In recent years, under the decisive direction of the Government and the Prime Minister, Vietnam's business investment environment has made remarkable improvements with breakthrough policies, promoting strategic and important sectors.

In this context, the mineral extraction and deep processing industry emerges as a critical sector for the development of strategic and important fields such as national defense and security, semiconductors, renewable energy, and the aerospace industry, among others. With the advantage of possessing many rare and valuable mineral types with large reserves, ranking from 3rd to 6th globally, Vietnam can develop the deep mineral processing industry not only as an economic sector but also to enhance national security and Vietnam's influence on the international stage.

In performing its function as the national organization representing the business community and contributing to the implementation of Resolution No. 10-NQ/TW of 2022 by the Politburo on the strategic orientation for geology, minerals, and the mining industry up to 2030, with a vision to 2045, VCCI organized a workshop with senior leaders from agencies, enterprises, associations, and experts in the industry. Accordingly, VCCI respectfully reports to the Prime Minister on the shortcomings in the financial policy framework for the industry and presents some recommendations.

1. Shortcomings in Financial Policies for the Mineral Industry

Currently, mining enterprises must fulfill multiple financial obligations simultaneously applied to mineral extraction and processing activities:

Firstly, the overlap between resource tax and the fee for the right to mine minerals. Both obligations apply to the same object: the extracted mineral resource. Enterprises are required to pay a fee to "purchase" the right to mine the mineral and continue to pay tax when mining.

Secondly, the export tax policy applies a uniformly high export tax rate, without distinguishing between raw mineral products and mineral products that have been deeply processed into industrial products or industrial minerals. The Value Added Tax (VAT) policy does not allow refunds for many deeply processed mineral products exported.

Thirdly, the Corporate Income Tax (CIT) policy applies a high tax rate of 50% (compared to the standard tax rate of 20%) to the extraction of certain rare and valuable resources.

This policy has impacted the operations of enterprises in the industry, specifically:

• High Cost Burden and Reduced Competitiveness: The combined tax rate collected from resource tax (3–25%) and the fee for the right to mine (1–5%) is very high. If calculating the total financial obligations to the state budget (including CIT, environmental protection fees, deposits, export tax, VAT, etc.), the total obligation to the budget can reach 24–26% of revenue based on a real-life example from an enterprise in the sector. This burden erodes profits, potentially causing many mineral processing businesses to incur losses, and enterprises to lack resources for technology reinvestment.

  • Concurrently, the financial obligation of Vietnamese enterprises is significantly higher than international practices. Specifically, enterprises in Indonesia, Malaysia, Australia, or Canada usually pay only about 5–7% of revenue in the form of royalty (resource tax) and ordinary CIT. Many countries, such as the US, Australia, and Japan, also do not apply export tax to deeply processed products.

• Discouraging Deep Processing and Extraction of Low-Grade Minerals: These projects require high capital investment, and the addition of high taxes and fees further reduces project efficiency. Moreover, the more they extract, the higher the tax, while the profit margin is low. This leads many mines to focus only on the rich sections, neglecting the low-grade sections, resulting in low resource recovery efficiency.

• Impact on Long-Term Investment: With high tax and fee rates, enterprises may choose a "mine fast – withdraw fast" strategy, focusing on short-term profits and closing the mine when the easily exploitable parts are exhausted, instead of making long-term investments.

• Impact on Attracting Investment in the Exploitation of New Strategic Mineral Resources such as rare earth. Despite enormous potential, the current financial policy makes it very difficult to attract enterprises to invest in the exploitation and deep processing of this strategic resource.

2. VCCI's Recommendations

To realize Resolution No. 10-NQ/TW on developing a modern and advanced mineral industry, VCCI respectfully recommends that the Prime Minister pay attention to and direct Ministries and sectors to research and conduct a comprehensive reform of the financial policies for the mineral industry, specifically:

• Integrate the two obligations—fee for the right to mine and resource tax—into a single "mineral tax," calculated directly based on the enterprise's sales revenue. The environmental protection fee should also be calculated based on the enterprise's sales revenue. This approach aligns with tax laws and international practices, reduces the risk of overlap, and creates a stable investment environment. If both charges are maintained, a "ceiling mechanism for total financial obligations" must be added to ensure reasonable state budget revenue while encouraging enterprises to invest systematically and enhance deep processing.

• Regarding the resource tax rate, allow the application of a reasonable tax rate for deeply processed minerals that have increased content and been transformed into industrial products, industrial minerals, or industrial materials.

• Adjust export tax, VAT refund, and Corporate Income Tax to encourage deep processing enterprises and promote strategic and important mineral sectors.

• Provide conditional incentives for deep processing projects or low-grade mineral mines with difficult mining conditions such as exemption or reduction of the fee for the right to mine or resource tax to align with the task in Resolution No. 10-NQ/TW on adjusting tax rates to encourage modern technology in mining.

VCCI is confident that, with the close attention and direction of the Government, financial policies in the mineral industry will soon be completed towards transparency, harmonizing the interests of the State, enterprises, and society, contributing to the development of a modern, sustainable, and internationally competitive mineral industry.

The Vietnam Chamber of Commerce and Industry respectfully reports and looks forward to receiving the attention and direction of the Prime Minister.

Sincerely thank you./.