Non-agricultural land tax-liable objects according to current Vietnam’s regulations

Real estate tax is one of the expenses that individuals and organizations subject to tax must pay to the State. The article shall provide details about taxpayers and tax exemptions in accordance with Vietnam’s regulations.

1. Land classification according to current regulations on land

According to Article 10 of the Land Law 2013 of Vietnam, depending on land use purpose, land is classified into 3 main following types:

- Agricultural land;

- Non-agricultural land;

- Unused land, including land of types for which land use purposes have not been determined yet.

2. Non-agricultural land tax-liable objects

Real estate tax is understood as one of the expenses that individuals and organizations subject to tax must pay to the State in the process of using and transferring land. This is an indirect tax, applied to houses, residential land and land for construction of works.

According to Article 3 of the Circular No. 153/2011/TT-BTC of the Ministry of Finance of Vietnam, taxpayers for non-agricultural land use tax are specified as follows:

- Taxpayers are organizations, households and individuals that have the right to use land.

- Organizations, households or individuals have not yet been granted certificates of land use rights and ownership of houses and other land-attached assets.

Some specific cases are specified as follows:

- When land is allocated or leased by the State for implementation of investment projects, those that are allocated or leased land by the State will be taxpayers.

- When persons with land use rights lease land under contracts, taxpayers shall be identified as agreed upon in these contracts. When no agreement on taxpayers is reached in contracts, persons with land use rights will be taxpayers.

- When a certificate has been granted for land which is currently under dispute, pending the settlement of the dispute, the current land user will be the taxpayer. Tax payment does not serve as a ground for the settlement of disputes over land use rights.

- When many persons have the rights to co-use a land plot, the lawful representative of these co-users will be the taxpayer.

- When a person with land use rights contributes his/her land use rights as business capital to form a new legal entity that has the right to use tax-liable land specified in Article 1 of this Circular, the new legal entity will be the taxpayer.

- When leasing state-owned houses, the lessors (units assigned to sign contracts with lessees) will be taxpayers.

- When land is allocated or leased by the State for implementation of housing projects for sale or lease, those who are allocated or leased land by the State will be taxpayers. When land use rights are transferred to others, the transferees will be taxpayers.

3. How to calculate non-agricultural land use tax

According to Article 5, 6 and 7 of the Law on non-agricultural land use tax 2010 of Vietnam, non-agricultural land use tax shall be determined as follows:

- Tax bases are taxable price and tax rate.

- Taxable price of land is determined by the taxable land area and the price of one square meter of land.

Non-agricultural land use tax = Taxable land area x Price of one square meter of land x Tax rate

+ Taxable land area: The actual land area used, usually the area calculated based on the number of land areas shown on the land use right certificate. However, for families sharing land on a plot, the real estate tax rate is the actual area used by each family.

When land is allocated or leased by the State for the construction of an industrial park, the taxable land area is exclusive of the land area for the construction of infrastructure facilities under common use.

For residential land of a multi-story building with many users or a  condominium with areas for both dwelling and commercial purposes, the taxable land area is the allocation coefficient multiplied by the area of the apartment of each user.

For underground construction works, the applicable allocation coefficient is 0.5 of the constructed land area divided by the total area of works used by organizations, households and individuals.

+ The price of a square meter of land: Set by the State and may change over a five-year cycle.

- Tax rates for residential land, including land used for commercial purposes, to be applied according to the Partially Progressive Tariff are specified as follows:

+ Area within the set quota: 0.03%

+ Area in excess of up to 3 times the set quota: 0.07%

+ Area in excess of over 3 times the set quota: 0,15%

Moreover, the state also specifies different tax rates depending on the purpose of land use from which to provide a basis for appropriate tax calculation in the Law on non-agricultural land use tax 2010 of Vietnam and other guiding documents.

Key word: non-agricultural land use tax | land law | tax rates | Non-agricultural land | tax-liable objects |

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