The investor must pay land rental for the delayed implementation of the project in Vietnam

Where an investor in Vietnam is late in the implementation of a project and is approved by a competent agency, he/she shall additionally pay to the State the amount corresponding to the land use fee and land rent for the period of delay in project implementation as prescribed.

Illustration. Internet Source

Guide Tay Ninh Provincial Tax Department on the collection of land rent for the time of delay in project implementation of Hung Thinh Education Joint Stock Company, General Department of Taxation specified at Point i, Clause 1, Article 64 of the Land Law 2013.

According to the Land Law, one of the cases of land acquisition due to violation of the law on land is land allocated or leased by the State for the implementation of investment projects that is not used within 12 consecutive months or land use progress 24 months behind the progress recorded in the investment project since the handover of land in the field must be put into use in Vietnam.

In case of not putting the land into use, the investor shall be entitled to extend the use for 24 months and must pay the State the amount corresponding to the land use fee and land rent for the time of delay in project implementation during this time.

If the time limit is extended but the investor in Vietnam has not yet put the land into use, the State shall recover the land without compensation for land and land-attached assets, except for cases of force majeure.

According to Clause 2, Article 3 of Decree 135/2016/ND-CP dated September 9, 2016 of the Government amending and supplementing a number of articles of the Decrees regulating the collection of land use fees, land rent and water surface rent, if the State leases land but does not put the land into use or is behind the progress of land use compared to the progress recorded in the investment project, the land tenant in Vietnam must pay the State the amount corresponding to the payable land rent.

In particular, in case of extension of the use time as prescribed, the amount corresponding to the land rent payable for the delay in progress shall be calculated according to the annual land rent payable.

If the object is not extended the land use time in Vietnam or the object is extended the land use time but does not carry out the procedures to be extended or has expired the extended time but still does not put the land into use and the State does not have a decision on land acquisition according to the provisions of law, the State must pay the amount calculated equal to the annual land rent for the period from the time of land allocation to the time of official issuance of the land acquisition decision after deducting the basic construction time determined by the competent state agency when the land is leased.

The construction period shall be deducted up to 03 years for cases where the State leases land before July 1, 2014 and no more than 02 years for cases where the State leases land from July 1, 2014 onwards.

Land rental unit price in Vietnam to determine the amount of land rental is determined on the basis of the land price in the Land Price List, the land price adjustment factor, the percentage (%) of calculating the land rental unit price issued by the provincial People's Committee.

Based on the above provisions, the General Department of Taxation shall pay additional amounts of money corresponding to land use fees and land rent for the delayed implementation of the above-mentioned projects to investors who are late in the implementation of projects in Vietnam and are approved by competent agencies.

Ngoc Anh

Source: Financial magazine

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