VINACHEM

Vietnam’s mineral industry faces challenges from complex tax laws and overlapping obligations.

Vietnam’s mining enterprises are currently subject to nine types of taxes and fees, with total obligations reaching approximately 25% of revenue - significantly higher than the 5–10% typical in countries such as the US, Australia, or Malaysia.

Double taxation weighs on mining sector

The mining industry plays a vital role in Vietnam’s economy, supplying essential raw materials to core sectors such as metallurgy, energy, and construction, while also contributing significantly to state revenues.

This concern was raised by Nguyen Le at a policy workshop on financial regulations for the mineral industry, held on October 15.

According to Dau Anh Tuan, Deputy Secretary General and Head of Legal Affairs at the Vietnam Chamber of Commerce and Industry (VCCI), mining companies are currently subject to two major financial obligations: the mineral resources tax under the 2009 Mineral Tax Law, and mineral exploitation rights fees under the 2010 Mineral Law - provisions that are retained in the upcoming 2024 Law on Geology and Minerals.

“Both charges aim to ensure the state captures value from national mineral assets. However, applying two overlapping financial mechanisms to the same object has raised legal, practical, and economic concerns,” said Mr. Tuan.

He cited business feedback indicating that total financial obligations in the sector can reach 30–40% of revenue. In contrast, mining powerhouses such as Australia, Canada, and Indonesia typically apply only a flexible royalty system combined with corporate income tax, resulting in significantly lower overall tax burdens.

This overlap between the resource tax and exploitation rights fee increases business costs, reduces competitiveness, and distorts investment incentives - especially those supporting efficient extraction and value-added processing, which are strategic goals outlined in Resolution 10-NQ/TW of the Politburo on mineral industry development through 2030, with a vision to 2045.

Nguyen Van Phung, a senior tax expert and former head of the Large Enterprise Tax Department under the Ministry of Finance, noted that mining firms are currently subject to nine types of taxes. Notably, their corporate income tax rate can reach up to 50%, double the 25% rate applied to other businesses.

According to Mr. Phung, the rights fee and the resource tax are essentially identical in terms of calculation and scope, but are handled by different authorities using separate administrative processes, which doubles the compliance burden.

“These two charges share the same tax base and calculation methods - only differing in management approach, timelines, and authority - which creates a clear perception of duplicate taxation,” he explained.

He added that managing the resource tax is already complex, especially in determining taxable output and pricing, making the process difficult not only for businesses but also for tax authorities.

Calls for merging dual obligations

The biggest challenge, experts agree, lies in the concurrent application of the mineral tax and the rights fee, resulting in what many describe as “tax on top of tax.” Bui Ngoc Tuan, Deputy General Director of Tax Advisory Services at Deloitte Vietnam, stated that the sector’s total tax and fee burden currently reaches 25% of revenue - far exceeding the 5–10% range in peer countries like the US, Australia, or Malaysia. He emphasized that corporate tax alone can reach 50% for strategic minerals like tungsten and rare earths - double the standard 20% rate.

From a business perspective, Phan Chien Thang, Deputy CEO of Masan High-Tech Materials, highlighted persistent challenges with licensing procedures for mining and processing, especially for strategic minerals. He noted that delays often cause companies to miss favorable market opportunities.

“When a license reaches its quota, companies must reapply, which can take up to a year. We propose streamlining these procedures. For urgent projects, the government should consider special resolutions or mechanisms allowing parallel investment and paperwork processes to accelerate project timelines,” he suggested.

Mr. Thang also pointed out that retroactive policy changes undermine investor confidence. For instance, when Masan invested in 2010, the mineral tax rate was below 10%, but post-investment adjustments raised it to between 6–25%. Additionally, environmental fees and exploitation rights fees were introduced only after the project became operational, disrupting financial planning.

He proposed consolidating the mineral exploitation fee and resource tax into a single obligation and adjusting the rates to align with regional and international benchmarks. Ideally, total taxes should not exceed 3–8% of revenue, in line with global best practices.