Besra Gold Inc asks MoF not to raise royalty tax

Friday, Aug 09, 2013 18:37

Besra has employed about 1,800 workers for their two gold companies in Viet Nam.— Photo

HA NOI (Biz Hub) —Canada's Besra Gold Inc has sent an official letter to Viet Nam's Ministry of Finance to ask it not to raise the royalty tax on gold that could force it to cease operations in the country.

The letter comes following the fact that in May, the Ministry of Finance (MoF) called for comments on a proposal to raise the tax on mining iron ore, titanium, gold, copper and several other minerals by 3 to 10 percentage points in order to bring in an extra VND508.6 billion (US$24 million) a year in tax revenue. The MoF planned to increase the tax on gold from 15 per cent to 25 per cent.

Le Minh Kha, a representative of Besra Gold Inc in Viet Nam, told Biz Hub that that the current royalty of 15 per cent in Vietnam was already one of the highest rates in the world, adding that the rate was unsustainable, and any increase would lead to the company closing operations.

In Viet Nam, Besra Gold Inc is partnered with Phuoc Son Gold Company and Bong Mieu Gold Mining.

Besra has invested 75 per cent of its total spending directly into the two companies in Vietnam. Until February 2013, Besra's payments to local contractors and suppliers totalled nearly VND 3,300 billion ($158 million). The company has also invested more than VND 45 billion ($ 2.3 million) on infrastructure construction, education and healthcare programmes in the local community.

Kha, also general director of both companies in Viet Nam, said as a result, they would be forced to close their two gold mines in Viet Nam and would no longer pay significant royalties, taxes and other fees to the Government. 1,800 employees would also be laid off.

Besra added that if that happened, the mines could potentially be illegally exploited, leading to environmental damage.

Further losses would also be incurred by local suppliers to the mines which in turn would lead to less tax contributions. According to Besra's estimations, the company had about 20,000 indirect workers.

According to Kha, the fiscal regime applicable to his companies was significantly more severe than in neighbouring countries. In comparison, royalties applied in Vietnam were 5 times higher than in Indonesia, 3 times higher than Laos and 15 times more than East Malaysia.

Instead of raising the tax, Besra asked the MoF to reduce it to 6 per cent and also asked for a reduction of 8 per cent on its current corporate income tax of 40 per cent.

Viet Nam has gold reserves of 154 tonnes, and if the new tax was applied, revenue from that would increase by VND139.3 billion ($6.6 million) to VND348.3 billion, ($16.6 million) a year.

If approved, the new tax will be in place from January 2014. —VNS

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