Mining companies are expressing concerns about potential difficulties if new taxes and fees are implemented.

(Baonghean.vn) - From July 1st, Circular No. 44Applying the new resource tax frameworkThe Ministry of Finance's directive has come into effect. Many mining companies in Nghe An and Yen Bai provinces are worried and have petitioned the Prime Minister and relevant authorities.

The new tax framework is too high.

The Association of Small and Medium Enterprises in Quy Hop District (Nghe An Province), operating in the field of mineral exploitation, has submitted a petition to the Prime Minister and relevant authorities, reflecting the difficulties encountered in applying Circular No. 44/2017/TT-BTC dated May 12, 2017, of the Ministry of Finance on the new resource tax framework.

Businesses argue that the implementation of this circular will increase resource taxes and mining rights fees by 3-4 times, causing significant difficulties for enterprises.

Trung Hai Mineral and Trading Joint Stock Company (Chau Quang) invested over $6 million in a modern ultra-fine limestone powder processing plant and recently hired more than 200 additional workers. However, under the new tax framework, the plant is likely to cease production. Photo: Van Truong

Mr. Nguyen Trung Hai, Chairman of the Board of Directors of Trung Hai Mineral and Trade Joint Stock Company - Nghe An, said that the company has just invested in a large-scale, high-capacity ultra-fine limestone powder processing plant with the most modern technology currently available, with a total investment of over 6 million USD, and has recently recruited more than 200 additional workers.

If the company's mine operates at its licensed capacity, applying the lowest price framework under Circular 44, the additional resource tax payable by the enterprise would exceed 18 billion VND, and the additional licensing fee would be approximately 3.6 billion VND, totaling 21.6 billion VND. With this tax rate, the enterprise would certainly incur losses and would have to cease production.

Long Anh Private Enterprise invested in cutting stone using diamond saw blades extracted from the top down at Tho Hop quarry, Quy Hop, but the scarcity of white stone and the poor quality of the quarry are also reasons for difficulties in selling the product. Photo: Van Truong.

A representative from An Loc Joint Stock Company in Tho Hop commune, Quy Hop district, also shared: The company mainly utilizes white marble to produce carbonate powder for sale in the Chinese and Malaysian markets. The old tax rate for marble powder was 90,000 VND/m³, but now, under the new tax framework of 280,000 - 400,000 VND/m³, we will face significant difficulties because we cannot increase the selling price to our partners.

Few stone cutting and paving workshops are still operating in Dong Hop commune, Quy Hop district. Photo: Van Truong.

Mr. Chu Duc Manh, Head of the representative office of Dat Viet Construction and Investment Cooperation Joint Stock Company in Nghe An, said: The company has a quarry in Thung Lo and Thung Diep, bordering Lien Hop and Chau Loc communes. The quarry covers an area of ​​18.76 hectares, licensed by the Ministry of Natural Resources and Environment since 2010 for 29 years. The licensed output is 2.8 million tons of cut stone and 7.2 million tons of quarry stone over 29 years, but in reality, the quarry does not meet the required reserves and quality. It mainly consists of quarry stone, with only 5-10% of the extracted stone being finished products. Meanwhile, the company still has to pay taxes on 100% of the stone, including unusable stone. Now, with the high tax rate, the company is struggling.

A representative from Long Anh Private Enterprise in Tho Hop commune stated: "Our company invested in a diamond-bladed stone cutting system to cut layers from top to bottom, but we rarely find white stone; we mostly find colored stone, which is of low value. Or, even if we find a vein of white stone, we discover upon cutting into it that the stone doesn't meet the required whiteness and continuity standards, and it cracks and breaks, rendering it completely unusable. Due to the poor quality of the stone, we've had to switch to producing quarry stone. For the past few years, the global market has been selective, so we've had to operate at a reduced capacity. Our workforce has dwindled from over 150 to just over 50. If the new tax rate is applied, we will certainly go bankrupt."

On the other hand, businesses in Nghe An argue that the floor and ceiling prices established in Circular No. 44 are inconsistent with the 2009 Resource Tax Law, as the aforementioned price framework does not represent the selling price of marble and white marble resources in Nghe An province.

Specifically, Nghe An province is currently setting the tax rate at 250,000 VND/m².³For quarry stone, if Circular 44 is applied, the lowest rate would be 700,000 VND/m².³, which is 2.8 times higher than it is now.

Regarding limestone powder, Nghe An currently imposes a tax and fee of 50,000 VND per ton of reserves. If Circular 44 is applied, the lowest rate would be approximately 164,700 VND per ton, an increase of more than three times. "With the current fee, we are not collecting enough to cover our expenses. Applying the new rate would be truly impractical," Mr. Nguyen Giang Hoai affirmed.

Many stone quarrying businesses in Quy Hop have dissolved due to difficulties in selling their products. (One of the stone quarrying workshops of a business in Tho Hop has been abandoned). Photo: Van Truong.

Risk of bad debt exceeding 7 trillion VND, nearly 29,000 workers losing their jobs.

Quy Hop is considered the export capital of the country for stone. In previous years, mining activities in Quy Hop were very bustling, but at this time, the mining areas in Chau Quang, Chau Hong, Tho Hop, etc., are very gloomy. Industrial clusters and machinery lie scattered around, and numerous businesses have had to close down because their products cannot compete with the world market.

In reality, the quality of stone from the quarries is not high. Recovery yields only reach 7%, with over 2% being paving stone and 5% being crushed stone, the rest being waste stone. Some businesses report that while the licensed reserves are as stated, the amount of stone that has to be discarded is dozens of times greater than the meager amount of finished stone that can be sold. This doesn't even account for other costs such as transportation fees, and the fluctuating market makes operations very difficult.

Some businesses are trying to hold on, hesitant to sign new contracts because if they've already signed them and fees and taxes increase, they won't be able to raise prices for customers. This would mean the businesses would have to bear additional costs.

For many years, unsold paving stones from the Thung Khuoc industrial cluster in Quy Hop town have been left exposed to the elements. Photo: Van Truong.

Mr. Hoang Van Hai, Director of Hoang Gia Joint Stock Company (Dong Hop commune), explained: "Although paying taxes is the responsibility and obligation of businesses, if the authorities do not find solutions to address the issues when applying Circular 44, businesses are very likely to close down. The consequences are that many workers will lose their jobs, the company will not be able to maintain its annual tax payments to the State, and the company will become a bad debtor to the bank…"

Currently, many mining workers in Quy Hop district are working while anxiously monitoring the latest developments in the implementation of the circular. A worker from Hoang Gia Joint Stock Company confided: "I've been working in stone processing with the company for over 7 years, and my family's livelihood depends on my salary. If I don't have a job, life will be difficult because we have no farmland or forest land, and I don't know what else to do to make ends meet."

Mr. Nguyen Giang Hoai, Chairman of the Quy Hop Small and Medium-Sized Enterprise Association, added: Applying the new tax rate will have many negative consequences. Specifically, the total investment in the marble sector in Nghe An and Yen Bai provinces is approximately 10,800 billion VND, creating 30,500 jobs. Of this, bank loans account for 70%, equivalent to 7,560 billion VND. If the regulations and price framework in Circular No. 44 are applied, 95% of businesses will go bankrupt, resulting in unrecoverable bad debts for banks of approximately 7,182 billion VND. This will lead to 28,957 direct job losses and indirectly affect 86,925 people, or about 7,243 households. The unfinished mining areas will leave behind environmental risks, occupational safety hazards, and the risk of resource depletion due to illegal activities.

We will submit it to the Prime Minister for appropriate policy action.

In light of this situation, the Quy Hop - Nghe An Small and Medium-Sized Enterprise Association and the Luc Yen - Yen Bai White Stone Association have submitted a proposal to the Prime Minister requesting consideration and guidance from the Ministry of Finance, the General Department of Taxation, and other competent authorities to review and adjust the price framework, list, collection rates, and calculation methods accordingly.

A report submitted to the Prime Minister by the Association of Small and Medium Enterprises of Quy Hop - Nghe An and the Association of White Stone of Luc Yen - Yen Bai

Mr. Nguyen Dinh Tung, Chairman of the Quy Hop District People's Committee, stated: "Currently, mineral mining businesses, especially those extracting white stone in the area, are facing significant difficulties. Due to the economic downturn, the production and business activities of most enterprises have declined. As of now, in Quy Hop, 227 out of 477 enterprises have ceased production or dissolved, and over 118 enterprises have outstanding tax debts due to large inventories. If taxes are increased according to the new circular, it will only add to the difficulties. The local authorities hope that higher levels of government will implement reasonable policies to create favorable conditions for businesses to operate."

If the new tax framework is implemented, many workers will lose their jobs. Photo taken at the ultra-fine limestone powder processing line of Trung Hai Mineral and Trade Joint Stock Company (Chau Quang). Photo: Van Truong.

Currently, businesses in the area are requesting that the Ministry of Finance and relevant authorities establish an inter-ministerial, inter-agency, and inter-local working group to conduct on-site surveys of mine value, investment costs, profits, employment, and to gather opinions from specialized agencies at the local level.

At the same time, consult with experts in mining economics, geology, finance, and taxation to develop a solution that is appropriate to the specific quality of marble tiles and marble used in the production of calcium carbonate powder in Yen Bai and Nghe An, as well as current revenue collection regulations.

Based on that, the floor price, unit price, classification, group name, and resource type for the tax calculation price framework for marble and white marble will be reissued or applied as a reference.

Hai An