Circular No. 105/2010/TT-BTC guiding a number of articles of the Law on Royalties and guiding Government’s Decree No. 50/2010/ND-CP of 14 May 2010 which details and guides a number of articles of the Law on Royalties

Article 3. Royalty payers by organizations and individuals (below referred to as cont ractors) und er the pe tro leu m law 1. Roya lty payers are organizations and involving the exploitation of natural resources individuals exploiting natural resources being are regulated by this Circular. royalty-liable objects defined in Article 2 of this Issue no 06/August 2010 OFFICIAL GAZETTE 7 (Gong BaD nos 499-500IAugusf 21, 2010) Circular, including state companies, joint-stock changesin small-scale natural resource exploiters companies, limited liabi lity companies, for whom royalties are declaredand paid by the partnerships, cooperatives, private enterprises, purchaser, the purchaser shall fill in a foreign-invested enterprises, foreign parties to supplementary declaration form for submission business cooperation contracts , and other together with the royalty declaration dossier of organizations, households and individuals, the month when these changes occur. When the regardlessof their sectors, trades, sizes or forms on-behalf royalty payment terminates, the two of operation,that exploit naturalresources under parties shall make a record thereon which shall Vietnam's law, that pay royalties underArticle 3 be sent by the royalty payer to the tax office in of the Law on Royalties. the month when the on-behalf royalty payment 2. Royalty payers in some cases are specified terminates. as follows: 2.4. In case an organization or individual that 2.1. In case the enterprise exploiting natural acts as a construction contractorwithout natural resources is set up on a joint-venture basis, the resource license, during the process of joint-venture enterprise is the royalty payer; performing the construction contract, obtainsand sells a volumeof naturalresources (for example, 2.2. In case the Vietnamese party and foreign contractors dredging canals, ditches, lakes or party jointly perform a business cooperation lagoons obtained and sold a volumeof sand, soil contract on the exploitation of natural resources, and mud or contractors exploiting stones sell the royalty payment liability of each party must them for processinginto construction materials), bespecified in the businesscooperation contract: shall declare and pay royalties thereon to local in case the business cooperation contract does tax offices. not specify the royalty payer, all contractual parties shall declare uud pay royalties or appoim 2.5. For organizations and individuals (below a representative to pay royalties for the business referredto as contractors) prospecting, exploring cooperation contract. and exploiting crude oil and natural gas in 2.3. In case an organization or individual that Vietnam under the Petroleum Law, the royalty payer in each case is specified as follows: exploits natural resources on a small scale sells the exploited natural resources to another at For a petroleumcontractsigned in the form organization or indi vidual thatcommitsin writing of production-sharing contract, the royaltypayer to declare and pay royalties on behalf of the is the contract executive. natural resource exploiter, the purchaser is the bl For a petroleum contractsignedin the form royalty payer. ofjoint-administration contract, the royaltypayer The purchasershall make a list of small-scale is the joint-administration company. exploiters for whom royalties shall be declared c/ For a petroleum contractsigned in the form and paid by the purchaser and submit this list, of joint-venturecontract, the royalty payer is the together"with the royalty declaration dossier of joint-venture enterprise. the first month when natural resources are dl In case the Vietnam National Petroleum purchased, to the managing tax office for Group or its subsidiary corporations or monitoring and administration in subsequent companies prospect, exploreor exploit crude oil . royalty periods. Upon the occurrence of any or natural gas by themselves, royalty payers are -- 8 OFFICIAL GAZETTE Issue no06/August 2010 (Gong Bao nos 499-500IAugust 2!, 2010) the Vietnam National Petroleum Group or its Royalty Output of Royally amount affiliate corporations and companies. amount royalty- assessed on a payable ::::: liable x unit of 2.6. Organizations and individuals that use in a natura l exploited water from irrigations works built with non-state period resources natural reso urce budget capital or partially with state budget capital for power generation shall pay royalties and water charge acc ording to regulations. Payable royal ty amounts shall be asse ssed based on tax offices' database in conformity with 2.7. For royalty-liable natural resources regulations on tax assessment for enterprises that banned from exploitation or illegally exploited fail to properly comply with accounting regimes which are seized or confiscated and permitted and regulations on invoices and vouchers, or with for sale, organizations and individuals that are regulations on handling of tax-related violations , assigned to sell these natural resources shall pay and on royaltiable prices provided by provincial - royalties before deducting seizure, auction or level People's Committees under Clause 4, reward expenses according to regulations. Article 6 of this Circular. Part II Article 5. Natural resource output used for ROYALTY BASES royalty calculation The natural resource output used for royalty

Article 4. Royalty bases calculation is the output of actually exploited Royalty bases include the output of royalty- natural resources provided in Article 5 of the Law liable na tura l resources, royaltiable price of a unit on Royalties, which shall be determined as of natural resource and royalty rate, in which the follow s: royaltiable price of a unit of natura l resource shall 1. In case the quantity, weight or volume of be app lied correspondingly to the kind of the the actually exploited natural resources can be royauy-llab le natural resource in the royalty determined, the natural resource output used for period. royalty calculation is the quan tity, weight or The pay able royalty a rno un t shall be volume of natural resources actually exploited calc ulated as follows : in the royalty period. For exploited natural resources which can be Royalty Output of Royalti able classified into natural resource products of amount royalty- price of a different grades , qualities or commercial values , Royalty payable = liable x unit of x the natural resource output used for royalty ratc ina natural natural calculation shall be classified by their grade, period resources resource quality or commercial value or converted into an unit of natural resource to serve the determination of the natural resource output used In case a state agency assesses a royalty for calculation of royalties for the whole volume amount payable on a unit of exploited natural of exploited natural resources . resource, the payable royalty amount shall be determi ned as follows : Example 1: In case the products obtained from the process of rock exploitation by the Issue noOB/August 201 0 OFFICIAL GAZETTE 9 (Gong BaD nos 499·5001Augusl 21,2010) blasting method are rubble stone and broken resources exploited and used for mining stone of different sizes, these stones will be activities, such as water exploited and used for classified by their grade and quality for sorting and sieving activities, must also be determining the royalty-calculation output of determined. each type of stone. Tn case a part of the exploited bl For exploited natural resources which rubble stone is sold while the remaining volume contain different substances but are not sorted of rubble stone and broken stone are crushed for and classified and the volume of each substance cement production! the output of broken stone cannot be determined upon sale, the royalty- must be converted into rubble stone so as to calculation output of each substance shall be determine the output of actually exploited rubble determined based on the output of natural stone used for royalty calculation. resources actually exploited and the proportion 2. For natural resources of which the actually of each substance in these natural resources exploited quantity, weight ur volume cannot be according to the results of assessment of sample determined because they contain different ores. substances and impurities, the output of natural Example 3: The volume of copper ore resources in some specific cases shall be exploited in a month is 1,000 tons, which contains determined as follows: different substances. According to the natural aJ For exploited natural resource which II1U~l resource exploitation license and exploltatlon be sorted or classified before sale, the natural design dossier approved by cornpetenrauthorities resource output used for royalty calculation shall and the assessed proportions of substances in the be determined based on the quantity, weight or exploited copper ore are as follows: capper: 60%, volume of each substance obtained after sorting silver: 0.2% and zinc: 0.5%. or classification. Sorted or classified natural The output uf each substance used for royalty resources must be ores and have not yet been calculation shall be determined as follows: processed into other products. In case the soil, - Copper are: 1,000 tons x 60% ::: 600 tons. rock and waste obtained through the sorting and - Silver ore: 1,000 tons x 0.2% =2 tons. classification process are sold, their royalty- calculation output shall be determined - Zinc are: 1,000 tons x 0.5% = 5 tons. corresponding to each substance. The royaltiable price of each substance shall Example 2: For coal exploited from a mine be determined based on the output of each which contains impurities , soil and rock and must substance in copper are when calculating be sorted and classified before sale, the actually royalties under the guidance at Point 2.2, Clause exploited output of coal used for royalty 2, Article 6 of this Circular. calculation is the amount of sorted and classified 3. For exploited natural resources which are coal. not sold but used for producing other products, In case a large volume of soil and rock (the if the quantity, weight or volume of the actually amount of which cannot be determined) must be exploited natural resources cannot be determined, sorted and sieved to obtain 2 kg of gold nugget the natural resource output used for royalty and 100 tons of iron are, royalty shall be calculation shall be determined based on the calcu lated on this amount of gold nugget and iron output of products produced in the royalty period and the norm of used natural resource per product -- ore. At the same time, the amount of other natural 10 OFFICIAL GAZEITE Issue no06/August 2010 (Gong Bilo nos 499·5OOIAugusl 21, 2010) unit. for use as gro uuds for ro ya lty calculati on . Th e norm of used natu ral resource must In stall ed de vi ces mu st have in spe ct ion conform w ith the applied produ ction and cert ificates of a Vietnamese agency in charge of proces sing techn ology registered by royal ty measurement and quality and notified to tax payers with tax offices in th e fi rst royalty offices, togeth er with the royalty declaration declarat ion period. In case the amount of natural dossier of the royalty period after they are resource used for the production of a product unit installed. is over :>% higher than the designed norm, the If it is impossible for objective reasons to tax office shall coordinate with relevant agencies install devices for measuring the exploited and in apprai sing this am o unt for as sessing the used output of water or to directly determine the. ro yal ty-li ab le o utput of ex plo ited natural output used for royalty calculation, a presumptive resources. output of exploited natural resources may be Example 4: To produce 1,000 unbaked bricks, de teu uiued ill a royalty l'~liud. Tax offi ces shall it is necessary to use I m3 of clay. In a month, if coordina te with co ncerned local age ncies in a clay-exploiting establishment produces 100,000 determinin g the presumptive output of exploited bricks, the output of exploited clay liable to natural resource s for royalty calculation under royalty will be: 100,000 bricks divided by (:) Clause 6 of this Article. 1,00 0 bricks = 100 m3 • 6. In case of manual, scattered 01 urobil e, 4. For natu ral water used for hydropower irr egular exploitation, if the projected output of generatiou, the output of natural resource used exploited natural resource in a year is valued at for royalty calculation is the output of electricity under VND 200 million, a presumptive o utput sold by the electricity producer to electricity of exp loited natural resource may be determi ned buye rs under electr icity sa le and purchase on a seasonal or regular basis. Tax offices shall contracts or the output of transmitted electricity coordinate with concern ed local agencies in in case no electricity sale and purchase contract detennining the presumptive output of exploited is made . T his e lect ric ity o utpu t s ha ll be natural resources for royalty calculation. determined by a metering system up to Vietnam's Th e determination of presumptive royalty measurement and quality standards and certified am oun t s m u st be based o n the practic al by the se ller and buyer or the deli verer an d exploitation situation, technologies of exploiting recipient. natural re so urces an d producing produ cts J . For natural mineral water, natural thermal according to design dossiers, branch technical water and natural water used for indu strial standard norms or the output of natural resources purposes. the natural resource output used for exp loited by other similar organizations o r royalty calculation shall be determined in cubic individuals. meter (m') or liter (I) according to the measuring Tax offices s hall, basing them se lves on sys te m up to Vie tnam's measurement and quality roya lty regisuaucn dossiers, technical design standards. doss iers o f natu ral re so urc e exp loitati o n Royalty pa ye rs sha ll inst all de vice s to technologies. royalty declaration dossiers and measure the output of exploited natural minera l limitations of the royalty declaration, analyze and water, natural thermal water and natural water coord inate with rel evant lin e managemen t Issue no06/August 2010 OFFICIAL GAZETTE 11 (Gong BaD nos 499-500IAugust 21, 2010) agencies in determining the output and value of the total turnover (exclusiveof value-added tax) natural resources exploited in a year in order to earned from the sold natural resource by the total determine cases in which a presumptiveroyalty- output of the natural resource sold in the month. liable output of natural resources is applied. In case organizationsand individuals exploit 7. In case an organization or individual signs a natural resource for a group, corporation or a contract to purchase natural resources from company for consumption under a contract organizations and individuals exploiting natural between them, the royaltiable price of a unit of resourceson a small scale and commitsin writing naturalresource is the price set by the provincial- to declare and pay royalties on behalf of the levelPeople's Committee of the localityin which sellers, the output of natural resources used for the natural resource is exploite.d asspecified in royalty calculation is the output of natural Clause 4, Article 6 of this Circular. resources actually purchased. 1.2. If an output of natural resources is exploited in a month but no turnover is earned

Article 6. Royaltiable prices from the sale thereof, the royaltiable price of a The royaltiable price is the exploiter's selling unit of natural resource. sha 11 he. determined to price of a unit of natural resource product, be the weighted average royaltiable price of a exclusive of value-added tax, as specified in unit of natural resource in the preceding month.

Article 4 of Decree No. 50120101ND-CP, which If this weighted average price is lower than the is indicated in sale documents but must not be royaltiable price set by the provincial-level lower than the royaltiable price set by the People's Committee under Clause4, Article 6 of provincial-level People's Committee.In case the this Circular. .the royaltiable price set by the selling price of an exploited natural resource is provincial-level People's Committee shall be lower than the royaltiahle price set by the used. provincial-level People's Committee, royalties 2. In case the selling price of an exploited shall be calculated based on the price set by the natural resource cannot be determined under provincial-level People'S Committee. The Clause 1 of thisArticle,the royaltiableprice shall royaltiableprice shaIJ be determinedspecifically be determined on any of the following grounds: as follows: 2.1. The regional market's selling price uf a 1. In case the selling price of a unit of natural unit of naturalresourceproductof the same grade resource product can be determined: or equivalent value whichmustnot be lower than 1.1. For natural resources of the same grade the royaltiable price set by the provincial-level and quality which are exploited in a month, People's Committee under Clause 4 of this regardless of whether part of which is transported Article. elsewhere for sale or is put into production, 2.2. In case the exploited natural resource processing, sorting or classification, the contains different substances, the royaltiable royaltiable price is the selling price of a unit of price shall be determined based On the selling exploited natural resource product, exclusive of price of a unit and the content of each substance value-added tax (regardless of the place of in the exploited natural resource which must not consumption). The selling price of a unit of be lower than the royaltiable price set by the natural resource shall be calculated by dividing provincial-level People's Committee. -- 12 OFFICIAL GAZETTE Issue noOS/August 2010 (Gong Bao nos 499-5001Augusi 21,2010) Example 5: The volume of copper ore provincial-level People's Committee. exploited by a unit is 1,000 tons (following 2.3. Natural resource exploiters shall notify Example 3). According to the natural resource tax offices of the applied method of determining exploitation license, natural resource exploitation the royaltiable price of each exploited natural design dossier nne! appraisal dossier approved hy resource under Clause 2 of this Article. This competent authorities, the proportion of each notice shall be sent together with the royalty substance in the exploited copper are is as registration dossier or the royalty declaration follows: copper: 60%; silver: 0.2%; and zinc: dossier of the first month of natural resource 0.5%. The royaltiable price of a unit of pure exploitation. Any change in the method of natural resource set by the provincial-level determining the royaltiable price must be People's Committee is VND 8,OOO,OOO/ton of promptly notified to tax offices in the month in copper; VND 600,OOO,OOO/ton of silver; and which such change occurs. VND J10,OOO,000/ton of zinc. 3. In some cases, the royaltiable price is Based on the royaltiable price of a unit of pure specifically as follows: natural resource set by the provincial-level 3.1. For natural water used for hydropower People's Committee and the output of each generation, it is the average selling price of substance, the royaltiable price of a unit of each commodity electricity. substance shall be determined as follows: The average selling price of commodity - For copper ore: 600 tons x VND 8,000,000/ electricity used for calculating royalties ton = VND 4,800,000,000 applicable to hydropower producers shall be - For silver are: 2 tons x VND 600,000,000/ announced by the Ministry of Finance. ton =: VND 1,200,000,000 3.2. For timber, it is the selling price at the - For zinc are: 5 tons x VND 40,000,000lton place of delivery (warehouse or yard at the place =: VND 200,000,000 of exploitation); if the selling price at the place The royalty rate applicable to each element of delivery cannot be determined yet, the in copper are shall be determined based on its royaltiable price is that set by the provincial-level royaltiable price. People's Committee under Clause 4 of this In case the exploited natural resource is put Article. into processing or production and after 3.3. For exploited natural resources which are processing, an associated natural resource exported, it is the export price (FOB price) of a product is obtained, the royaltiable price shall unit of natural resource product. For exploited be determined as appropriate in each specific case natural resources which are both domestically defined in this Arttcte. consumed and exported, the royaltlable price for Example 6: If in the course of iron are the domestically sold natural resources is the refinement, O.OS ton of refined copper ore is selling price of a unit of natural resource product, obtained per ton of cast iron and sold at VND exclusive of value-added tax, while that for the 8,500,000/ton, the royaltiable price of 0.05 ton exported natural resource is the export price. of copper ore wit! be: 0.05 x VND 8,500,000 =: Natural resource exploiters shall separately VND 425,000. If such refined copper are is not declare outputs of domestically sold natural sold, the royaltiable price is the price set by the resources and exported natural resources in Issue noOS/August 2010 OFFICIAL GAZETTE 13 (Gong Baa nos 499·5001Augusl 21, 2010) monthly declarations of payable royalty amounts decision. and royalty finalizat ion declarations according The formulation of royaltiable prices must be to regulations. based on the content, quality and output of natural 3.4. For crude oil and natural gas, it is the resources, the rate of recovered natural resources, selling price determined under Article 14 of this and market selling prices of natural resources in Circ ular. localities where natural resources.are exploited, 3.5. Fornatural mineral water, natural thermal with reference to the selling prices of natural water and natural water used for production or resources in surrounding areas. service provision without a selling price, the When the selling price of a natural resource royaltiable price shall be set by the provincial- fluctuates by 20% or more, the royaltiable price level People's Committee on the principle guided must be adju sted accordingly. Provincial-level in Clause 4 of this Article. Finance Departments sha ll assume the prime 4. For exploiters that do not sell exploited responsibility tor, and coordinate with provincial- natural resources or fail to fully ob serve level Tax Departments and Natural Resources regulations on accounting books and documents; and Env ironment Departments in, surveying payers of royalties according to the assessment local market prices of natural resources and make method; or for cases in which the output of a plans to adj ust royaltiable prices, then submit naturat resource can be determined at the stage them to provincial-level People's Couuniuees fur of exploitation but grounds for determining the decision and reporting to the Ministry ofFinance market selling pri ce of such natural resource are (the General Department of Taxation). in sufficient because it has undergone man y Tax offices di rec tly man aging royalty sorting and consumption stages, the royaltiable collection shall post up roya ltiab le prices of price is the Belling price set by the provincial- natural resources at their head offices. level People's Committee in each period.

Article 7. Royalty rates For exploited natural mineral water, natural thermal water and natural water lacking grou nds The royalty rate used for calculating royalties for determining the royaltiable price of a unit of for each exploited natural resource complies with natural resource, the royaltiable price is that set the Royalty Tariff promulgated together with the by the provincial-level People's Committee under Natio nal Asse mb ly Standin g Commi ttee' s this Clause. Resolution No. 9281201OlUBTVQH 12 of April 19, 2010. Ba sed o n loc a l charac teri st ic s a nd requirements of formulating royaltiable prices, Particularly, the application of royalty rates provincial-level People's Committees shall direct to mineral water. natural thermal water and and assign provincial-level Finance Departm ents natural water specified in Section V of the to assume the prime responsib ility for, and Royalty Tariff promul gated together with the coord ina te with provin ci al-level Tax Nationa l Assembly Standing Couuu iu ees Departments an d Natu ra l Re sources a nd Resolution No. 928/20101UBTVQH1 2 in some Environment Departme n ts in , dra wi ng up cases is specified as follows: royalt ia ble p ri ce plans for subm ission to - Mineral water, natural thermal water and pr ovincial-le ve l People ' s Com mittees for re fin ed na tural wa ter, bottled or can ne d 14 OFFICIAL GAZETTE Issue no OS/August 2010 (Gong Bao nos 499·500/August 21, 2010) (including water in large containers which may according to its/his/her divided shares. be bottled or canned) are liable to the royalty rate applicable to bottled and canned water. Pall IV - In case natural water used for hydropower ROYALTY EXEMPTION AND generation specified at Point 2, Section V and REDUCTION natural water used for production and business specified at Point 3, Section V also contains Article 9. Royalty exemption and reduction mineral water or natural thermal water, but the 1. Cases of royalty reduction and exemption design dossier and the production or service under Article 6 of Decree No. 60/20101ND-CP provision process approved by competent include: authorities show that theseproduction and service 1.1. Royalty payers that suffer natural provision activities do not produce bottled or disasters, fires or accidents, causing losses of canned mineral water, natural thermal water or natural resources for which royalties have been refined water, the applicable royalty rate will declared or paid, may be considered for correspond to the use purpose. exemption from or reduction of the payable Part 1Il royaltiesfor the lost volumes of natural resources. If royalties have been paid, the paid royalty ROYALTY REGISTRATION, amount will be refunded or cleared against the DECLARATION, PAYMENT AND subsequent period's payable royalty amount. FINALIZATION 1.2. Ro yalties are exempted for natural marine

Article 8. Royalty registration, declaration, products. payment and finalization 1.3. Royalties are exempted for tree branches 1. The royalty registration , declaration , and tops,firewood and bambooof all kinds which payment and finali zation comply with the Law individualsarepermittedto exploit for their daily on Tax Administration and guiding documents. needs. 2. Particularly, some cases of petroleum 104. Royalties are exempted for natural water prospecting, exploration and exploitation are used for hydropower generation by households added as follows: and individuals for their daily needs. 2.1. In case an organization or individual 1.5. Royalties are exempted for natural water conducts petroleum survey, exploration and used for agriculture , forestry, fishery or salt exploitation activities under different petroleum making; natural water exploited by households contracts, royalty provisions in thisCircularshall and individuals for their daily needs. be separately applied to each petroleumcontract. 1.6.Royalties are exempted for soil exploited 2.2. In case contractors to a petroleum and used right in allocatedand leased land areas; contract in the form of production-sharing and soil exploited for ground leveling and contract or joint-administration contract receive construction of security and military works and divided conrracrual shares in crude oil or natural dikes. Soil exploited and used on site which is gas and take responsibility to sell these divided exempted from royalty under this Point covers shares, each party shall declare and pay royalties also sand, rock or gravel mixed in the exploited Issue noDS/August 201D OFFICIAL GAZETTE 15 (Gong Bso nos 499·5001August21, 2010; soil, making it impossible to identify each daily needs and certified by the commune-level substance, and used in crude forms for ground People's Committee. When these equipment is leveling or work construction, including cases put into use, households shall make declarations in which soil dug within allocated or leased land with managing tax offices for enjoying royalty areas must be. removed . If soil is exchanged or exemption. sold, exploiters shall declare and pay royalties 2.4. Procedures for royalty exemption for soil according to regulations. exploited and used in allocated or leased land 1.7 The Ministry of Finance shall assume the areas: prime responsibility for, and coordinate with Soil exploiters (including contractors) shall relevant ministri es and branches in, submitting send a written request for royalty exemption, other cases of royalty exemption or reduction to enclosed with a certified copy of the decision on the Govemment for submission to the National land allocation or land lease and the investor's Assembly Standing Committee for consideration relevant dossiers on the construction of a work and decision. in the locality approved by a competent agency, 2. The order and procedures for royalty to the rax office of the locality in which the exemption or reduction and competence to decide exploitation is carried out for royalty exemption on royalty exemption or reduction comply with monitoring. the guidance in Section II, Part E of the Finance Ministry's Circular No. 60/2007 nT-BTC of July Part V 14, 2007. In some specific cases mentioned ROYALTIES FOR CR1IDE OIL AND below. exploi ters are not required to declar e the NATURAL GAS output of exploited natural resources and the exempted or re d uce d royalty amoun t. I. GENERAL PROViSIONS Specifically: 2.1. Exploiters of marine products eligible for Article 10. Plac es of royalty registration , royalty exemption are not required to fill in declaration and payment monthly royalty declaration form s and annual 1. Places of royalty registration, declaration royalty finalization forms. and payment (excluding import duty and export 2.2. Exploiters of natural water for duty) are provincial-level Tax Departments of agriculture, forestry or fishery production and salt localities in which royalty payers' principal making, or for daily needs eligible for royalty executive offices are located. exemption are not required to fill in monthly 2. For petroleum contracts under which royalty declaration forms and annual royalty exploltation activities have been carried out finalization forms . before the effective date of this Circular, the 2.3. Procedures for natural water used for places of royalty registration, declaration and hydropower generation by households and payment comply with the guidance given before individuals for their daily needs: Explo iters shall the effective date of this Circular. send a written request for royalty e xemption , enclosed with written explanations about Article 11. Royalty period equipment for hydropower generation to meet The royalty period is the calendar year. 16 OFFICIAL GAZETTE Issue no06/August 2010 (Gong BaD nos 499·5001Augusf 21,2010) - The first royalty period lasts from the first is liable to royalties. day of crude oil or natural gas exploitation till 2. In case the Vietnamese Government uses the last day of the calendar year. the volume of associated gas which is not - The last royalty period lasts from the first exchanged or sold or is burnt off by royalty day of the calendaryear till the day of termination payers, royalty payers are not obliged to pay of crude oil or natural gas exploitation. royalties on this volume of associated gas.

Article 12. Currencies us ed for royalty 3. In the process of crude oil or natural gas exploitation, if royalty payers are permitted to payment exploit other resources liable to royalties, they In case crude oil or natural gas is sold in US shall pay royalties in each specific case guided dollar or another freely convertible foreign in this Circular. currency, the currencyused for royalty payment is the US dollar or that freely con vertible foreign Article 14. Royaltiable prices currency; 1. The royaltiable price of crudeoil or natural In case crude oil or natural gas is sold in gas is the selling price at the place of delivery. Vietnam dong, the currency used for royalty The place of delivery is the place agreed in the payment is Vietnam dong. petroleumcontract in which the ownership over In case crude uil or natural gas is sold ill both crude oil or natural gas is transferred between the US dollar or another freely convertible parties to the petroleum contract. foreign currency andVietnamdong, thecurrency 2. Determination of the royaltiable price of used for royalty payment is Vietnam dong. crudeoil or naturalgas in casecrudeoilor natural The conversion of US dollar or other freely gas is not sold under arm's length trading convertible foreign currencies into Vietnam dong contracts for royalty paymentshall be made at the average In case crude oil or natural gas is not sold inter-bank foreign exchange rate announced by under arm's length trading contracts, tax the State Bank of Vietnam at the time of royalty administration authorities (tax offices and payment customs offices) shall determine the royaltiable Particularly, exploited crude oil sold to price on the following principles: domestic oil refinery units for which separate - For crude oil: The royaltiable price is the guidance of the Finance Ministry has been arithmetic mean of the sellingprices of crude oil provided, such guidance shallbe compliedwith. of the same category on the international market in 3 weeks in a row: the week before, the week II. ROYALTY CALCULATION METHODS ofand the weekafter thesaleofcrudeoil.Royalty AND ROYALTY DECLARATION AND payers shall supply tax offices with information PAYMENT on the composition and quality of crudeoil being exp loited . When necessary, tax administration

Article 13. Royaltiable output authoritiesshall refer to the selling prices on the 1. The whole output of crude oil or natural WTI market (USA), Brent market (UK) and gas exploited and retained from the areas under Platt's market (Singapore) or consult competent petroleum contracts and measured at the place statemanagement agencies to determine the price of delivery (net crude oil or natural gas output) of crude oil being exploited by royalty payers. L BII:, . 2t Issue no 06/August 201 0 OFFICIAL GAZETTE 17 (Gong BaG nos 499-5001August 21, 2010) - For naturalgas: The royaltiable price is the National Assembly Standing Committee 's selling price of natural gas of the same category Resolution No. 9281201OlUBTVQHI2 of April on the market at the place of delivery, with other 19,2010. relevant factors taken into account. When The identification of petroleum projects necessary, tax administration authorities may eligible Ior investment promotion (Q determine consult competent state agencies to determine applicableroyalty rates shall be based on the list the priceof naturalgas beingexploitedby royalty of petroleum projects eligible for investment payers. promotion decided by the Prime Minister.

Article 15. Determination of payable royalty + The number of days of crude oil or natural amounts gas exploitatiou ill the royally period is the number of days of carrying out the exploitation 1. Royalties on crude oil or natural gas shall of crude oil or natural gas in the royalty period, be deteruiined on the basis of the partially excluding days on which production stops for progressive amounts of the total net crude oil any reasons. and natural gas output exploited in each royalty payment period which is calculated based on the Example "j: Determiningroyalties payable in daily average output of crude oil or natural gas crude oil in case of crude oil exploitation: exploited under the petroleum contract, the Presumably: royalty rate and the number of days of + The total output of royalty-liable crude oil exploitation in the royalty period. exploited in the royalty period is 72,000,000 2. Determination of the royalty amount barrels payable in crude oil or natural gas: + The number of production days in the royalty period is 360 days Daily Number Royalty output of of days of + The daily average output of royalty-liable nrnounr crude oil crude oil crude oil in the royalty periodis 200,000barrels payable or natural Royalty or natural (72,000,000 barrels: 360 days) =: x x in crude gas liable rate gas + Crude oil is exploited under a contract oil or to roy alty exploitation outsidethe list of projectseligiblefor investment natural in royalty in royalty promotion (in case crude oil is exploited under a gas period period contract on the list of projects eligible for investment promoti on, the payable royalty In which: amount shall be calculated similarly at a royalty + T he daily average output of crude oil 01 rate applicable to projects eligible for investment natural gas liable to royalty in the royalty period promotion) is the totaloutputof crudeoil or naturalgas liable The royalty amount payable in crude oil in to royaltyexploitedin the royalty perioddivided the royalty period is: by the numberof exploitation days in the royalty {(20,000x 10%) + (30,000 x 12%)+(25,000 period. x: 14 %) + (25,000 x 19%) + (50 ,000 x 24%) + + The royalty rate is specified in Section 2 of (50,000 x 299'0)} x 360 days = 14,526,000 the RoyaltyTariffpromulgatedtogetherwith the barrels. 18 OFFICIAL GAZETTE Issue no DB/August 2010 (Gong BaD nos 499-500/August 21, 2010) Example 8: Determining royalties payable in gas liable to royalty actually sold. natural gas in case of natural gas exploitation: + The price for temporary royalty calculation Presumably: is the selling price of crude oil or natural gas at + The total output of royalty-liable natural the place of delivery upon each sale under an gas exploited in the royaltyperiod: J,960,UUU,UUU ann's length trading contract, exclusive of value- m3 added tax. + The number of days of production in the + The temporari ly calculated royalty royalty period is 360 percentage shall be determined as follows: + The daily average output of royalty-liable Royalty amount natural gas in the royalty period is 11,000,000 to be paid in crude oil m3 (3,960,000,000 m3 : 360 days) Temporarily or natural gas in the + Natural gas is exploited under a contract calculated royalty period royalty = x 100% outsidethe list of projects eligible for investment Output of crude oil or percentage promotion (in case natural gas is exploited under natural gas liable to a contract on the list of projects eligible for royalty to be exploited investment promotion, the payab le royalty in the royalty period amount shall be calculated similarly at a royalty rate applicableto projects eligiblefor investment + The royalty amount to be paid in crude oil promotion), or naturalgas in the royalty period is determined under the guidance in Article 15 of this Circular The royalties payable in natural gas in the on the basis ofthe output of crude oil or natural royalty period is: gas liable to royalty projected to be exploited in {(5 ,00@,000.x 2 %) + (5,000,000 x 5%) + the royalty period and the projected number of (1,000,000 x 1O%)} x 360 days = 162,000,000 exploitation days in the royalty period; m3 + The output of crude oil or royalty-liable

Article 16. Declaration and payment of natural gas projected to beexploitedin the royalty temporarily calculated royalties period is the output of crude oil or royalty-liable natural gas to be exploited in the royalty period. L Determination of the temporarily calculated royaIty amoun t: Based on the output of crude oil or natural e~$ liable to royalty projected to he exploited Output every year and the royalty tariff applicable to of crude crude oil or natural gas, royalty payers shall Temporarily oil or Pricefor 'Iempasrily calculated temporary calculated determine the temporarily calculated royalty = natural x royalty x royalty percentage of each year and notify it to local tax royalty gas amount calculation percentage offices with which they make royalty registration actually not later than December 1 of the previous royalty sold period. In which: If there is any change ill the projected crude + The output of crude oil or natural gas oil or natural gas outputand the projectednumber actually sold is the output of crude oil or natural of days of petroleum exploitation in the last 6 - Issue no 06/8u9usl2010 OFFICIAL GAZETTE 19 (Gong BaD nos 499-500/August 21, 2010) months of the year, leading to an increase or a 11,000,000 m3/day (3,960,000,000 m 3 : 360 decrease by at least 15% of the temporarily days). calculated royalty percentage already notified to + The royalty amount projected to be paid in tax offices, royalty payers shall determine and the royalty period (determined under the notify the new temporarily calculated royalty guidance in Article 16 of this Circular) is percentage to tax offices before May I of this year. 162,000,000 m 3• Example 9: Determining the temporarily The temporarily calculated royalty percentage calculated royalty percentage; for natural gas exploitation is: - Determining the temporarily calculated 162,000,000 royalty percentage for crude oil: x 100% = 4.09% Presumably: 3,960,000,000 + The total output of crude oil liable to royalty 2, Declaration and payment of temporarily projected to be exploited in the royalty period is calculated royalties: 72,000,000 barrels. 2. I. For crude oil exploitation: + The projected number of exploitation days 2.1.1. The royalty declaration dossier is the in the royalty period is 360. temporarily calculated royalty return, made + The daily output of crude oil liable to royalty according to form No, Ol/TAIN-DK issued in the royalty period is 200,000 barrels/day together with this Circular (not printed herein). (72,000,000 barrels: 360 days). 2.1.2. The deadline for submission of the + The royalty amount projected to be paid in temporarily calculated royaltydeclaration dossier the royalty period (determined under the is the 35th day counting from the date of sale guidan ce in Article 16 o f this Circular) is (for crude oil sold on the domestic market) U1 14,526,000 barrels, the day the customs office gives certification of The temporarily calculated royalty percentage the exported crude oil. In case the 35th day falls for crude oil exploitation is: on a Saturday, Sunday, holiday or new year day (collectively referred to as holiday), the deadline 14,526,000 for submission of the. royalty calculation dossier x 100% = 20,18% 72,000,000 is the day following that holiday. 2.1. 3. Th e deadline for payment of - Determining the temporarily calculated temporarily calculated royalties is the deadline royalty percentage for natural gas: for submission of the temporarily calculated - Presumably: royalty declaration dossier. + The total output of natural gas liable to 2.2. For natural gas exploitation royalty exploited in the royalty payment period 2.2.L The royalty declaration dossier is the is 3,960,000,000 m", temporarily calculated royalty return, made + The number of produ ction days in the according form No. OllTAIN-DK issued together royalty payment period is "160. with this Circular (not printed herein). + The daily output of natural gas liable to 2.2.2. The deadline for submission of royalty in the royalty payment period is temporarily calculated royalty declaration • 20 OFFICIAL GAZETTE Issue no 06/August 2010 (Gong BaD nos 499-5001August 21, 2010) dossiers is the 20th every month. In case the 20 th 1.1.4. Determination of the payable amount day falls on a holiday, the deadline for submission from the sale of royalties in crude oil in the of royalty declaration dossiers IS the day royalty period: following that holiday. Payable amount 2.2 .3. The deadline for payment of Royalties in Price for from the sale of crude oil sold calculation temporarily calculated royalties is the deadline royalties in = x for submission of temporarily calculated royalty in the royalty of royalties crude oil in the period on Comrie oi I declaration-dossiers. royalty period

Article 17. Royalty finalization In which: 1. For crude oil exploitation: + Royalties in crude oil sold in the royalty period shall be determined under the guidance 1.1. Determination of the payable royalty at Point 1.1.1, C lause I of this Article: amount: 1.1.1. Determination of royalties to be paid + The price for calculation of royalties on in crude (iiI in the royalty period: crude oil is the weighted average price of crude oil sold at places of delivery under arm's length Daily Number of trading con tracts in the roya lty period, exclusive Royalties output of days of of value-added tax. to be paid crude oil crude oil in crude Royalty x 1.1.5. Determination of royalties payable in oil in the = liable to x rate exploitation crude oil not yet sold in the royalty period for royalties in in the royalty the royalty royalty use as a basis for finalization of royalties in crude Period period period oil to be paid in the subsequent royalty peri od: Royalties 1.1.2. Determination of the percentage of Royalties in crude Roya lties royalty in crude oil of the exploitation output in in crude Royalties oil not in crude oil not in crude the royalty period: yet sold oil to be yet sold = in the + paid in - oil sold Royalties in crude oil in the in royalty Percentage to be paid in the previous royalty royalty period of royalties royalty period royalty period period in crude oil = - - - -- - - - x 100% period paid in the Exploited output of royalty crude oil in the royalty In case crude oil is not sold under arm 's length period period trading contracts, the royaltiable price sha ll be determined under Clause 2, Article 14 of this 1.1.3. Determination of royalties in crude oil Circular. sold in the royalty period: Examp le 10: Determining the royaltiable Percentage Royalties price: of royalties in crude Volume Volume Presumably: The crude oil output in the in crude oil so ld in of sold x of sold x oil m the royally period (4,000,000 barrels) is sold out in the royalty crude oil crude oil royalty three lots: lot 1 of 2,000 ,000 barrels at the price period period of USD 65/barreJ; lot 2 of 1,000,000 barrels at Issue no 06fAugust 2010 OFFICIAL GAZETTE 21 (Gong Beonos 499·500IAugusf21, 2010) the price of USD 68/barrel; lot 3 of 1,000,000 - A list of outputs and sales of crude oil or barrels at the price of USD 70lbarrel. natural gas exploited in the royalty period, made (2,000,000 x 65) + according to form No. 02-l/TAIN-DK issued Price for (1,000,000 x 68) + together with this Circular (not printed herein); calculation (1,000,000 x 70) - A list of temporarily calculated royalty of royalties - = USD 67/barrel amounts in the royalty period, made according on crude 4,000 ,000 to form No. 02-2ffAIN-DK issued together with uil this Circular. 1.1.6. Determination of the deficient (surplus) 1.2.2. Time limits for submission of royalty amount from the sale of royalties in crude oil in finalization dossiers: the royalty period: - 90 days from the last day of the calendar year. Deficient Payable Temporarily - 45 days from the date of termination of the (surplus) amount from calculated petroleum contract. amount from the sale of royalty the sale of royalties in In case the 90 th or 45 th day falls on a holiday, amount x royalties in = crude oil to already paid the deadline for submission of royalty tax crude oil in be paid in in the finalization filing dossiers is the day following the royalty the royalty royalty that holiday. period period period 1.2.3. Royalty payment according to royalty finalization dossiers: In which: Based on royalty finalization dossiers: + The payable amount from the sale of royalties in crude oil in the royalty period shall - If the temporarily calculated royalty be determined under Point 1.1.4 , Clause 1of this amount in the royalty period is larger than the Article. payable royalty amount, the surplus amount shall be cleared against the payable royalty + The temporarily calculated royalty amount amount in the next payment of temporarily already paid in the royalty period is the total calculated royalties or royalty payers shall carry temporarily calculated royalty amount already out procedures for the refund of the surplus paid according to the submitted list of royalty amount under current regulations on tax temporarily calcnlared royalties (made accordiJ.18 administration, if there is no subsequent royalty to form No. 02-2/TAIN-DK issued together with payment period. this Circular - not printed herein). - If the temporarily calculated royalty amount 1.2. Royalty declaration and payment in the royalty period is smaller than the payable according to royalty finalization dossiers: royalty amount, royalty payers shall pay the 1.2 . i. A dossier of royalty finalization deficient amount to state treasuries within the comprises: time limit for submission of royalty finalization - Aroyalty finalization return, made according dossiers . to form No. 02ITAIN-DK issued together with 2. For natural gas exploitation: this Circular (not printed herein); 2.1. Determination of the payable roy alty 22 OFFICIAL GAZETTE IssuenoOSIAugusl2010 (Gong Bao nos 499·500/August 21,2010) amount: Deficient (or Payable Temporarily surplus) 2.1.1. Determination of royalties to be paid amount from calculated amount from in natural gas in the royalty period: the sale of royalty the sale of royalties in = royalties in x amount Daily natural gas to already paid natural gas to Royalties average Number of be paid in the in the royalty be paid in the in natural output of days of royalty period period royalty period gas to be natural natural gas Royalty x exploitation In which: paid in = gas liable x rate the to royalty in the + The payabl e amou nt from the ""1" of royalty in the royalty royalties in natural gas to be paid in the royalty period royalty period period shall be determined under Point 2.1.3, perind Clause 2 uf this At ticle. . + The temporarily calculated royalty amount 2.1.2. Determination of payable amounts already paid in the royalty period is the total from the sale of royalties iu natural gas in the temporarily calculated royalty amount already royalty period: p aid according to th e submitted list of Payable amount Royalties Price for temporarily calculated royalty amounts (made from the sale of in natural calculation according to form No. 02-2/TAIN-DK issued royalties in gas to be of together with this Circular - not printed herein). = x natural gas to paid in the royalties 2.2 . Roya lty declaration and payment be paid in the royalty On natural according to royalty finalization dossiers: royalty period period gas 2.2.1. A dossier of royalty finalization comprises: In which: - A royalty finalization return, made according + Royalties in natural gas to be paid in the to form No. O2ITAIN-DK issued together with royalty period shall be determined under Point this Circular (not primed herein); 2.1.1, Clause 2 of this Circular. - A list of outputs and sales of crude oil 01 natural gas exploited in the royalty period, made + The price for calculation of royalties on natural gas is the selling price under an arm's according to form No. 02-1/TAIN-DK issued together with this Circular (not printedherein); length trading contract at the place of delivery in the royalty period, exclusive of value-added tax. - A list of temporarily calculated royalty amounts already paid in the royalty period, made In case natural gas is not sold under an arm's according to form No . 02-2/TAIN-DK issued length trading contract, the royaltiable price shall together with this Circular (not printed herein). be determined under Clause 2, Article 14 of this 2.2.2. Time limits for submission of royalty Circul ar, finalization dos siers: 2.1.3. Determination of the deficient (or - 90 days from the last day of the calendar surplus) amount from the sale of royalties in year. natural gas to be paid in the royalty period: - 45 days after the date of termination of the ! ;; t Issue no06/August 2010 OFFICIAL GAZETTE 23 (Gong Baa nos 499-500IAugust 21, 2010) petroleum contract. Law on Petroleum, are annulled. In case the 90th or 45th day falls on a holiday, For natural resource outputs which are the deadline forsubmission of royalty finalization exploited before July 1, 2010, but not yet dossiers is the day following that holiday. consumed or put into subsequentproduction or 2.2.3. Royalty payment according to royalty processing processes, royalties shall be declared finalization dossiers: under legal documents on royalties which are effective prior to July 1,2010. Based on royalty finalization dossiers: 3. For investment projects or petroleum - If the temporarily calculatedroyaltyamount contracts signed priortoJuly 1,2010, with royalties in the royalty period is larger than the payable specified in their investment licenses, investment amount, the surplus amount may be cleared certificates or petroleum, the provisions of these against the payable amount in the next payment investment licenses, investment certificates or of temporarily calculated royalties or royalty petroleum contracts apply. III case royalty payers shall carry out procedures for the refund incentives indicated in investment licenses, of the surplus amount under current regulations investment certificates or petroleum contracts are on tax administration, if there is no subsequent lower than those provided in this Law, ,the royalty royalty payment period. incentives provided in thisLaw will apply for the -If the temporarily calculatedroyaltyamount remaining duration of the projects or contracts. in the royalty period is smaller than the payable Any problems arising in the course of amount, royalty payers shall pay the deficient implementation should be promptly reported to amount to state treasuries within the time limit the Ministry of Finance for study and timely for submission of royalty finalization dossiers. settlement.- Part V For the Minister of Finance ORGANIZATION OF IMPLEMENTATION Deputy Minister DO HOANG ANH TU~N

Article 18. Effect 1. This Circular applies from the royalty declaration period staring from July 2010 and replacestheFinanceMinistry'sCircularNo. 124/ 2009/TT-BTC of June 17, 2009, guiding the Government's Decree No. OS/2009/ND-CP of January 19, 2009, detailing the Ordinance On Royalties and the Ordinance Amending and Supplementing Article 6 of the Ordinance on Royalties. Provisions on royalties in the Finance Ministry's Circular No. 3212009/TT-BTC of February 19,2009, guiding the implementation of ta-x provisions applicable to organizations and individuals conducting petroleum prospecting, exploration and exploitation activities under the