The Ban Phuc Nickel Co., Ltd has been operating in Vietnam since 1993 and has invested over USD 127 million to exploit and process nickel sulphide ores at Sulphua Nikel Mine in Son La Province.

Unfortunately, the company is currently on the verge of default. The company's imminent default not only has a negative impacted on the company's employees and the economic success of Son La Province, but can also have a large negative impacted on the company's ability to operate. To attract foreign investment of Vietnam for the development of modern, economical and environmentally sustainable mining activities in the country.

Regarding this issue, I would like to express some concrete examples that the company is facing to maintain its operations in Vietnam:

• Excise tax on nickel ore

The Excise tax on pure ore is very high at 20%. The imposition of such high tariffs is limited to mining operations, mine operations can only develop durably and sustainably when the project generates sufficient revenue to extract a portion of its use for consecutive exploitation operation. The success of exploration activities will expand production in Vietnam on the basis of identifying new mines.

• Royalties

The mining industry faces a variety of taxes / fees that limit economic activity. These fees include royalties, environmental protection and mining rights.

Mineral resources tax in Vietnam is 10% and is among the highest in the world.

Provincial and central tax authorities have no agreement on the method of calculating royalties, which makes it difficult for foreign-invested mining companies to produce audited clearly financial statements.

The Company has been subject to royalty rates for ores without clearly reflecting the following matters:

oMineral content and metal content

oThe properties of the ore involved in metallurgy

oMetal prices on the world LME market

oOther fees

oThe terms of marketing and payment of products

Method of calculating environmental protection charges based on conversion ratio determined by local authorities to determine the volume of ore mine from the refined ore. This resulted in the volume of extracted ores being different from the actual volume of ores exploited (the volume of ore actually exploited by Ban Phuc is 975,759 tons, the amount of ore used for calculation of EP fees is 1,660,988 tons) And so we have to pay a very high fee for the ore we do not exploit. The method of conversion is not concerned with the mass determination system in modern mining applied at Ban Phuc mine, while the coefficient was determined at a certain time not reflecting the representativeness. for a lifetime mine.

The grant of mining rights is simply a one-time more royalty, once again levied as a tax on very large initial investment in new mining projects. Regrettably, the grant of mining rights encourages less honest companies to report improperly on mining reserves in order to reduce the cost of initial investment. It would be more realistic to make annual premiums based on actual volumes.

The Company's mining license was calculated on the basis of reserves with a marginal content of 0.2% Ni, but in the mine life, the tailing content was 0.33% Ni. The determination of marginal content in Vietnam's reserve calculation does not fully reflect the economic factors of the ore body and resulting the amount calculation of the mining rights was also inadequate and has made the company pay a considerable amount and not be economically.

The company's royalty fee was paid on the basis of 3,138,000 tons of ore, but after the completion of the actual mining, 2,321,799 tons of ore were identified. This change should be considered when determining the company's obligation to pay the mining rights.

• Understanding and applying for tax payment

In March 2017, the General Department of Taxation conducted an inspection of the Company. However, the inspection has taken more than a year but not yet draft the inspection report. The company has incurred significant financial costs in assisting the General Department of Taxation to collect evidence supporting data and production costs from government and provincial authorities.

Understanding and applying tax laws and regulations in mining between the local and central tax authorities are widely clear different (the company has been finalized by the Son La Tax Department from 2010 to 2014 and have other comments after the settlement is different from the point of view of the General Department of Taxation. The inconsistency between the central and local taxes has led to the company being forced to pay unreasonable fines. In addition, there is a lack of in-depth understanding of the modern mining industry and lack of comparisons between local and central tax authorities, which are legally-based agencies but have not yet been well aware of the mining industry to openly exchange understanding and applying regulations in a uniform way.

The Company expects that the company's tax method to be based on actual data so that our tax burden is fairly calculated. Fair and equitable taxation will deliver a good message to foreign investors wishing to invest in mining in Vietnam.

In addition, the inconsistency in the customs procedures between Gia Thuy Customs and Hanoi Customs has led to the inconsistency of the customs valuation time for export shipments of the Company, resulting the company could not get back $ 460,000 in export tax refunds that have a very negative impact on investors' confidence and the financial condition of the company.

• Incorrect taxable price in new regulations

The Circular No. 44/2017 of the Ministry of Finance adjusted the royalty price that has not updated the current price of the metal on the international market, nor cooperate with the mining enterprises to grasp the trend at current prices of metals around the world, leading to high tax prices, especially the price of nickel ore tax has doubled, while the price of real nickel metal on the world market is still low.

There are no different detailed tax rates for ore with different content for certain types of ore, especially with nickel ore.

• Handling tax for various factors between kinds of related tax

In the case of Ban Phuc nickel mine, the volume of ore used to calculate royalties is the actual mining volume and is very different from the amount of ores converted for environmental protection charges. There is, however, no reasonable handling for unifying the difference in volumes used to account for the two taxes.

Mineral mining is a cyclical industry, investment in exploration, construction and mining is also cyclical. All over the world are affected by this cycle and companies are constantly comparing global development options to selectively filter and reach a balance between risk and success.

Here, the geological potential of the project is key factor. The Ban Phuc project has got a lot of exploration objectives, with staff and geological experts, so we are very optimistic about the potential of the area. However, this potential is being affected by fiscal considerations related to taxes in Vietnam. It is difficult to standardize Ban Phuc with other Western mining operations in Vietnam because, unfortunately, these mining operations do not exist.

The table below compares the tariff regimes being applied in the countries involved in the export of ores and concentrates.

1 Canada's resource tax varies between provinces. The basic rate is 2% and the remaining rates depend on the profit

2 Indonesian export tax is 10% for unprocessed low grade concentrates.

Indonesia's natural resource tax reduced to 2% for processed ores.

The above table shows that, compared to other countries, the tax policy for the mining industry in Vietnam is a burden for mining companies in general, including our company. The company knows that the ultimate goal of the tax system applied to the mining industry is to ensure the greatest possible benefits to the state budget and the people, but to foreign companies such as ours I have to survive, the tax system must also be in the direction of encouraging and creating conditions for the mining industry to develop.

1. From the facts presented above, the Company recommends:

To direct the General Department of Taxation to consider the method of calculating taxes / fees to the company based on the actual data on taxes / charges upon the exploited volume, to ensure fairness for thecompany. To consider and not issue tax fines and late payment of corporate tax due to errors made by the company due to the inconsistency in understanding and application of taxes / fees of various levels of tax administration. .

2. To direct the General Department of Customs to finalize issues on export tax of the company and carry out procedures to refund USD 460,000 export taxes to the company so that we have the funds to maintain maintenance activities while waiting for additional foreign investment to expand the project.

To review existing mining laws and introduce a more investor-friendly regime by offering a consistent and fair tax system for the benefit of both the government and investors. In particular, consideration of thedeclining export taxes and royalties.