The economy of Vietnam is heavily dependent on the mining industry. Using modern, high technology in mining was emphasized by Directive No. 2/CT-TTg of January 2012 and Decree No. 15/2015/ND-CP and during a visit by the Prime Minister to Australia. However, the legislation governing the mining sector seem unfriendly to both foreign and local investors, especially concerning the high royalty rates and other taxes and fees, particularly:

Payment for mining rights: Under Decree No. 203/2013/ND-CP, mining companies have to make a payment between 1-5% of the original value of the original ore to get mineral exploitation rights before receiving licenses. This fee is impractical and will deter foreign companies from investing in the mining industry. The reason behind is that in this period, they must spend a lot on exploitation and mining construction without any revenue. Accordingly, they will seek to reduce their investment in mining technologies to pay for such fee. Consequently, advanced and environmentally friendly technology is not used by mining companies for exploitation, resulting in economic inefficiency. In light of the above, the Government should amend the Decree to allow such fee to be paid on an annual basis after the mining companies make revenue.

Environmental protection fee: Circular No. 158/2011/TT-BTC imposes the environmental protection fee on the basis of "the quantity of crude metal mineral ores actually exploited". The calculation of such fee is only based on the mineral output without taking into account the level of pollution caused by each mine. This regulation is not fair because mining companies using advanced technology to limit impacts on the environment and those which are using cheap technology and destroying the environment must pay the same fee. It will discourage mining companies from investing in modern machinery and technology to protect the environment. The Circular should be amended to reflect the fee calculated in proportion to the levels of pollution caused by mining exploitation.

Royalty tariff on minerals: Under Resolution No. 712/2013/UBTVQH13, the natural resources tax has considerably increased for many types of minerals such as wolfram (18%), titanium (16%), copper (13%), iron (12%), etc. Although the natural resources tax for gold, silver, alumina and bauxite, tin, lead and zinc was not increased but was subject to 10% royalty tariff. Moreover, the Ministry of Finance proposes increasing tax on exploitation of natural resources for almost minerals at 15-50% from 1 January 2016. This has increased the tax burden on the mining companies and it is likely that they will be liquidated. Therefore, the Government should support this industry by postponing the tax increase.

Corporate income tax for mining enterprises: Decree No. 122/ND-CP amending and supplementing a number of articles of the Government's Decree No. 124/2008/ND-CP detailing and guiding the implementation of a number of articles of the Law on Enterprise Income Tax No. 14/2008/QH12 reduced Corporate Income Tax for all companies to 25% except for mining of precious and rare natural resources which are currently fixed at 50%. Under this Decree, the rate will be reduced to 40%, more than 70% of the mine areas located in difficult social-economic areas. The Decree also confirmed that mineral exploitation activities do not enjoy other incentives of the enterprise income tax.

Although the royalties, fees and taxes of the mining operations in Vietnam are high, but the ways they are collected and spent afterwards are not transparent. The business community is not informed of fee management. The environmental protection fee must be used to recover the environment at the mining areas, however, the mining companies have to pay a fee for this. The Government should publicize information on licensing and financial obligations of the applicants for mining operations and fee management.
Additionally, the Government should not raise taxes at this period because an increase in tax and mining right fee will cause a reduction in investment of the mining companies in the technology. Accordingly, they will use cheap machinery and technology for their mining exploitation activities and this goes contrary to the Prime Minister's Directive.
In conclusion, in order to encourage more investments in mineral exploitation operations and use of advanced and environmental friendly technology for mining industry, the Government should control the tax collection instead of raising taxes and provide transparency on fee and tax management.