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Vietnam plans surcharge on profit oil
The government is planning to impose a surcharge on foreign contractors’ share of the profit oil when crude prices rise above 20 percent.
Profit oil is the amount of production that remains after deducting the portion allocated to costs and expenses. This is divided between the participating parties and the host government according to the terms of the production sharing contract.
Finance Minister Vu Van Ninh said companies operating in Vietnamese oil fields are currently required to pay royalty, environment tax, export tax and corporate income tax. No other charges are levied, so foreign contractors stand to make windfall gains on the profit oil when global prices go up.
The profit oil that foreign contractors received accounted for 13.1 percent of Vietnam’s total oil output of 15.49 million tons last year.
Under a proposal presented for discussion at a session of the National Assembly’s Standing Committee last week, the government said if average oil prices increase by 20 percent year-on-year, foreign contractors will have to pay a surcharge equal to 50 percent of the profit earned on their profit oil.
Phung Quoc Hien, Chairman of the National Assembly Finance and Budget Committee, said such a move was necessary. There were some suggestions among committee members that the surcharge collected should be transferred into the government’s fuel fund, he added.
Vietnam has set up a fund, using a portion of traders’ profits, to stabilize retail prices of fuel products in case global prices rise.
THANHNIEN, TT
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