Circular No. 68/2005/TT-BTC dated August 29, 2005 of the Ministry of Finance guiding the distribution among budgets of various levels of Value Added Tax and Business Income Tax paid by subcontractors for oil and gas field exploration and development, and oil and gas exploitation activities

CIRCULAR

GUIDING THE DISTRIBUTION AMONG BUDGETS OF VARIOUS LEVELS OF VALUE ADDED TAX AND BUSINESS INCOME TAX PAID BY SUBCONTRACTORS FOR OIL AND GAS FIELD EXPLORATION AND DEVELOPMENT, AND OIL AND GAS EXPLOITATION ACTIVITIES

Pursuant to State Budget Law No. 01/2002/QH11 of December 16, 2002, and its guiding documents;

Pursuant to the July 6, 1993 Petroleum Law, the June 9, 2000 Law Amending and Supplementing a Number of Articles of the Petroleum Law, and guiding documents;

Pursuant to the Governments Decree No. 77/2003/ND-CP of July 1, 2003, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

The Ministry of Finance hereby guides the distribution among budgets of various levels of value added tax and business income tax paid into the state budget by subcontractors for oil and gas field exploration and development, and oil and gas exploitation activities as follows:

I. GENERAL PROVISIONS

1. Contractors and subcontractors mean Vietnamese or foreign organizations and individuals specified in Clause 8 and Clause 9, Article 3 of the July 6, 1993 Petroleum Law.

2. Direct activities of oil and gas field exploration and development, and oil and gas exploitation by subcontractors are oil and gas activities specified in Clause 4, Article 3 of the July 6, 1993 Petroleum Law and oil and gas field development activities specified in Clause 6, Article 4 of the Governments Decree No. 48/2000/ND-CP of September 12, 2000, detailing the implementation of the Petroleum Law, including: collection and processing of seismological documents; seismological interpretation; sea bed exploration and geologic investigation; exploration of drill wells; directional drilling; geophysical measurement of drill wells; construction of drilling platforms; well ridge plastering; solid substance separation; desalination and dehydration; preparation and investment in the construction of oil and gas exploitation works, exploitation drilling, installation of equipment; and operation of drilling platforms.

II. SPECIFIC PROVISIONS

1. The distribution among budgets of various levels of value added tax and business income tax paid by subcontractors for oil and gas field exploration and development, and oil and gas exploitation activities shall be effected as follows:

1.1. Value added tax and business income tax paid into the state budget by subcontractors (including subcontractors directly declaring and paying taxes in Vietnam and subcontractors declaring and paying taxes via contractors) for activities specified at Point 2, Section I of this Circular shall be accounted in Category 03, Clause 02 (for oil and gas exploitation activities); or Category 03, Clause 03 (for oil and gas field exploration and development activities) of the corresponding chapter, item and sub-item of the current state budget index and wholly transferred to the central budget.

1.2. Value added tax and business income tax paid by subcontractors into the state budget for activities other than oil and gas field exploration and development as well as oil and gas exploitation activities specified at Point 2, Section I of this Circular shall be accounted in the corresponding chapter, category, clause, item and sub-item of the current state budget index (other than those mentioned at Item 1.1, Point 1, Section II of this Circular) and distributed to state budgets of various levels according to currently prescribed provisions (in %).

2. Contractors (where they pay taxes on behalf of subcontractors) and subcontractors shall declare and pay value added tax and business income tax for activities stipulated in this Circular.

3. Tax authorities shall guide contractors (if they pay taxes on behalf of subcontractors) and subcontractors to declare and clearly write on tax-payment documents the state budget index for each activity specified in Items 1.1 and 1.2, Point 1, Section II of this Circular.

4. State treasuries shall base themselves on tax payment documents of contractors (if they pay taxes on behalf of subcontractors) and subcontractors to distribute the paid tax amounts to budgets of various levels in strict accordance with regulations of the State Budget Law, its guiding documents and this Circular.

III. IMPLEMENTATION PROVISIONS

This Circular takes effect 15 days after its publication in CONG BAO. Any problems arising in the course of implementation should be reported to the Ministry of Finance for consideration and proper amendment.