20,659 (metric tons): 1,936,000 (metric tons) x 100% ≈ 1.067% (rounded)

b) C_maxis the maximum metal content specified in the taxable price list issued by the People’s Committee of the province;

c) C_minis the minimum metal content specified in the taxable price list issued by the People’s Committee of the province;

d) C is the metal content specified in the taxable price list issued by the People’s Committee of the province;

dd) C_tqis the average content of metal in ore concentrates used for determining the taxable price;

e) H_nis the loose coefficient of volume conversion from the natural state (minerals that have not been extracted from the ground) to the crude state (crude minerals) which is determined according to the physical and mechanical properties of each mineral type or group and rounded to the nearest one thousandth;

Example: If H_nis 1.475128, it will be rounded into 1.475.

g) D: the natural weight of a mineral (equal to quantity of this mineral in natural state divided by a volume unit) which is specified in the approved report on results of mineral exploration.

Article 4. Cases requiring determination of K_qd

1.Prices of crude minerals are not specified in the taxable price list issued by the People s Committee of the province.

2.The taxable price list issued by the People s Committee of the province contains the prices of crude minerals but its measurement unit is not the same as those of the licensed mineral reserve.

Example: Unit of the mineral reserve allowed to be extracted (underground) is m³or metric ton while the unit of crude minerals (loosened) is m³.

Article 5. Cases in which K_qdequals 1

K_qdwill equal 1 if:

1.The taxable price list issued by the People s Committee of the province contains prices of crude minerals.

For example:Ashlars, mineral water, crude coal; crude kaolin

2.The taxable price issued by the People s Committee of the province contains prices determined according to metal ores and corresponding to the metal reserve specified in the license to extract minerals.

The price used for calculating fees for granting the mineral right in this case shall be calculated in accordance with regulations in Point a Clause 1 Article 6 of this Circular.    

Article 6. Determination of K_qdof metal ores

1.Formula for determining K_qdin the cases where thePeople’s Committee of a province issuestaxable prices according to the content of metal ores:

a) If the average actual content of a metal in a mine (C_m) falls within its certain limits, the price used for calculating fees for granting the mineral right shall be equal to the issued taxable price corresponding to the limits on content of this metal ore and calculated as follows:

K_qd= 1

Example: The People’s Committee of TN province issues the taxable price list according to limits on content of lead-zinc ore which is specified as follows:

Table 1

After C_mis determined in accordance with Point a Clause 3 Article 3 of this Circular, if the mine A₁has Cm of lead and zinc equal to 16.8%, the price used for calculating fees for granting the mineral right will be equal to the taxable price corresponding to the content from 15% to under 20% and equal 1,500,000 VND per metric ton (specified in section 3 of the abovementioned table). Similarly, if the mine A₂has C_mof lead and zinc equal to 24.5 %, the price used for calculating fees for granting the mineral right shall be equal to the taxable price corresponding to the content from 20% to under 25% and equal 2,500,000 VND per metric  ton (specified in section 4 of the above-mentioned table).

b) If C_mspecified in the approval decision is greater than C_maxspecified in the taxable price list,K_qdwill be equal to C_mdivided by C_max(K_qd= C_m: C_max)

Example: According to the approval decision, the mine B has C_mof lead and zinc equal to 26% while C_maxof lead and zinc is 25% (specified in section 5 of the above-mentioned table) K_qdshall be determined as follows:

K_qd= 26% (C_m) :  25% (C_max) = 1.040

c) If C_mspecified in the approval decision is less than C_minspecified in the taxable price list, K_qdwill be equal to C_mdivided by C_min(K_qd= C_m: C_min)

Example: According to the approval decision, the mine X has C_mof lead and zinc equal to 8% while C_minof lead and zinc specified in section 1 of the above-mentioned table is 10%.  K_qdshall be determined as follows:

K_qd= 8% (C_m): 10% (C_min) = 0.800

2.If the taxable price list issued by thePeople’s Committee of the province only specifies a fixed price for the content of metal ores (C), K_qdwill be equal to C_mdivided by C(K_qd= C_m: C)

Example: According to the approval decision, the mine D has C_mof tin (Sn) equal to 0.41 % while content of tin specified in the taxable price issued by the People s Committee of the NA province is 70%.  K_qdshall be specified as follows:

K_qd= 0.41% (C_m): 70% (C) = 0.006 (rounded)

3.If the People’s Committee of the province issues its taxable price list according to metal ore concentrates, the K_qdwill be equal to C_mdivided by the average content of metal in ore concentrates (C_tq) (K_qd= C_m: C_tq)

Example: The mine E has the C_mof cooper equal to 1.2% while the C_tqof copper specified in the taxable price list issued according to copper ore concentrates is 25.6% K_qdshall be determined as follows:

K_qd= 1.2% (C_m): 25.6% (C_tq) = 0.047 (rounded)

4.If the People’s Committee of the province issues the taxable price list for multiple metals, ore concentrates or useful components, the formula for determiningK_qdwill be similar to those for determiningK_qdof each metal or useful component prescribed in Clauses 1, 2 and 3 of this Article.

Example: A tungsten and multi-metal mine is licensed to extract tungsten, fluorite, copper and bismuth. The taxable price list contains taxable prices determined according to ore concentrates regarding tungsten, fluorite and copper the price determined according to metal regarding bismuth. K_qdshall be determined according to each useful component and specified in the following table:

Table 2

Article 7. Determination of conversion coefficient (K_qd) of non-metal ores

1.Formula for determining K_qdin the cases where the taxable price issued byPeople’s Committee of a province is the price of crude mineral but its unit is not the same as those of its reserve shall be specified as follows:

a) If unit of taxable price (price of crude mineral) is VND/m³but the unit of licensed reserve is m³(underground m³), K_qdshall be determined as follows:

K_qd= H_n

Example: Rocks used as building materials are commonly derived from solid minerals requiring blast during their extraction (loosened rocks). In Appendix C –table C1on coefficient of volume conversion from natural soil to loosened soil prescribed in the national standard No. TCVN 4447:2012, H_nis 1.475. K_qdshall be determined as follows:

K_qd= H_n=1.475

b) If unit of the taxable price (price of crude mineral) is VND/m³but unit of licensed reserve is metric ton, K_qdshall be determined as follows: 

K_qd= H_n: D

Example: According to the approved report on results of mineral exploration, a limestone mine has D (natural weight of limestone) = 2.68 and H_nof loosened limestone is 1.475. K_qdis determined as follows:

K_qd= H_n: D = 1.475 : 2.68 = 0.550 (rounded)

2.Formula for determining K_qdin the cases where the People’s Committee of a province issues the taxable price list for nonmetals according to rates of their useful component shall be similar to those prescribed in Clause 2 Article 6 of this Circular.

Example: A kaolin-pyrophyllite mine which has C_mof Aluminium oxide (Al₂O₃) specified in the approval decision equal to 20.16% while the People s Committee of QN province issues the taxable price list for kaolin-pyrophyllite whose content of Aluminum oxide is less than 25% (C).  Kqd shall be determined as follows:

K_qd= 20.16% (C_m) : 25% (C) = 0.806 (rounded)

3.H_nmentioned in the formulas for determining K_qdprescribed in Points a and b Clause 1 of this Article shall be determined in the report on results of mineral exploration whose mineral reserves have been approved by the competent authority. If the mineral extraction is allowed to be carried out in an area which has no H_n, regulations in Appendix C Table C1 on coefficient of volume conversion from natural soil to loosened soil of the national standard No. TCVN 4447:2012 promulgated by the Ministry of Science and Technology will be applied.

Article 8. Effect and implementation

1.This Circular takes effect on November 30, 2017.

2.Regarding licenses to extract minerals that have been issued by competent authorities from the day on which the Government’s Decree No. 158/2016/ND-CP comes into force to the day on which this Circular comes into force, prices used for calculating fees for granting the mineral right shall be determined in accordance with this Circular.

3.The Vietnam General Department of Geology and Minerals shall take responsibility for providing instructions on and accelerating inspections of implementation of this Circular.

4.Ministries, ministerial agencies, Governmental agencies, People’s Committee and relevant organization and individuals shall take responsibility for implementing this Circular.

Any problem arising during the implementation of this Circular should be reported to the Ministry of Natural Resources and Environment for research and amendments.

For the Minister

The Deputy Minister

Nguyen Linh Ngoc