Cases of non-agricultural land use tax reduction in Vietnam

Cases of non-agricultural land use tax reduction in Vietnam (Internet image)

1. Non-agricultural land use tax-liable objects in Vietnam

In Article 1 of Circular 153/2011/TT-BTC, the tax-liable objects are as follows:

- Residential land in rural and urban areas defined in the 2003 Land Law and its guiding documents.

- Non-agricultural production and business land, including:

+ Land for construction of industrial parks, including industrial clusters, industrial parks, export-processing zones and other consolidated production and business zones subject to a common land use regime;

+ Land for construction of production and business establishments, including industrial production, cottage industry and handicraft businesses; service and trade establishments and other facilities serving production and business operations (including also land for construction of production and business establishments in hi-tech parks and economic zones);

+ Land for mineral mining and land used as mineral processing sites, except cases in which mineral mining activities do not affect the top soil layer or land surface;

Example 1: Company A is leased land by the State for coal mining. Of the total leased area of 2,000 m2, forest land occupies 1,000 m2, and the remaining land area is used as coal mining and processing sites. If coal mining does not affect the forest land, the forest land area is not liable to tax.

+ Land for production of construction materials or pottery, including land used as raw material and land used as construction material processing and production or pottery-making sites.

- Non-agricultural land specified in Article 2 of Circular 153/2011/TT-BTC, which is used by organizations, households or individuals for commercial purposes.

2. Principles of tax exemption and reduction in Vietnam

Article 9 of Circular 153/2011/TT-BTC stipulating the principles of tax exemption and reduction as follows:

- Tax exemption and reduction will only apply directly to taxpayers and be calculated based on the lax amounts payable under the Law on Non-Agricultural Land Use Tax and Circular 153/2011/TT-BTC.

- Tax exemption and reduction for residential land shall apply only to residential land registered under the name of taxpayers in a locality chosen by themselves, except the cases specified in Clause 9, Article 10, and Clause 4, Article 11 of Circular 153/2011/TT-BTC.

- A taxpayer that is eligible for both tax exemption and reduction for a single land plot may enjoy tax exemption. A taxpayer eligible for tax reduction under two or more conditions specified in Article 11 of Circular 153/2011/TT-BTC may enjoy tax exemption.

In case both the taxpayer and at least one member of his/her household are eligible for a 50% reduction of tax each, the taxpayer's household may enjoy tax exemption.

These persons must have grandparent-grandchild or parent-child relations and be named in the household's permanent residence registration book.

- A taxpayer that has many investment projects eligible for tax exemption or reduction may enjoy tax exemption or reduction for each investment project.

3. Cases of non-agricultural land use tax reduction in Vietnam

Article 11 of Circular 153/2011/TT-BTC stipulates tax reduction as follows:

- To reduce payable tax amounts by 50% in the following cases:

+ Land of investment projects in the sectors eligible for investment promotion; investment projects in geographical areas with socio­economic difficulties;

Land of enterprises with between 20% and 50% of their employees being war invalids or diseased soldiers.

Lists of sectors eligible for investment promotion (investment incentives); sectors eligible for special investment promotion (special investment incentives); areas with socio-economic difficulties: and areas with extreme socio-economic difficulties comply with the investment law.

Employees being war invalids or diseased soldiers must be regularly employed in the year as specified in Circular 40/2009/TT-BLDTBXH

+ Within-quota residential land in geographical areas with socio-economic difficulties.

+ Within-quota residential land of war invalids of 3/4 or 4/4 grade;

Persons enjoying policies like war invalids of 3/4 or 4/4 grade;

Ssick soldiers of 2/3 or 3/3 grade;

Martyrs' children enjoying monthly allowances,

+ Taxpayers facing difficulties due to force majeure circumstances, provided the value of damage related to their land and houses on land accounts for between 20% and 50% of the taxable price.

In this cases, certification of commune-level People's Committees of the localities where exists such land is required.

Ngoc Nhi

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