What are principles of tax exemption and reduction for non-agricultural land use in Vietnam?

What are principles of tax exemption and reduction for non-agricultural land use in Vietnam?

According to Article 9 of Circular 153/2011/TT-BTC regulating the principles for granting tax exemptions and reductions for non-agricultural land use:

- Tax exemptions and reductions are directly applicable only to the taxpayer and only calculated based on the tax amount as prescribed by the Law on Non-Agricultural Land Use Tax 2010 and guided by Circular 153/2011/TT-BTC.

- Tax exemption or reduction for homestead land is applicable only to homestead land at one location chosen by the taxpayer unless specified otherwise in Clause 9, Article 10, and Clause 4, Article 11 of Circular 153/2011/TT-BTC.

- If a taxpayer is eligible for both tax exemption and reduction for the same parcel, the tax will be exempted; if a taxpayer qualifies for a tax reduction under two or more conditions specified in Article 11 of Circular 153/2011/TT-BTC, the tax will be exempted.

In a case where a taxpayer is entitled to a 50% tax reduction and has one or more family members also entitled to a 50% tax reduction, the family will be exempt from the tax. These members must have a familial relationship (grandparents, parents, children, grandchildren) and be registered in the family’s permanent household book.

- Taxpayers with multiple investment projects that qualify for tax exemptions and reductions will receive exemptions and reductions for each individual investment project.

What are principles of tax exemption and reduction for non-agricultural land use in Vietnam? (Image from the Internet)

What types of land are subjects for tax exemption on non-agricultural land use in Vietnam?

According to Article 10 of Circular 153/2011/TT-BTC, supplemented by Article 4 of Circular 130/2016/TT-BTC, the following subjects are eligible for non-agricultural land use tax exemption:

(1) Land of investment projects in the field of special investment encouragement (especially advantageous investments); investment projects in geographical areas with specially difficult socio-economic conditions; investment projects in the field of encouraged investment (advantageous investments) in geographical areas with difficult socio-economic conditions; land used by enterprises employing over 50% of their workforce as war invalids or sick soldiers.

The list of fields encouraged for investment (advantageous investments), fields of special investment encouragement (especially advantageous investments), localities with difficult socio-economic conditions, localities with specially difficult socio-economic conditions is implemented according to the legal regulations on investment.

The number of employees who are war invalids or sick soldiers must be the annual average regular labor according to regulations.

(2) Land of facilities implementing socialization for activities in education, vocational training, healthcare, culture, sports, and the environment, including:

- Non-public facilities established and operating in accordance with the regulations of competent state agencies in the fields of private investment;

- Organizations or individuals operating under the Enterprise Law with investment projects, joint ventures, links, or the establishment of facilities operating in the fields of private investment with sufficient operating conditions as prescribed by competent state agencies;

- Public non-business units contributing capital, mobilizing capital, joint ventures, or links according to legal regulations to establish independently accounting facilities or enterprises operating in the fields of private investment under the decisions of competent state agencies;

- Foreign investment projects in the field of private investment as decided by the Prime Minister of the Government of Vietnam upon the proposal of the Ministry of Planning and Investment and related line ministries.

Facilities implementing private investment in education, vocational training, healthcare, culture, sports, and the environment must meet the criteria of scale and standards as decided by the Prime Minister of the Government of Vietnam.

(3) Land for constructing charitable houses, solidarity houses, facilities for nurturing elderly people who live alone, disabled people, or orphans, and facilities providing social treatments.

(4) Residential land within the quota in areas with especially difficult socio-economic conditions.

(5) Residential land within the quota of individuals who participated in revolutionary activities before August 19, 1945; war invalids of categories 1/4 and 2/4; people entitled to policies as war invalids of categories 1/4 and 2/4; sick soldiers of category 1/3; heroes of the armed forces; Vietnamese Heroic Mothers; biological parents, people who raised martyrs while they were young; spouses of martyrs, and children of martyrs receiving monthly allowances; revolutionary activists affected by Agent Orange; individuals affected by Agent Orange in difficult family circumstances.

(6) Residential land within the quota of poor households according to the Decision of the Prime Minister of the Government of Vietnam on poor household standards. If the Provincial People’s Committee specifically prescribes poor household standards to be applied locally according to legal regulations, the determination of poor households will be based on those standards issued by local authorities.

(7) Households and individuals whose homestead land is reclaimed under a plan or project approved by a competent state agency will be exempt from tax for the year in which the land is actually reclaimed both for reclaimed land and for land at the new residence.

(8) Land with garden houses recognized by competent state agencies as historical and cultural relics.

(9) Taxpayers facing difficulties due to force majeure events if the value of the damage to the land and houses on the land exceeds 50% of the taxable value.

In this case, the taxpayer must have confirmation from the commune-level People’s Committee where the land is damaged.

(10) Exemption from non-agricultural land use tax for households and individuals with annual non-agricultural land use tax payable (after subtracting exempt and reduced amounts, if any, according to the Law on Non-Agricultural Land Use Tax and guiding documents) of fifty thousand VND or less. If households and individuals have multiple parcels within a province or centrally-run city, the exemption from non-agricultural land use tax according to this Article will be calculated based on the total payable tax amount for all parcels. The procedure for exemption from non-agricultural land use tax as guided in this Article is implemented according to the guidance in Circular 153/2011/TT-BTC.

For households and individuals eligible for exemption from non-agricultural land use tax according to this Circular who have already paid tax to the state budget, the tax authorities will process refunds according to the Law on Tax Administration and guiding documents.

Which entities are eligible for a reduction in non-agricultural land use tax in Vietnam?

According to Article 11 of Circular 153/2011/TT-BTC, the subjects eligible for a 50% reduction in non-agricultural land use tax include:

(1) Land of investment projects in the field of advantageous investment; investment projects in geographical areas with difficult socio-economic conditions; land used by enterprises employing between 20% and 50% of their workforce as war invalids or sick soldiers.

(2) Residential land within the quota in areas with difficult socio-economic conditions.

(3) Residential land within the quota for war invalids of categories 3/4 and 4/4; people entitled to policies as war invalids of categories 3/4 and 4/4; sick soldiers of categories 2/3 and 3/3; children of martyrs who are not entitled to monthly allowances.

(4) Taxpayers facing difficulties due to force majeure events if the value of the damage to the land and houses on the land ranges from 20% to 50% of the taxable value.

In this case, the taxpayer must have confirmation from the commune-level People’s Committee where the land is damaged.