How to calculate compensation for investment costs in land when the state recovers land in Vietnam?

The subjects specified in Article 77 of the Land Law 2013 of Vietnam are those who are not compensated for land but are compensated for the remaining investment costs in land. According to Article 3 of Decree 47/2014/ND-CP: The remaining land-related investment expense means expenses invested in land by land users in accordance with land use purpose and such expenses are not yet fully expropriated at the date of expropriation. The remaining land-related investment expense mean all or part of the following costs:

+ Expenses for land grading

+ Expenses for soil nutrient enrichment, removal of salt, corrosion and erosion control of the land used for agricultural production;

+ Expenses for reinforcement load, vibration, and sinking bearing capacity of the land used as business premises;

+ Other expenses invested in accordance with land use purpose.

Conditions for determination of the remaining land-related investment expense

+ Documents or vouchers proving investment has been made. In case there are no documents or vouchers to prove such investment, the People’s Committees of central-affiliated provinces and cities (hereinafter referred to as the province-level People’s committee) shall rely on actual circumstances in the locality to determine the remaining land-related investment expense;

+ The remaining land-related investment expense does not originate from the state budget.

Formula for calculating the remaining land-related investment expense

Article 3 of Decree 47/2014/ND-CP stipulates that the remaining cost of investment in land must be compatible with the market price at the time of the decision on land recovery and is determined by the following formula:

P=((P1+P2+P3+P4)/T1)xT2

Where:

P: The remaining land-related investment expense;

P1: Expenses for land grading;

P2: Expenses for enrichment of soil nutrients, soil desalination and de-acidification, corrosion and erosion control of the land used for agricultural production;

P3: Expenses for reinforcement load, vibration, and sinking bearing capacity of the land used as business premises;

P4: Other expenses in accordance with land use purpose.

T1: Land use term;

T2: Remaining land use term;

In case the time of investment in land takes places after the time of land allocation by the State, land use term (T1) shall be calculated from the time of investment in land.

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