Businesses worried about applying new resource tax rates

(Baonghean) - From July 1, 2017, Circular No. 44/2017/TT-BTC of the Ministry of Finance "regulating the price framework for calculating resource tax for groups and types of resources with similar physical and chemical properties" will take effect. Accordingly, the minimum and maximum tax rates for construction stones will increase by 2 to 3 times compared to the present. Therefore, many stone mining and processing enterprises in the province are really worried.

Currently, Nghe An has 148 construction stone mining enterprises scattered in many different locations. Since 2014, the Provincial People's Committee has made adjustments to the price level for calculating resource tax for the field of mineral mining according to finished products (Decision No. 75/QD-UBND dated October 17, 2014).

During the implementation process, many businesses have commented on the price applied by the Provincial People's Committee higher than the minimum price prescribed by the Ministry of Finance, such as stone 3 (8-15 cm) with a minimum price of 50,000 VND/m3, the province applied a price of 80,000 VND/m3; stone 0.5 - 1, the minimum price is 95,000 VND/m3, the province applied a price of 160,000 VND/m3; crushed stone - powder with a minimum price of 30,000 VND/m3, the province applied a price of 90,000 VND/m3...

Stone mining in Yen Thanh district. Photo: VT

However, while all proposals from businesses to reduce the tax rate were being studied by the Provincial People's Committee, on May 12, 2017, the Ministry of Finance issued Circular 44/2017/TT-BTC (Circular 44) with regulations on the minimum tax rate for the mineral exploitation sector higher than the current provincial price rate. That made stone mining businesses more worried.

Circular 44 stipulates that the minimum price for the mining of non-metallic minerals, including stone, is quite high. For example, graded stone (equivalent to 0.5 - 1 stone), quarry stone, the minimum tax price is 140,000 VND/m3 and the maximum is 200,000 VND/m3; crushed stone (1-2cm) the minimum tax price is 168,000 VND/m3 and the maximum is 240,000 VND/m3...

Upon receiving Circular 44, Mr. Nguyen Giang Hoai - Chairman of the Quy Hop Small and Medium Enterprises Association said: "The Ministry of Finance issued a price frame for calculating resource tax on non-metallic minerals, which is high compared to the construction stone market which is already facing difficulties. In particular, for blasted stone, mixed stone (mined minerals), the tax rate is 70,000 - 100,000 VND/m3; white marble blocks (≥ 0.4m3) for cutting and tiling, type 1 - white are all at 15,000,000 - 18,000,000 VND/m3... In Quy Hop, before Circular 44 was issued, due to many difficulties in output, a number of stone processing enterprises had to dissolve...".

Mr. Nguyen Trung Hai - Chairman of the Board of Directors of Trung Hai Mineral and Trading Joint Stock Company in Quy Hop town said: "Our company has long been mainly using white marble to produce carbonate powder with an output of over 200,000 tons/year, sold in the Chinese and Malaysian markets. For a long time, the old tax rate on stone powder was 90,000 VND/m3, now applying the new tax bracket from 280,000 - 400,000 VND/m3, we will have a lot of difficulties, because we cannot increase the selling price with partners to offset the loss in the new tax bracket.

Some types of stone must increase according to the new tax bracket, 3 times higher than the old tax rate. Although paying taxes is the responsibility and obligation of enterprises, if the authorities do not have a solution when applying Circular 44, enterprises can easily stop production due to losses.

The increase in resource tax will impact the market of construction stone products. Photo: Van Truong

Most construction stone quarry owners share the same sentiment, a representative of Dong Thanh Company Limited (Yen Thanh) said: "Our construction stone quarry mainly exploits boulders and crushed stones of all kinds. The price of crushed stones sold on the market is currently only 170,000 VND/m3, while businesses also have to pay for labor, oil, bank interest for machinery purchases... For a long time, crushed stones have only been subject to a minimum tax of 50,000 VND/m3. Now, according to the new tax bracket, the minimum tax is from 168,000 VND/m3 and the maximum is 240,000 VND/m3, which is too high...".

When Circular 44 was issued, the Nghe An Small and Medium Enterprises Association and the Provincial Veterans Enterprises Association received a lot of feedback from mining enterprises, hoping that all levels and sectors would study to apply a more appropriate resource tax rate.

Mr. Nguyen Duc Tuyen - Vice President of Nghe An Veterans Business Association. Photo: Nguyen Nguyen

Mr. Nguyen Duc Tuyen - Vice Chairman of the Provincial Veterans Business Association said: Each enterprise operating in the mining sector, in addition to investing in machinery and equipment, salaries and bonuses, must fulfill obligations for 7 different types of taxes and fees such as: Land rent; mineral exploitation rights fee; environmental restoration deposit; resource tax, environmental fees; environmental monitoring costs; compensation for site clearance and other infrastructure investment costs; value added tax, corporate income tax.

Thus, the cost is very large and all must be included in the selling price of the product. For a long time, people have complained about the increase in the price of construction materials, including stone. Now, if Circular 44 is applied, the price of construction stone will increase many times.

Mr. Tuyen added: “We cannot predict the market reaction, but for now, mining enterprises have a premonition of great difficulties. I myself am also involved in mining, and have seen a lot of pressure, because for a long time, besides the above problems, our province has been applying a mining land rental rate of 300% of the price of adjacent residential land.”

According to Mr. Tuyen, applying such a mining lease price makes many enterprises with mines in the midlands and deltas face many difficulties. For example, if there are mines in Hung Nguyen, Nam Dan, Thanh Chuong, Do Luong, Nghi Loc, Dien Chau, Yen Thanh, Quynh Luu, Hoang Mai town, the mining lease price will be very high, because the land price in these areas is much higher than in other areas. This increases costs and reduces the competitiveness of enterprises...

Thus, the implementation period of Circular 44 in resource exploitation is only about half a month, the Provincial People's Committee will have a new decision on adjusting the application of resource tax, including construction stone according to the Circular and it is forecasted that the construction stone market will have fluctuations.

Nguyen Nguyen - Van Truong