HCMC – Vietnam’s Ministry of Finance (MoF) has announced that it is currently seeking approval to raise taxes on the country’s key natural resources. The tax raises are intended to act as a tool to increase government revenues and tighten the management of resource mining.
Specifically, the MoF wants to revise Resolution 712/2013/UBT-VQH13 on natural resource tax. Some of the products that will see their current tax levels affected by the tax raises include the following:
- Iron will rise from 12 percent to 15 percent
- Titanium will rise from 16 percent to 18 percent
- Gold will rise from 15 percent to 20 percent
- Nickel will rise from 10 percent to 16 percent
- Wolfram and antimony will rise from 18 percent to 20 percent
- Bronze will rise from 13 percent to 18 percent
Additionally, other resources, such as coal and sand, will see their taxes raised by around three percent. Precious stones, such as diamonds and rubies, will also see their taxes raised by an estimated five percent.
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While many of the natural resources will see their tax rates raised, the tax on wood will actually see a decrease, depending on the category. However, precious woods, such as tram huong, will see an increase from their current level of 25 percent to 30 percent.
The new taxes could have a depressing effect on foreign direct investment (FDI) in the country. Current investment levels are lagging behind the previous year already. According to Vietnam’s Ministry of Planning and Investment, as of May 20th, 592 projects had been approved. These projects were worth US$2.95 billion in total registered capital, representing a year on year decrease of 19.4 percent. Since the beginning of January, foreign invested companies have pledged US$4.29 billion for their new and operational projects, representing a 22 percent decline over the previous year.
However, foreign enterprises have disbursed more capital over the current period than during the same time last year. The Vietnamese government has been quick to point out that many analysts consider FDI disbursements a better indicator of investor sentiment than total registered capital.
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The top four countries with the largest new investments and additional capital pledges into Vietnam are currently:
- South Korea: US$1.1 billion (25.7 percent)
- British Virgin Islands: US$663.24 million (15.4 percent)
- Turkey: US$660.2 million
- Japan: US$431.7 million
FDI into Vietnam has been spread across fourteen business sectors, with the majority of investment flowing into the manufacturing-processing industry, followed by the property market, and then the wholesale-retail sector.
This article was first published on Vietnam Briefing.
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