What is the policy on land rent exemption and reduction guided by the General Department of Taxation of Vietnam in Official Dispatch 5516/TCT-CS?

What is land rent in Vietnam?

Based on Clause 45, Article 3 of the Land Law 2024, land rent is defined as follows:

Land rent is the amount of money that the land user must pay to the State when the State leases land, permits the conversion of land use purposes for leasing land, or in other cases where land rent payment is required under the provisions of the law.

What is the policy on land rent exemption and reduction guided by the General Department of Taxation of Vietnam in Official Dispatch 5516/TCT-CS?

On November 27, 2024, the General Department of Taxation of Vietnam issued Official Dispatch 5516/TCT-CS in 2024 guiding on land rent.

Specifically, according to Official Dispatch 5516/TCT-CS in 2024, the General Department of Taxation of Vietnam provides guidance on the policy of land rent exemption and reduction as follows:

- At point c, clause 3, Article 19 of Decree 46/2014/ND-CP (a document that has expired) stipulating the collection of land rent and water surface rent as follows:

Exemption of land rent and water surface rent

...

3. Exemption of land rent and water surface rent after the period of land rent and water surface rent exemption for the construction phase pursuant to Clause 2 of this Article. Specifically:

...

c) Eleven (11) years for investment projects in areas with especially difficult socioeconomic conditions;

...

The list of investment incentive sectors, especially incentivized sectors, areas with difficult socioeconomic conditions, and areas with especially difficult socioeconomic conditions are implemented according to the provisions of the law on investment.

- At clause 9, clause 11, Article 38 of Decree 103/2024/ND-CP stipulating the collection of land levy and land rent as follows:

Principles for implementing land rent exemption and reduction

...

9. If a competent state agency discovers that the land user has been exempted or reduced land rent but does not meet the conditions for exemption or reduction according to regulations, or if the land is not used for the purposes recorded in the land lease decision, lease contract, but does not fall under the cases of land recovery as per land law, or if the land user requests not to apply preferences because they no longer meet the conditions for exemption or reduction, they must pay the State treasury the amount of land rent that was exempted or reduced. The recovery of the amount of land rent exempted or reduced is implemented as follows:

a) The amount of land rent exempted or reduced to be recovered is calculated based on the land price in the Land price list, the percentage (%) for land lease price calculation issued by the provincial People's Committee at the time of land rent calculation as per Clause 3, Article 155 of the Land Law plus (+) an amount equivalent to the late payment interest on land rent according to tax management regulations from each period.

b) The time for calculating late payment interest, as provided at point a of this clause, is calculated from the time of land rent exemption or reduction to the time the competent state agency decides to recover the exempted or reduced land rent;

c) The tax agency recovers the amount of land rent that was exempted or reduced.

...

11. Land rent exemption and reduction under investment incentive law does not apply to investment projects in the manufacturing and business sectors for goods and services subject to special consumption tax, as regulated by the Law on Special Consumption Tax, except for automobile, aircraft, and yacht manufacturing projects.

..

- At clause 5, Article 51 of Decree 103/2024/ND-CP stipulating the collection of land levy and land rent as follows:

Transitional provisions for land rent collection

...

5. In cases where the State leases land according to the land law before this Decree takes effect and the current land user qualifies for land rent exemption or reduction under land law or other regulations of The Government of Vietnam, or the Prime Minister of The Government of Vietnam, before the Land Law 2024 takes effect:

b) If the land user has submitted documents in compliance with competent state agencies and is still within the period of land rent exemption or reduction under previous law before this Decree takes effect but has not received a decision on exemption or reduction, the preferential treatment (exemption, reduction) is applied according to previous law before this Decree takes effect; if the preference level in this Decree is higher, then the preference level prescribed by this Decree applies for the remaining preferential time.

c) If the land user has not completed procedures for exemption, reduction, but is still within the period of exemption, reduction under previous law before this Decree takes effect, exemption or reduction is applied according to this Decree for the remaining preferential time.

d) With regards to cases under points b and c of this clause that qualify for land rent exemption, the tax agency transfers documents to the land management agency to carry out land procedures (without having to complete land rent exemption procedures); for other cases, the tax agency continues procedures and informs land users and land management agencies pursuant to this Decree.

Based on the above regulations, effective from August 1, 2024, the law on land rent collection has specific provisions on the principles of implementing land rent exemption and reduction in cases where a competent state agency discovers that a land user has been exempted or reduced land rent but does not meet the conditions for such, concerning investment projects in manufacturing, business sectors for goods and services subject to special consumption tax as regulated by the Law on Special Consumption Tax 2008 and transitional processing for preferential exemption and reduction of land rent is regulated at clause 9, clause 11, Article 38 and clause 5, Article 51 of Decree 103/2024/ND-CP.

For consideration of land rent exemption according to the law on land rent collection, prior to August 1, 2024, under Clause 3, Article 19 of Decree 46/2014/ND-CP, if there are issues in applying investment incentive regulations by sector, industry, and geographic areas not applied to projects investing in manufacturing and business sectors for goods and services subject to special consumption tax as per the Investment Law 2020, whether calculated for the entire project area or only the area used for the manufacturing and business activities of goods and services subject to special consumption tax and determining the area not exempted in case such an area cannot be distinguished, it is proposed that the Provincial Tax Department communicates with the Ministry of Planning and Investment (the agency in charge of drafting and submitting the Investment Law to competent authorities) for guidance in accordance with the law.

What is the policy on land rent exemption and reduction guided by the General Department of Taxation of Vietnam in Official Dispatch 5516/TCT-CS? (Image from Internet)

In case of land leasing by contract, who is liable for non-agricultural land use tax in Vietnam?

Based on Clause 3, Article 4 of the Law on Non-agricultural Land Use Tax 2010, it provides for the taxpayer. Specifically:

Taxpayer

...

3. Taxpayer in certain specific cases is prescribed as follows:

a) In cases where the State leases land for investment projects, the homestead land lessee is the taxpayer;

b) In cases where the land user leases land by contract, the taxpayer is determined by the agreement in the contract. If the contract does not stipulate who the taxpayer is, the person with land use rights is the taxpayer;

c) For land with a certificate but under dispute, before the dispute is resolved, the current land user is the taxpayer. Paying tax is not a basis to resolve disputes over land use rights;

d) In cases where multiple people jointly have rights to use a parcel, the taxpayer is the legally authorized representative of those who hold rights to the parcel;

đ) In cases where a land user contributes business capital by land use rights to form a new legal entity that holds the land use subject to tax as prescribed in Article 2 of this Law, the new legal entity is the taxpayer.

Thus, in cases where land use rights are leased by contract, the non-agricultural land use taxpayer is determined according to the agreement in the contract.

If the contract does not stipulate who the taxpayer is, the person with land use rights is the one liable for the non-agricultural land use tax.