Tax increase proposed on key natural resources in Vietnam

“The adjustment is expected to boost State management of natural resources and ensure economic benefits for the state, the mining and refineries sector and people living in areas rich in natural resources,” Tuan told the National Assembly Standing Committee.

Under the proposal, iron taxes will increase to 13 per cent, a 3 per cent rise on current rates applied since 2010. Similarly, titanium taxes will be raised from 11 to 16 per cent; gold from 15 to 22 per cent; wolfram and antimony from 10 to 18 per cent; copper from 10 to 15 per cent; and nickel from 10 to 12 per cent. 

Soil for brick production is also set to increase from 7 to 10 per cent, while sand, stone, gravel and coal will be up by 1 to 2 per cent.

The move aims to encourage firms to shift to more efficient and sustainable technologies, whilst providing a significant windfall to the state’s annual budget. 

Estimates show that the adjustment will add roughly VND2.279 trillion (Bt3.47 billion) to the State’s budget next year, up from the VND41.3 trillion collected last year.

“The higher tax would help encourage enterprises to upgrade technology and use natural resources more efficiently,” Tuan said.

Phung Quoc Hien, chairman of the NA Financial and Budgetary Affairs Committee, said the proposal did not cover metals that were low in natural reserves but were being exported in high-volume as raw materials; such as platinum, silver and tin. 

Meanwhile, modest tax increases were proposed fornatural resources deemed precious and non-renewable, he said, adding the panel was urging the government to review mining in the resources sector in light of limited reserves, pollution, low processing capabilities and need for more “value-added” projects. Hien agreed to increase natural resource taxes to harness the economic benefits but advised that a long-term road map was needed to give certainty to businesses.

Chairman of the NA Judiciary Committee Nguyen Van Hien warned the higher taxes could negatively affect mining activity, given most resources were being mined and exported as low-priced raw materials. He urged closer monitoring at the national level rather than local level, due to localities granting mining licences resulting in fewer benefits and high pollution.