Principles of exemption and reduction of land rental and water surface rental in Vietnam

1. An investment project using land shall be eligible for consideration for exemption or reduction of land rental and/or water surface rental if it is established, appraised and approved in accordance with law.

2. An investment project shall have land rental or water surface rental exempted or reduced in cases the lease of land is approved by a competent authority for the first time for implementing the project or have the land lease period extended in accordance with the land law.

3. An organization or individual that is leased land or water surface by the management board of the economic zone may enjoy exemption or reduction of rental only after completing procedures for requesting rental exemption or reduction. To be specific:

If a lessee of land or water surface is eligible for exemption or reduction of rental but fails to carry out procedures for requesting rental exemption or reduction, it/he/she must pay the land rental or water surface rental in accordance with law. If the procedures for requesting land rental exemption or reduction are carried out late, no land rental or water surface rental shall be exempted or reduced for the late period.

If an application for rental exemption or reduction is submitted when the prescribed incentive period ends as regulated in Decree No. 35/2017/ND-CP, no land rental or water surface rental shall be exempted or reduced. If it is submitted while rental exemption and reduction incentives still remain valid, land rental or water surface rental shall be only exempted or reduced for the remaining incentive period as from the receipt of a valid application.

4. An operating project that has been making annual payment of land rental and/or water surface rental before the date of entry into force of Decree No. 35/2017/ND-CP shall not be eligible to enjoy rental exemption and reduction. If it is eligible to apply for enjoyment of rental exemption and reduction in accordance with Decree No. 35/2017/ND-CP, land rental or water surface rental may be exempted or reduced for the remaining incentive period (if any) as from the receipt of the investor's valid application for enjoyment of rental exemption and reduction.

This regulation shall not apply to investment projects that are prescribed in Point c, Point d Clause 2 Article 15 of the Law on Investment 2014 and use land leased by the Government before July 01, 2015 (i.e. the effective date of the Law on Investment in 2014).

5. If an operating project is enjoying exemption or reduction of land rental or water surface rental as regulated by law before the effective date of Decree No. 35/2017/ND-CP at incentive levels lower than those prescribed in Clause 6 Article 8 of Decree No. 35/2017/ND-CP, the project investor may apply for enjoying incentive levels prescribed in this Decree for the remaining land lease period.

The remaining land lease period for which land rental is exempted or reduced shall be determined by subtracting the period for which rental has been exempted or reduced as regulated by law before the effective date of Decree No. 35/2017/ND-CP from the incentive period prescribed in Decree No. 35/2017/ND-CP. This regulation shall not apply to investment projects that are prescribed in Point c, Point d Clause 2 Article 15 of the Law on Investment in 2014 and use land leased by the Government before July 01, 2015 (i.e. the effective date of the Law on Investment in 2014).

6. Operating projects prescribed in Clause 4 and Clause 5 Article 8 of Circular No. 89/2017/TT-BTC are investment projects that have been granted investment certificates, investment licenses, certificates of investment registration or decisions on approval for investment proposal (excluding cases where these documents are not required under the law on investment) and use land under unexpired land lease contracts in accordance with law.

View more details at: Circular No. 89/2017/TT-BTC of the Ministry of Finance of Vietnam takes effect from October 06, 2017.

- Nguyen Trinh -

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