From Today, More Subjects Eligible for Land Rent Reduction

50% Reduction for Projects in Specially Difficult Areas

A notable new point of Circular 332/2016/TT-BTC is the addition of regulations on reducing land levy.

To be specific: A 50% reduction in land levy for projects located in specially difficult socio-economic areas or investment projects with a capital scale of VND 6,000 billion or more, with a minimum disbursement of VND 6,000 billion within 3 years from the date of the investment policy decision for projects not required to complete the investment registration certificate procedures.

Additionally, a 30% reduction in land levy for projects located in difficult socio-economic areas or investment projects in rural areas employing 500 or more workers (excluding part-time workers and workers with labor contracts of less than 12 months).

Investors eligible for the land levy reduction due to investment projects with a capital scale of VND 6,000 billion or more or investment projects in rural areas employing 500 or more workers are only eligible for the land levy reduction when they submit a request for the reduction along with proof of having disbursed a minimum investment capital of VND 6,000 billion or proof of employing 500 workers as specified in Points c and d, Clause 1, Article 16 of Decree 118/2015/ND-CP which details and guides the implementation of some articles of the Law on Investment.

The tax authority will check, verify, and issue a Decision to reduce the land levy within 5 days from the date of receiving the investor’s request along with the above-mentioned proof. In the case of inspections or audits where the project does not meet the conditions for a land levy reduction, the investor must refund the reduced land levy amount to the state budget along with late payment interest calculated on the reduced land levy amount as prescribed by the law on tax administration.

Addition of Land Rent Determination Methods

In Circular 333/2016/TT-BTC, the Ministry of Finance supplements regulations on determining land rent. Specifically, for households and individuals who legally transfer agricultural land use rights to carry out investment projects in accordance with approved land use planning and plans, and must change the land use purpose after receiving the transfer and fulfill financial obligations in paying land rent, the handling of transfer money is conducted according to regulations.

The Circular also stipulates how to calculate the land rent payable in cases where the State leases land with annual payment but has completed financial obligations for a number of years due to deductions of pre-paid compensation costs, ground clearance costs, or land use right transfers into the land rent according to the law, when switching to one-time full payment for the remaining lease term.

The calculation method is as follows: The payable land rent is calculated by multiplying the area subject to land rent by the land rent unit price determined as prescribed in Clause 2, Article 4 of Decree 46/2014/ND-CP at the time the competent state authority permits switching to one-time full payment for the remaining lease term.

Also, according to Circular 333, in cases where the State leases land with annual land rent payment but has completed financial obligations for several years due to deductions for pre-paid compensation and ground clearance costs or land use right transfers into the land rent according to the law, when transferring the project or transferring their assets attached to the leased land as stipulated by law, the transferee inherits and continues to deduct the remaining compensation, ground clearance, or land use right transfer costs corresponding to the unrealized exchange period into the payable land rent.

The finance authority implements recording of the compensation, ground clearance costs that the lessee voluntarily advanced deducted into the payable land rent, and water surface rent according to the state budget law.

Source: Customs Newspaper

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