Nghe An mineral enterprises face the risk of closure due to Circular 44
(Baonghean) - For a long time, the management of mining licenses has not been strict, white stone exports are mainly raw, creating a resource drain effect. Therefore, the State's strengthening of management of mineral exploitation activities to increase the value of goods is a correct and necessary policy. However, many policies overlap, especially Circular No. 44/2017/TT-BTC on promulgating the price framework for calculating resource tax, which lacks practicality, causing many enterprises to struggle, even go bankrupt.
Hard reality
Nghe An is a province with many types of resources, especially mineral resources. In recent years, revenue from resource taxes in the area has contributed significantly to the total budget revenue in the area of the province, creating jobs for tens of thousands of workers.
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| Pha Ngoc Company Limited in My Son (Do Luong) exploits and processes stone powder. Photo: Thu Huyen |
From another perspective, mineral management still has shortcomings; the management of mining licenses is not strict, white stone is mainly exported in raw form, creating a "bleeding" effect of resources. After the 2010 Mineral Law was issued, the management of mineral exploitation activities has been greatly improved.
However, the situation of mineral exploitation in general and minerals for common construction materials in the area is facing many difficulties. Construction activities and consumption of construction materials are sluggish due to the limitation of public investment from the State budget, so the consumption output is slow. Due to the great competition in supply sources inside and outside the province, the selling price of products such as construction stones, sand and gravel is very low, not enough profit for operation and reinvestment. The market for paving stones is increasingly narrowing due to the decrease in construction, causing difficulties for enterprises exploiting and processing paving stones in the province.
That difficulty, combined with many types of taxes and fees, is causing many difficulties for enterprises in the mineral production and business sector. Currently, on a unit of mining land area, enterprises have to pay many fees: Compensation for site clearance (if it is forestry land or people's planted forest); Forest regeneration fee (paid to the Department of Agriculture and Rural Development for management); Deposit for environmental restoration after mining; Mining land rental fee; Mining right fee.According to the synthesis, the total number of enterprises operating in the field of mineral exploitation by the end of 2013 was 148, by the end of 2016 there were only 84 enterprises. By the first 6 months of 2017, 29 more enterprises announced to close. And it is known that there are currently more than 20 other enterprises in the process of temporarily suspending operations.
In particular, on May 12, 2017, the Ministry of Finance issued Circular No. 44/2017/TT-BTC on promulgating the price framework for calculating resource tax, requiring localities within 3 months to promulgate the price table for calculating resource tax according to this price framework.
According to feedback, the floor price and ceiling price range established in Circular 44 is not consistent with the provisions of the Law on Natural Resources Tax 2009. For example, Circular 44 stipulates the taxable price for resource code II401 white marble (no color or quality classification) with size ≥ 0.4m3After exploitation, the minimum price is drafted at 700,000 VND/m3, maximum 1,000,000 VND/m3. This price is 2.8 times higher than the current price in Nghe An. Resource group code II403, white marble for carbonate powder production, Circular 44 applies the price of 280,000-400,000/m33This collection level is about 3.3 times higher than the current collection level of Nghe An and Yen Bai.
This pushed all units in the white marble mining and processing industry into a very difficult situation. The application of this price list led to the following expenses: Mineral exploitation rights fees of mines, resource tax of white marble products immediately increased by about 3 times. All units exploiting and processing white marble in Nghe An as well as Yen Bai (two localities with white marble nationwide) were facing the risk of mass bankruptcy.
Many businesses said that when the State applied a series of environmental taxes and fees to increase revenue and minimize environmental impacts, most businesses in the mineral sector understood, sympathized and shared. However, since the addition of two sanctions: collecting licensing fees and land tax at high and continuously increasing prices, after calculating the cost price, the cost has accounted for nearly 40% of the product price.
Therefore, the operations of mineral enterprises are increasingly difficult. Increasing the land rent by 300% will only increase by 5-7 billion VND per year; the minimum resource tax price will increase by another 5-7 billion VND. But in return, nearly 100 enterprises have to stop operating, losing a source of tax revenue of more than 100 billion VND/year, not to mention thousands of workers losing their jobs.
Many businesses may have to close
In Quy Hop, Trung Liem Stone Mining Company has been operating for more than ten years but has been continuously losing money for the past two years due to a shrinking market. It has nearly 30 hectares of quarry land but has only invested in exploiting 3 hectares. The company's leaders said that if the regulations of Circular 44 are applied, the company will certainly have to stop operations or pay back 50% of the remaining land area.
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| Sand mining business is facing many difficulties due to high tax and fee increases. Photo: Thu Huyen |
As for Trung Hai Mineral and Trading Joint Stock Company, they have just invested in a production line of 6 million USD and this is the time when the first batches of products are produced, orders have been signed in 10 countries. To get orders, the company is forced to lower prices, accepting initial losses to compete with other countries. According to calculations, if the new regulations are implemented, the company will have to pay over 13 billion VND per year for just 2 types of resource tax and licensing tax. This means bankruptcy...
The issuance of resource tax and the calculation of mineral exploitation right fees much higher than the selling price in Nghe An province has caused many difficulties for mineral exploitation enterprises. Especially for white marble for tiling, white marble for CaCO3 powder, the main products are export markets. The increase in resource tax (the increase rate from 6% in 2009 to now is 15% and the minimum price prescribed by Circular 44 of the Ministry of Finance is many times higher than the transaction price on the market) makes enterprises unable to compete in the world market.
Mineral processing and exporting enterprises are facing many difficulties, both objective and subjective. While countries like Malaysia and Turkey have many support policies, Vietnam's policies have changed a lot, taxes and fees, and resource taxes have increased, making production and business difficult for enterprises, and facing fierce market competition with these countries. Enterprises compete to sell, even sell below cost, and are making things difficult for each other.
White stone mining and processing enterprises are struggling and sand mining enterprises are also living a miserable life with the new tax and fee policy. In the current situation, many sand mining enterprises in Tan Ky, Do Luong, Nghia Dan have had to stop operations. In Tan Ky, 13 enterprises have stopped operations for a week now. Mr. Tran Manh Cuong - Director of Hai An Trading and Service Company Limited (Tan Ky) said that our enterprise's sand mine was licensed in Nghia Dong, operating in 2014, the market is mainly in districts without sand mines such as Yen Thanh, Dien Chau, Quynh Luu. For a long time, the price of sand at the mine has been 30,000 VND/m3, but with the current sudden increase in taxes and fees, the selling price will have to be increased, estimated at about 100,000 VND/m3, an increase of more than 300%. And so, in the end, consumers will suffer.
Major problems from mineral exploitation in Quy Hop
(Baonghean.vn)
29 mineral mining areas in Nghe An closed
(Baonghean.vn) - In the first 6 months of 2017, the Department of Natural Resources and Environment advised the Provincial People's Committee to issue decisions to close mines in 29 mining areas, and 8 other mining areas are being reviewed so that the Provincial People's Committee can issue decisions to close mines.
Mr. Hai and some other businesses expressed their frustration that in the neighboring Thanh Chuong district, there are no licensed mines, mainly exploited by bandits. Many mines have not paid any tax and have sold below cost (from 25,000 to 28,000 VND/m3) fierce competition with neighboring sand mining enterprises in Nam Dan, Do Luong. Now with the new regulations, it continues to burden licensed enterprises, illegal mining sites operate freely without paying fees and continue to live well. The sand mining situation in Thanh Chuong district is known, the authorities know but I don't understand why they haven't dealt with it yet" - Mr. Hai worried.
(To be continued)
