Calculating land rent based on the time of handover

VCN - The Land Law of 2024, approved by the National Assembly on January 18, 2024, is expected to take effect on July 1, 2024, with significant changes related to land finance.
Land financial obligations are an issue of public concern. Photo: ST
Land financial obligations are an issue of public concern. Photo: ST

The Ministry of Finance is tasked by the Government to detail some contents about land finance, including land use fees and land rent. The contents that receive interest and contributions include land rent financial obligations, exemptions, and reductions of land rent.

The draft Decree on land use fees and land rent is built on principles closely following the financial contents on land that the Land Law directly assigns the Government to regulate or guide; summarizing practical problems in recent times to regulate in the Decree, ensuring compliance with the provisions of the Land Law 2024 and related laws while inheriting the stable and suitable regulations of the Decrees stipulating the collection of land use fees and land rent according to the Land Law 2013.

Regarding the issue of the time for the financial obligations of land rent, the Vietnam Chamber of Commerce and Industry (VCCI) stated that the draft regulation is directed towards land rent arising from the time of the decision to lease land. The Land Law 2024 also stipulates that businesses must pay in advance before leasing land. According to VCCI, in practice, there are cases where businesses have paid land use fees, but state agencies are slow in implementing site clearance, leading to delayed handover of land in reality, sometimes delayed for many years. In such cases, businesses still have to bear the obligation of land rent but do not have land to use. Many businesses facing this problem report suffering significant losses due to the state's delay in delivering clean land but still having to pay for it.

Therefore, contributing to this regulation, VCCI proposes that the drafting agency adjust the regulation so that businesses temporarily pay land rent before leasing the land. If the site clearance and land handover proceed as scheduled, there is no need to adjust the land rent. In case the land handover in reality is slower than expected, businesses have the right to request the state agency to recalculate the land rent to reduce the obligation corresponding to the delayed handover period. This reduction will be settled and deducted from subsequent land rent payments or other financial obligations to the state.

The regulation on exemption and reduction of land rent is one of the notable contents in the draft. According to representatives of the Department of Public Asset Management, Ministry of Finance, in Articles 39 and 40 of the draft, the exemption from land rent allows land users not to pay land rent for the entire lease period; the reduction in land rent allows land users not to pay a specific amount calculated as a percentage (%) of the land rent payable. The draft also designs land rent reduction levels according to investment incentive sectors and investment incentive areas as per legal regulations, generally similar to the current levels.

Along with that, the draft generally stipulates the levels of exemption and reduction of land use fees for projects in investment incentive sectors and areas without building separate incentives. Regarding the order and procedures for exemption and reduction, to ensure the supervision of implementation according to the regulations, ensuring that the exemption from land use fees and land rent is applied to the right subjects, avoiding loss of state budget revenue, and ensuring the effectiveness of the state's preferential policies, the draft stipulates that the exemption from land use fees and land rent is recorded in the decision to lease land.

Commenting on the principle of implementing exemption and reduction of land use fees, the Department of Justice of Binh Dinh province proposes an option to stipulate the exemption and reduction of land use fees in case of auctioning land use rights to allocate land with land use fees for auction winners who are eligible for exemption and reduction. In this, it is necessary to specify the exemption and reduction levels applicable to all subjects eligible for exemption and reduction, ensuring their right to exemption and reduction of land use fees, while ensuring fairness in implementing the state's exemption and reduction policy.

Commenting on the policy of calculating land use fees when changing detailed planning, the Department of Justice of Binh Dinh province proposes to choose option 1 in the draft, which states, “When there is a decision to adjust the detailed planning by a competent state agency, the land use fees will be recalculated for the entire project according to the new detailed planning as per the legal regulations at the time the competent state agency decides to adjust the detailed planning...". Because adjusting the detailed planning will change the land use structure, and position of each type of land, land use coefficient, so it is necessary to recalculate the land use fees for the entire project according to the new detailed planning as per legal regulations at the time the competent state agency decides to adjust the detailed planning to ensure fairness in land use, limit abuse of detailed planning adjustment and enhance the responsibility of investors when making detailed project planning.

By Hoai Anh/Tran Minh

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