New Regulations on Land Rent Exemptions and Reductions Proposed
|
The Ministry of Finance has outlined the principles for land rent exemptions and reductions in a new Decree. The 2024 Land Law does not provide specific definitions for land rent exemptions and reductions. However, throughout the drafting process and in the provisions governing cases requiring land use rights auctions and tenders, the principle is consistently applied: A land rent exemption means the land user is not required to pay rent for the entire lease term, while a reduction means they are not required to pay a specific amount of the rent due, calculated as a percentage.
Therefore, Articles 39 and 40 of the draft Decree on land rent exemptions and reductions are based on the following principles: (i) A land rent exemption means the land user is not required to pay rent for the entire lease term; (ii) A land rent reduction means the land user is not required to pay a specific amount of the rent due, calculated as a percentage.
Regarding land rent exemptions: Articles 157(1) and (2) of the 2024 Land Law specify the cases eligible for land use fee and land rent exemptions and reductions. They also authorize the Government to specify additional cases eligible for such benefits after obtaining the approval of the National Assembly Standing Committee. Accordingly, the Draft Decree defines specific cases for land rent exemptions and outlines the levels of rent reductions for priority investment sectors and locations as per the Investment Law. These are generally consistent with the current provisions of Decree 46/2014/NĐ-CP (amended and supplemented by Decrees 135/2016/NĐ-CP and 123/2017/NĐ-CP).
Article 157 of the 2024 Land Law only provides for land use fee and land rent exemptions and reductions for land used for production and business activities in priority investment sectors or locations (without distinguishing between socialized sectors as in the 2013 Land Law). Therefore, Articles 39 and 40 of the draft Decree only contain general provisions on the levels of land use fee and land rent exemptions for projects in priority investment sectors and locations, without creating separate incentives for projects using land to build public works for business purposes (socialization).
Furthermore, Clause 6 of Article 50 sets out transitional provisions for land use fees, while Clause 14 of Article 51 provides transitional provisions for land rent collection. These provisions abolish the preferential treatment of land rent exemptions and reductions for projects in the social sector, as stipulated in Government Decrees 69/2008/NĐ-CP dated May 30, 2008 and 59/2014/NĐ-CP dated June 16, 2014.
Procedures for Exemptions and Reductions
Regarding the procedures for exemptions and reductions: Clause 3 of Article 157 of the 2024 Land Law stipulates that in cases where land use fees or land rents are exempted, it is not necessary to conduct land valuation or calculate the exempted amounts. Land users who are granted land use fee or land rent exemptions are not required to submit applications for such exemptions.
To ensure proper monitoring of compliance with the conditions for land use fee and land rent exemptions, prevent ineligible entities from receiving exemptions, and minimize revenue losses for the state budget, the draft Decree states that land use fee and land rent exemptions must be included in the land lease decision. It also assigns responsibilities to: (i) Tax authorities for calculating the amount of land use fees and land rents to be reduced and submitting it to the People’s Committee of the same level for a decision on the recovery of the reduced land use fees; (ii) Natural resources and environment authorities for compiling and summarizing cases of land rent exemptions. During the implementation process, natural resources and environment authorities will periodically inspect and review cases to ensure compliance with the conditions for land rent exemptions. If they discover that a party that has been granted a land rent exemption no longer meets the eligibility criteria, they must report it to the People’s Committee of the same level, which will make a decision to revoke the exemption and notify the tax authorities to coordinate in calculating, collecting, and paying the land rent due (without any exemption), in accordance with the policies and land prices at the time of the land lease decision, plus any late payment interest as prescribed by tax regulations.
