How much reduction in non-agricultural land use tax is provided for taxpayers facing difficulties due to force majeure circumstances in Vietnam?

How much reduction in non-agricultural land use tax is provided for taxpayers facing difficulties due to force majeure circumstances in Vietnam?

According to Article 10 of Law on Non-Agricultural Land Use Tax 2010, the regulations are as follows:

Tax Reduction

50% tax reduction is granted in the following cases:

1. Land of investment projects in sectors encouraged for investment; investment projects in areas with difficult socio-economic conditions; land of enterprises employing 20% to 50% of employees who are war invalids or sick soldiers;

2. Residential land within the limits in areas with difficult socio-economic conditions;

3. Residential land within the limits of third- and fourth-class war invalids; individuals entitled to policies similar to third- and fourth-class war invalids; second- and third-class sick soldiers; children of martyrs not receiving monthly allowances;

4. Taxpayers facing difficulties due to force majeure circumstances with property damage to land and houses on the land ranging from 20% to 50% of the taxable value.

Taxpayers facing difficulties due to force majeure circumstances with property damage to land and houses on the land, depending on the extent, will be entitled to a reduction of 20% to 50% of the non-agricultural land use taxable value.

How much reduction in non-agricultural land use tax is provided for taxpayers facing difficulties due to force majeure circumstances in Vietnam? (Image from the Internet)

What force majeure circumstances are eligible for non-agricultural land use tax reduction in Vietnam?

According to Clause 27, Article 3 of Law on Tax Administration 2019, the definition of force majeure in tax administration is as follows:

Terminology Explanation

In this Law, the following terms shall be understood as follows:

...

24. The independent transaction principle is a principle applied to the declaration and determination of taxable prices for taxpayers who engage in associated transactions to reflect the transaction conditions in associated transactions equivalent to those in independent transactions.

25. The principle of substance-over-form in operations and transactions determines tax obligations, particularly in tax administration, to analyze transactions and business operations of taxpayers to ascertain tax obligations corresponding to the value generated from the substance of such transactions and business operations.

26. The ultimate parent company of a group is the legal entity with direct or indirect ownership of other entities in a multinational group, not owned by any other legal entity, and whose consolidated financial statements are not included in the consolidated financial statements of any other legal entity globally.

27. force majeure circumstances include:

a) Taxpayers suffering material damage due to natural disasters, catastrophes, epidemics, fires, and sudden accidents;

b) Other cases of force majeure as stipulated by the Government of Vietnam.

Thus, force majeure circumstances eligible for non-agricultural land use tax reduction include:

- Taxpayers suffering material damage due to natural disasters, catastrophes, epidemics, fires, and sudden accidents;

- Other force majeure circumstances as stipulated by the Government of Vietnam.

What is the situation handled when a taxpayer entitled to both tax exemption and tax reduction for the same parcel in Vietnam?

According to Article 9 of Circular 153/2011/TT-BTC, the regulations are as follows:

Principles of Tax Exemption and Reduction

1. Tax exemption and reduction are only directly applied to the taxpayer and calculated based on the tax amount as stipulated in the Law on Non-Agricultural Land Use Tax and guidance in this Circular.

2. Tax exemption or reduction for homestead land is only applied to homestead land at one location chosen and named by the taxpayer, except for cases specified in Clause 9, Article 10, and Clause 4, Article 11 of this Circular.

3. If a taxpayer is entitled to both tax exemption and tax reduction for the same parcel, they shall be exempted from tax; if the taxpayer is eligible for a tax reduction under two or more conditions stipulated in Article 11 of this Circular, they shall be exempted from tax.

If a taxpayer is eligible for a 50% tax reduction and there is an additional member in the household eligible for a 50% tax reduction, the household shall be exempted from tax. These members must be family members, including grandparents, parents, children, and grandchildren, and must have their names listed in the household's permanent residence book.

4. If a taxpayer has multiple investment projects eligible for tax exemption or reduction, the tax exemption or reduction shall apply to each investment project.

Therefore, if a taxpayer is entitled to both tax exemption and tax reduction for the same parcel, they shall be exempted from tax.