DECISION

ON SOME FINANCIAL MECHANISMS OF THE BINH SON REFINERY AND PETROCHEMICAL STATE-OWNED ONE-MEMBER LIMITED LIABILITY COMPANY

THE PRIME MINISTER

Pursuant to the Law on Government’s organization dated December 25, 2001;

At the proposal of Minister of Finance at the official dispatch No. 348/BTC-TCDN dated July 09, 2012;

DECIDES:

Article 1. Scope of regulation

This Decision provides for some financial mechanisms, including: the regulatory revenues for refined and petrochemical products consumed domestically, incentives of enterprise income tax, depreciation of fixed assets and charter capital of the Binh Son Refinery and Petrochemical State-owned Limited Liability Company (hereinafter abbreviated to Binh Son Company).

Article 2. The regulatory revenues for refined and petrochemical products consumed domestically

1. Objects of collection, remittance and the applied duration:

a) Objects of the regulatory revenues are all products from refinery (petrol, oil, LPG) and petrochemical products which are produced, processed for domestic consumption by the Binh Son Company.

b) Binh Son Company shall declare, remit the regulatory revenues specified in this Article quarterly into state budget according to guide of the tax agency. Annually, make finalization of revenues and remittances in state budget of the regulatory revenues with the tax agency, deadline for making finalization shall comply with deadline for making finalization of enterprise income tax.

c) Duration applicable to the regulatory revenues for refined and petrochemical products of Binh Son Company as prescribed in this Article shall execute from the financial year 2012 to the end of 2018.

2. Bases to calculate the regulatory revenues: The regulatory revenues for refined and petrochemical products consumed domestically of Binh Son Company shall be defined equal to (=) the refined and petrochemical products consumed practically every quarter multiplied (x) with price to calculate the regulatory revenues and multiplied (x) with rate of regulatory revenues. In which:

a) Price to calculate the regulatory revenue is practical sale price of products from oil refinery and petrochemical products, excluded value-added tax, environmental protection tax, excise tax and charges payable to state budget (if any) which are calculated for the sale price of products.

b) Rate of regulatory revenue is difference between import tax rate of products from oil refinery and petrochemical products at time of consumption minus (-) the preferential value level which is calculated for sale price, which will be 7% applicable to petrol, oil; 5% applicable to LPG, and 3% applicable to petrochemical products.  

3. In case where the import tax of refined and petrochemical products as prescribed by State is lower than the preferential value level calculated for sale price (3% for petrochemical products, 5% for LPG and 7% for petrol and oil), the Vietnam Oil and Gas Group shall cover product sale of Binh Son Company and put the preferential value level into price of covering the product sale.

Article 3. Incentives of enterprises income tax

Binh Son Company is entitled to apply the tax rates of enterprise income tax of 10% for 30 years; exempted tax for 4 years and reduced 50% of payable tax for 9 years following the first year when Binh Son Company has taxable income from project of Dung Quat refinery plant.

Article 4. Charter capital and asset depreciation

1. Charter capital:

a) The Vietnam Oil and Gas Group shall define, approve and allocate additionally charter capital for Binh Son Company as prescribed by current law, ensure the stable operation of Dung Quat refinery plant, including expansion and increase of design capacity of the Dung Quat refinery plant up to 10 million ton/year and facilitate for Binh Son Company to conduct equitization.

b) The Vietnam Oil and Gas Group shall use profit from oil and gas which is divided to the host country and permitted to keep annually for allocating additionally charter capital of Binh Son Company.

2. Binh Son Company may conduct depreciation of fixed assets for main equipment of Dung Quat refinery plant for maximum time of 20 years.

Article 5. Provisions of implementation

1. This Decision takes effect on the day of its signing.

2. The Ministry of Finance shall assume the prime responsibility for, and coordinate with the Ministry of Industry and Trade and the Vietnam Oil and gas Group in guiding implementation of this Decision.

3. Ministers of Finance, Industry and Trade, Planning and Investment; Chairperson of People’s Committee of Quang Ngai province; Members' Council, President of the Vietnam Oil and Gas Group and Director of Binh Son Company shall implement this Decision.