Procedures for land lease rent exemption and reduction in Vietnam

Procedures for land lease rent exemption and reduction in Vietnam (Image from the Internet)

1. Procedures for land lease rent exemption and reduction in Vietnam

Procedures for land lease rent exemption and reduction in Vietnam according to Article 41 of Decree 103/2024/ND-CP are as follows:

- In cases where land lease rent is exempted, no procedures are required to determine land prices or calculate exempted land lease rent in accordance with Clause 3, Article 157 of the Land Law 2024. Land users eligible for land lease rent exemption do not need to perform any procedures to request the exemption.

- In cases of land lease rent reduction, based on the land lease documentation of the lessee provided by the Land Registration Office or the land management authority, the tax authority calculates the payable land lease rent, the reduced land lease rent, and issues a decision on land lease rent reduction; To be specific:

+ The Director of the Tax Department issues the decision on land lease rent reduction for domestic organizations, overseas Vietnamese, and foreign-invested organizations.

+ The Head of Tax Sub-Department or Regional Tax Sub-Department issues the decision on land lease rent reduction for households and individuals.

The decision on land lease rent reduction is implemented according to Form No. 02 in Appendix II issued together with Decree 103/2024/ND-CP.

2. Principles of implementing land lease rent exemption and reduction in Vietnam

The principles of implementing land lease rent exemption and reduction in Vietnam according to Article 38 of Decree 103/2024/ND-CP are as follows:

* Land lease recipients must perform procedures to receive rent reduction according to regulations:

- In cases where subjects are eligible for rent reduction but the recipients of land lease from the State do not perform procedures for rent reduction, they must pay land lease rent according to the law. If there is a delay in performing procedures to receive rent reduction, the land user is only granted rent reduction for the remaining preferential rent reduction period starting from the time proper procedures are completed; any time delayed will not be subject to rent reduction.

- If at the time of performing procedures for land lease rent reduction, the eligible period for rent reduction has expired according to Article 40 of Decree 103/2024/ND-CP, the land user will not receive the rent reduction.

* If land users are eligible for both rent exemption and reduction as per this Decree or other relevant legal documents, they will receive rent exemption. If they are eligible for several levels of reduction stated in Decree 103/2024/ND-CP and other legal documents, they will receive the highest reduction level.

* Rent exemption and reduction according to Articles 39 and 40 of Decree 103/2024/ND-CP are implemented based on each investment project and directly apply to the recipients of land lease from the State and are calculated on the amount of land lease rent unless governed by Article 157 of the Land Law 2024 but not requiring project investment. Land users must submit documents proving their eligibility for rent reduction as per legal regulations.

* If land users enjoy preferential rent exemption or reduction higher than the stipulations in this Decree, they will continue to enjoy the preferential rate for the remaining period; if the preferential rate is lower than the stipulations in Decree 103/2024/ND-CP, they will enjoy the rate stipulated in this Decree for the remaining preferential duration from the effective date of Decree 103/2024/ND-CP. If the preferential duration has expired as of the effective date of Decree 103/2024/ND-CP, no further preferential treatment will apply.

In cases where the land lease rent calculation date precedes the effective date of Decree 103/2024/ND-CP but renters perform procedures post-enforcement, rent reduction and other regulations of Decree 103/2024/ND-CP will apply.

* For one-time paid land lease where rent was exempted but the lessee wishes to pay annual rent within the lease period, one-time payment for the remaining lease period will follow regulations in Clause 2, Article 30 of Decree 103/2024/ND-CP, reflecting current policies and land prices at the time of application submission accepted by competent authorities. Land use rights will align with said payment.

* For annually paid land lease rent with ongoing preferential treatment, transferring property tied to the leased land continues under preferential terms if usage remains unchanged:

- Transferors cannot include exempted/reduced rent in sale prices.- Transferees continue to enjoy remaining preferential rent terms. If applicable, no procedure is required for the rent reduction.

* For one-time paid land leases under exempted/reduced rent where the project is transferred, invested as capital in land use rights, or linked to investment project transfers:

- Written permission from the competent authority and payment for previous exempted/reduced periods are required, calculated according to Clause 3(b), Article 33 of the Land Law 2024 and additional back due amounts reflecting delayed land levy rates as per tax management laws over specific periods.

Procedures for calculating previously exempted rent follow Clause 2, Article 30, and Article 34, of Decree 103/2024/ND-CP, reflecting then-applicable policies and land cost.

- For transferring investment projects under one-time paid leases with exempted/reduced rent following regulatory approval:

+ If exempted/reduced rent is not included in transfer price and the project continues, the transferee continues to enjoy rent exemption/reduction per investment laws for the remaining project period. If applicable, no procedure is required for rent reduction.

+ If the transferee switches the project approved by disciplines, rent payment applies to post-transfer projects. Partially fulfilled rent obligations are inherited by the recipient.

- For annually paid land leases within preferential periods under operational restructures or corporatization:

+ Post-restructure/corporatization entities continue enjoying remaining preferential rent terms if consistent with sanctioned land usage.

- If a competent authority identifies non-conforming entities under preferential rent reduction conditions, or non-compliant land use not warranting land retrieval under land regulations or upon voluntary waiver requests:

+ Recover previously exempted/reduced rent, calculated with relevant factors per Clause 3, Article 155 of the Land Law 2024 and attached late land levy amounts per tax laws over specified periods.

+ Computation periods for late amounts per Point a, Clause 9, Article 38 of Decree 103/2024/ND-CP start from exemption/reduction times till authoritative rent recovery decisions;

+ Tax authorities handle exempted/reduced rent recovery.

- Rent exemption/reduction does not apply to commercial land utilization under Clauses 2, 3, and 4, Article 39, and Clause 1(d), Article 40 of Decree 103/2024/ND-CP. Auction-based government land leases are also excluded.

- Exemptions/reductions under investment law do not apply to investment projects producing taxed goods/services under the Law on Special Consumption Tax 2008, except for automobile, aircraft, and yacht manufacturing projects.

- Exemptions/reductions do not apply to mineral resource exploitation projects.

- Lists of preferential investment sectors; special investment incentives sectors, and zones with difficult socio-economic conditions are according to Articles 39 and 40 of Decree 103/2024/ND-CP and investment laws.

List of zones enjoying land lease preferential rates applies to specific administrative zones (district levels).

- Housing development projects specifically for rental and renovation/reconstruction projects for apartment buildings follow housing laws.

- Based on local conditions, provincial People's Committees present rent exemption policies per zones/sectors for investment projects following preferential investment zone/sector listings or as approved by the Prime Minister of the Government of Vietnam for specific large-scale private investments; non-profit projects.

Incentive guidelines adhere to principles: maximum preferences waive lease rent for the entire period, while minimum preferences align with Clause 3, Article 39 of Decree 103/2024/ND-CP. Rental exemptions are not included in societal service/product pricing.

- Exemptions/reductions for special investment projects follow Prime Minister of Vietnam's Decisions on preferential investment in accordance with Article 20 of the Investment Law 2020 and guiding decrees. Exemption/reduction procedures adhere to Decree 103/2024/ND-CP and relevant laws.

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