Mining enterprises 'complain about difficulties' if new tax and fee rates are applied

(Baonghean.vn)- From July 1, Circular No. 44apply new resource tax frameworkof the Ministry of Finance takes effect. Many mining enterprises in Nghe An and Yen Bai are worried and have petitioned the Prime Minister and relevant agencies.

The new tax bracket is too high.

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

Businesses believe that applying this circular will increase resource tax and mineral exploitation rights fees by 3-4 times, causing many difficulties for businesses.

Trung Hai Mineral and Trading Joint Stock Company (Chau Quang) invested in a modern superfine stone powder processing factory worth more than 6 million USD, and has just recruited more than 200 workers to serve the factory, but if the new tax framework is followed, the factory will easily stop production. Photo: Van Truong

Mr. Nguyen Trung Hai - Chairman of the Board of Directors of Trung Hai Mineral and Trading Joint Stock Company - Nghe An said that the company has just invested in a large-scale, large-capacity superfine stone powder processing factory with the most modern technology today, with a total investment of over 6 million USD, and has just recruited more than 200 workers.

If the Company's mine reaches its licensed capacity, when applying the lowest price frame according to Circular 44, the company's additional resource tax will be over 18 billion VND, the licensing fee will increase by about 3.6 billion VND, totaling 21.6 billion VND. With this tax rate, the company will certainly suffer a loss, and the company will have to stop production.

Long Anh Private Enterprise invested in cutting stone with diamond saws from top to bottom at Tho Hop quarry, Quy Hop, but white stone is rare to find, and the poor quality of the quarry is also the reason why it is difficult to sell the product. Photo: Van Truong.

A representative of An Loc Joint Stock Company in Tho Hop Commune - Quy Hop also shared: The company mainly uses white marble to produce carbonate powder to sell in the Chinese and Malaysian markets. The old tax rate for stone powder is 90,000 VND/m3, now applying the new tax rate of 280,000 - 400,000 VND/m3, we will have a lot of difficulties because we cannot increase the selling price with our partners.

There are still a few stone-cutting workshops operating in Dong Hop commune, Quy Hop. 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, Thung Diep, bordering Lien Hop and Chau Loc communes. The quarry has an area of ​​18.76 hectares, granted by the Ministry of Natural Resources and Environment in 2010, with a term of 29 years. The output according to the license is 2.8 million tons of split stone, 7.2 million tons of boulder stone / 29 years, but in reality, the quarry does not meet the reserve and quality. Mainly boulder stone, only 5 - 10% of finished stone can be exploited. Meanwhile, businesses still have to pay tax for 100%, including unusable stone. Now the tax rate has increased, businesses are struggling.

A representative of Long Anh Private Enterprise, Tho Hop Commune, said: Our company invested in a diamond blade stone saw system to cut from top to bottom, but it is very rare to find white stone, mainly colored stone, low value. Or if we find a white stone layer, when cutting inside, we will know that the stone is not white enough, seamless, and it is cracked and broken, considered completely damaged. The quality of the stone is poor, so we have to turn to producing boulder stone. In recent years, the world market has been picky about consumption, so we have to produce at a moderate level. The number of workers has gone from over 150 to only over 50. If the new tax rate is applied, we will definitely go bankrupt.

On the other hand, businesses in Nghe An said that the floor price and ceiling price established in Circular No. 44 are not consistent with the 2009 Law on Natural Resources Tax, because the above price range is not the selling price of marble and white marble resources in Nghe An province.

Specifically, Nghe An is currently issuing a tax calculation price of 250,000 VND/m³For boulders. If applied according to Circular 44, the lowest level will be 700,000 VND/m³, 2.8 times higher than present.

Regarding stone powder, Nghe An currently issues a tax and fee rate of 50,000 VND/ton of reserves. If applied according to Circular 44, the lowest rate will be about 164,700 VND/ton, an increase of more than 3 times. "With the current fee rate, we are not collecting enough to cover expenses. If applied according to the new rate, it is really unrealistic," Mr. Nguyen Giang Hoai affirmed.

Many stone enterprises in Quy Hop have dissolved due to difficulties in selling their products. (One of the stone cutting workshops of an enterprise in Tho Hop is abandoned). Photo: Van Truong.

Risk of bad debt of more than 7,000 billion, nearly 29,000 workers lose their jobs

Quy Hop is considered the stone export capital of the country. In previous years, mineral activities in Quy Hop were very bustling, but at this time, the mining areas in Chau Quang, Chau Hong, Tho Hop... are very gloomy, industrial clusters of machinery and equipment are lying in disarray, a series of businesses have to stop working because their products cannot compete with the world.

In reality, the quality of stone in the mines is not high. The recovered output is only 7%, of which more than 2% is paving stone and 5% is stone powder, the rest is waste stone. Some businesses reflect: The licensed reserves are like that, but the amount of stone that must be discarded is dozens of times more than the small amount of finished stone that can be sold. That is not to mention other costs such as transportation costs, and the market fluctuations make operations very difficult.

Some businesses are trying to “hold on” and not daring to sign new contracts because if they have already signed them and fees and taxes increase, the business cannot increase prices for customers. The business will have to “bear” more costs.

Unsold stone products at Thung Khuoc industrial park in Quy Hop town have been left exposed to the elements for many years. 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 enterprises, if the authorities do not have a solution when applying Circular 44, enterprises can easily close down. The consequences are that many workers lose their jobs, every year they cannot maintain tax revenues for the State, and the company also becomes a bad debt of the bank...

Currently, many mineral workers in Quy Hop area are both working and anxiously following the latest situation of the circular's implementation. A worker of Hoang Gia Joint Stock Company confided: "I have been working in stone processing with the company for more than 7 years, my family's livelihood depends on the worker's salary. Without a job, life will be difficult, because there is no rice field or forest land, I don't know what to do to make ends meet."

Mr. Nguyen Giang Hoai - Chairman of the Quy Hop Small and Medium Enterprises Association added: If the new tax rate is applied, there will be many consequences. Specifically, the total investment in the marble sector in Nghe An and Yen Bai is about 10,800 billion VND and will solve 30,500 jobs. Of which, bank loans account for 70%, equivalent to 7,560 billion VND. If applied according to the regulations and price frame in Circular No. 44, it will lead to 95% of enterprises going bankrupt, leading to bad debts of banks that are difficult to recover capital of about 7,182 billion VND. This will lead to 28,957 direct workers losing their jobs, indirectly affecting 86,925 people, equivalent to about 7,243 households. Unfinished mining areas leave behind environmental risks, labor safety risks and the risk of resource loss due to illegal activities.

Will submit to the Prime Minister for appropriate policies

Faced with that situation, the Quy Hop - Nghe An Small and Medium Enterprises Association and the Luc Yen - Yen Bai White Stone Association have submitted a document requesting the Prime Minister to consider and direct the Ministry of Finance, the General Department of Taxation and competent authorities to consider adjusting the price framework, list, collection level and appropriate calculation method.

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

Mr. Nguyen Dinh Tung - Chairman of Quy Hop District People's Committee said: At this time, mineral mining enterprises, especially white stone in the area, are facing many difficulties. Due to the economic recession, production and business of most enterprises have decreased. Up to now, Quy Hop (227/477 enterprises have stopped production or dissolved, more than 118 enterprises have tax arrears due to large inventories). If taxes are increased according to the new circular, it will be more difficult. The locality also hopes that the superiors will have reasonable policies to create favorable conditions for enterprises to operate.

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

Currently, local businesses want the Ministry of Finance and relevant agencies to establish a working group with inter-ministerial, sectoral and local authorities to survey the actual value of the mine, investment rate, profit, employment and get opinions from local specialized agencies.

At the same time, consult with experts in mining economics, geology, finance, and tax to have a solution suitable to the specific quality of marble products and marble for producing calcium carbonate powder in Yen Bai, Nghe An and current budget collection regulations.

From there, re-issue the floor price, unit price, classification, group name, resource type for the tax calculation price frame for marble, white marble or apply for reference.

Hai An