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In order to calculate the royalties amount payable in a period, it is necessary to define the volume of royalties liable natural resources, royalties calculation price of a natural resource- unit and royalties rate. Here is the guidance for royalties calculation price of natural resources.
Pursuant to the Article 6, Circular No. 152/2015/TT-BTC, A royalties calculation price is the exploiter’s sale price of a natural resource product unit, exclusive of value-added tax but must not be lower than the royalties calculation price prescribed by the provincial-level People’s Committee.
In case the sale price of a natural resource product unit is lower than the royalties calculation price prescribed by the provincial-level People’s Committee, royalties shall be calculated based on the price prescribed by the provincial-level People’s Committee.
In case natural resource products are transported for sale, with freight and sale prices of these products separately stated in invoices, royalties calculation prices are sale prices of natural resource products exclusive of freight.
The royalties calculation price is prescribed in each case as follows:
1. For natural resources of which product unit sale prices can be determined
A royalties calculation price is the sale price of natural resource product units of the same class and quality, exclusive of value-added tax and applicable to the whole volume of natural resources exploited in a month; sale price of a natural resource product unit is equal to total turnover (exclusive of value-added tax) of the sold natural resource divided (:) by total volume of such natural resource sold in the month.
Accordingly, sale price of a natural resource product unit is determined as follows:
Sale price of a natural resource product unit = Total turnover (exclusive of value-added tax)/total volume of such natural resource sold
In case the natural resource is exploited but no sale turnover arises in the month, the royalties calculation price is the weighted average taxed price of natural resource unit of the latest month of turnover generation; if the weighted average taxed price of natural resource unit of the latest month of turnover generation is lower than the royalties calculation price prescribed by the provincial-level People’s Committee, the latter shall be applied.
In case legal entities exploit natural resources for groups or corporations to sell through a sole wholesaler under contracts or agreements between parties or at prices decided by these groups or corporations, royalties calculation prices are prices decided by these groups or corporations but must not be lower than prices prescribed by provincial-level People’s Committees of localities where natural resources are exploited.
2. For natural resources of which exploited product unit sale prices cannot be determined because they contain different substances
A royalties calculation price is the natural resource unit sale price of each substance, determined based on the total natural resource sale turnover in a month (exclusive of value-added tax) calculated for each substance contained in exploited natural resources in proportion to its content as examined and approved by the competent state agency and the sold natural resource volume stated in sale documents for each substance.
For example:
Enterprise A exploits 1,000 tons of ores, the contents of substances in the examined ore sample are: Copper: 60%; silver: 0.2%; tin 0.5%.
The taxed natural resource volume of each substance is determined as follows:
- Copper: 1,000 tons x 60% = 60 tons.
- Silver: 1,000 tons x 0.2% = 2 tons.
- Tin: 1,000 tons x 0.5% = 5 tons.
In the month, the enterprise sells 600 tons of ores and earns a turnover of VND 900 million. The taxed price shall be determined for each substance in ores is as follows:
- Turnover from the copper volume sold in the month: VND 900 million x 60% = VND 540 million.
- Taxed price of copper (VND million/ton): VND 540 million/360 tons.
- When declaring and paying royalties, the enterprise shall declare and pay royalties for the whole of 600 tons of copper ores with (the above) taxed price and corresponding royalties rate.
Taxed prices for declaration and payment of royalties for silver and tin volumes in 1,000 tons of ores exploited in the month shall be similarly determined.
3. For natural resources which are exploited not for sale but must be processed before being sold (for domestic sale or export)
In case of sale of a natural resource product, its taxed price is the sale price of a natural resource product unit (in case of domestic sale) corresponding to the sold natural resource volume stated in the sale document or customs value of exported natural resource product (in case of export) exclusive of export duty corresponding to the exported natural resource volume stated in the export document but must not be lower than the taxed price prescribed by the provincial-level People’s Committee.
The customs value of an exported natural resource product must comply with the provisions of customs value of exports of the Customs Law and guiding and revising documents (if any).
- In case of sale of an industrial product, its royalties calculation price is its sale price minus expenses for processing a natural resource product into an industrial product but must not be lower than the taxed price prescribed by the provincial-level People’s Committee.
Expenses for processing a natural resource product into an industrial product shall be deducted upon the determination of taxed price based on the enterprise’s processing technology under an approved project but exclude expenses for exploitation, sieving, sorting and content enrichment.
- In case the taxed price determined by the taxpayer is lower than that in the price table prescribed by the provincial-level People’s Committee, the latter shall be applied. In case the price table prescribed by the provincial-level People’s Committee has no taxed price of a natural resource product, the tax agency shall coordinate with a functional agency in examining and setting a taxed price in accordance with the law on tax administration;
In case an exploited natural resource is processed and used for production of a natural resource-accompanied product, the taxed prices of natural resource units in specific cases specified in this Article shall be applied.
4. Royalties calculation prices in some cases are specified as follows:
- Taxable price of natural water used for hydroelectricity generation is the average selling price of electricity.
Average selling price of electricity for calculating the resource royalty payable by hydroelectricity producers shall be determined according to the retail price of electricity defined by the Ministry of Industry and Trade.
- For timber, royalties calculation price is the sale price at delivery yards (warehouses and exploiting yards); in case the sale price at delivery yards has not yet been determined, the royalties calculation price shall be determined based on the taxed price prescribed by provincial-level People’s Committees.
- For natural mineral water, natural thermal water, bottled or canned purified natural water and natural water used for production and trading without any sale price, royalties calculation price shall be prescribed by provincial-level People’s Committees.
- For other organizations and individuals that exploit natural resources but fail to fully observe the prescribed accounting book and document regime, tax agencies shall examine and assess royalties in accordance with the law on tax administration.
In this case, taxed natural resource volume shall be determined based on examination results and royalties calculation price is that in the price table prescribed by provincial-level People’s Committees for each period.
Here are the regulations on Guidance for royalties calculation price of natural resources.
