What is the income-based method of land valuation in Vietnam? What are the procedures for land valuation by income-based method?
What is the income-based method of land valuation in Vietnam?
Pursuant to Clause 2, Article 4 of Decree 44/2014/ND-CP amended and supplemented by Clause 2, Article 1 of Decree 12/2024/ND-CP stipulating surplus-based method of land valuation as follows:
Land valuation methods
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2. The income-based method is implemented by dividing the average annual net income from a land unit by the average annual interest rate of 12-month term deposits in Vietnamese currency at commercial banks where more than 50% of the charter capital is held by the State or the total number of voting shares in the province for 3 consecutive years up to the end of the latest quarter with data before the valuation date
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Previously, the surplus-based method was also prescribed for land valuation according to Clause 3, Article 4 of Decree 44/2014/ND-CP as follows:
Land pricing methods
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3. The income-based method is a method used to determine land price by dividing the average annual net income from a land unit by average annual interest rate of 12-month term deposit on the pricing date at a state-owned commercial bank of which the deposit interest rate is highest in that province.
Thus, the income-based method is a method used to determine land price by dividing the average annual net income from a land unit by average annual interest rate of 12-month term deposit on the pricing date at a state-owned commercial bank.
However, the new regulations clarify that the average annual interest rate is the interest rate of 12-month term deposits in Vietnamese currency at commercial banks where more than 50% of the charter capital is held by the State or the total number of voting shares in the province for 3 consecutive years up to the end of the latest quarter with data before the valuation date.
What is the income-based method of land valuation in Vietnam? What are the procedures for land valuation by income-based method in Vietnam? (Image from the Internet)
What are the conditions of application of income-based method of land valuation in Vietnam?
Pursuant to Clause 2, Article 5 of Decree 44/2014/ND-CP amended and supplemented by Clause 3, Article 1 of Decree 12/2024/ND-CP, the conditions of application of income-based method of land valuation are specified as follows:
Conditions of application of land valuation methods
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2. The income-based method is applied for valuation in case the agricultural or non-agricultural land parcel or land zone is not residential land but the land parcel/land zone to be valued does not meet the conditions to apply the comparison method but the income and expenses from land use according to the legal land use purpose on the valuation date are determinable, except for the cases specified in Points a, b, c and d, Clause 4 of this Article.
Thus, the income-based method is applied for valuation in following cases:
- Agricultural or non-agricultural land parcel or land zone is not residential land;
- The land parcel/land zone to be valued does not meet the conditions to apply the comparison method;
- The income and expenses from land use according to the legal land use purpose on the valuation date are determinable.
Except for the cases:
- The cases specified in Point a, Clause 4, Article 114 and Clause 3, Article 189 of the Land Law 2013;
- Calculation of annual land rent when the State leases land without auctioning land use rights:
- Calculation of starting price for land use right auction when the State allocates land, leases land in case the land parcel or land zone has been invested in technical infrastructure according to detailed construction planning;
- Determination of the land price of the land parcel or land zone that needs to be valued, the total value calculated according to the land price in the land schedule for the area subject to land levy or land rent is less than 30 billion VND for central-affiliated cities, less than 10 billion VND for a mountainous and highland provinces, or less than 20 billion VND for the remaining provinces in the following cases:
+ The cases specified in Point b and point d, Clause 4, Article 114 and Clause 2, Article 172 of the Land Law 2013;
+ Calculation of lump-sum land rent for the entire lease term when the State leases land without auctioning land use rights.
What are the procedures and contents of land valuation by income-based method in Vietnam?
Pursuant to Article 5d of Decree 44/2014/ND-CP supplemented by Clause 7, Article 1 of Decree 12/2024/ND-CP, the procedures and contents of land valuation by income-based method are as follows:
- Survey and collection of information on income of the land parcel to be valued in accordance with Point a, Clause 3 and Clause 4, Article 5b of Decree 44/2014/ND-CP is supplemented by Article 1 of Decree 12/2024/ND-CP
- Survey and collection of information on costs from use of the land parcel to be valued in accordance with Point b Clause 3 and Clause 4 Article 5b Decree 44/2014/ND-CP supplemented by Article 1 Decree 12/2024/ND-CP, including:
+ Taxes related to land use;
+ Production costs based on norms and unit prices issued by competent authorities or construction cost per unit announced by the Ministry of Construction.
In case there are no norm, unit price or construction cost per unit , take account of statistical data of statistical agencies or information on actual costs prevailing on the market in accordance with Point b Clause 3 Article 5b of Decree 44/2014/ND-CP supplemented by Article 1 Decree 12/2024/ND-CP
- Determination of average annual net income
Average annual net income | = | Average annual income | - | Average annual expenses |
- Determination of the value of the land parcel to be valued.
Value of land parcel to be valued = Average annual net income/Average savings deposit interest rate
- Determination of price of the land parcel to be valued.
Price of land parcel to be valued = Value of land parcel to be valued/Area of land parcel to be valued
- Commercial banks where more than 50% of the charter capital is held by the State or the total number of voting shares in the province shall provide information on average savings deposit interest rates specified in Clause 4, Article 5b, Decree 44/2014/ND-CP supplemented by Article 1 of Decree 12/2024/ND-CP in writing within no more than 5 working days after receiving such a request from the land valuation entity to determine the land price according to the income-based method.
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