Escalating Land Tax Arrears in Hanoi
The Economic and Budget Committee of the Hanoi People’s Council revealed that from 2021 to 2023, the city witnessed a year-on-year increase in arrears to the state budget. Notably, land-related tax debts accounted for over 50% of the total annual arrears. For instance, in 2021, land tax arrears amounted to VND 11,840 billion, nearly 56% of the total debt. This figure rose to VND 13,545 billion in 2022, constituting almost 58% of the total, and further climbed to nearly VND 15,470 billion in 2023, making up close to 54% of the total debt.
For three consecutive years since 2021, land tax arrears have surged and accounted for over 50% of Hanoi’s state budget arrears. Pictured: The National Sports Complex owes VND 895 billion but is unable to pay.
The Economic and Budget Committee also pointed out the factors contributing to the accumulation of land tax debts. Specifically, some large entities owe significant amounts but lack the financial capacity to pay, such as the National Sports Complex with VND 895 billion in debt, the Vietnam Shipbuilding Industry Corporation with VND 173 billion, the Vietnam Railways Corporation with VND 484 billion, and Asia Company with VND 617 billion.
Additionally, 24 projects that were allocated land with collection of land use levies have outstanding land tax debts totaling approximately VND 2,800 billion. There is also an additional debt of over VND 4,000 billion awaiting processing related to land financial obligations, accounting for 26% of the total tax arrears.
Furthermore, addressing these debts awaiting processing is crucial to reducing Hanoi’s overall debt. Currently, most of these debts involve land-related financial obligations handled by various departments and sectors, with many cases lingering for years without a definitive resolution.
According to the Economic and Budget Committee, there is a lack of suitable measures to urge enterprises with long-standing land tax arrears to settle their debts, as many of these businesses have lost their payment capacity. Presently, numerous companies exhibit no production or business activities, rendering enforcement measures ineffective, and resulting in substantial late payment charges.
Implementing the conclusions of inspections and audits is also challenging in certain cases, such as with bankrupt or investigated enterprises that are incapable of settling their debts.
The committee identified several causes for this situation, including a lack of firmness and initiative in determining, managing, and urging the recovery of debts.
Another factor is the untimely resolution and progress update of taxpayers’ proposals and difficulties, with some cases lingering for years without a conclusive resolution, especially in determining and reviewing land use fees.
Notable cases include Vinaland Real Estate Investment Joint Stock Company and VNT Limited Company, which are implementing the project of a park and lake regulation in the Southwest Hanoi urban area.
Unveiling Major Tax-Debt Projects Awaiting Processing
To address this situation, the Economic and Budget Committee proposed that the Hanoi People’s Committee and the Steering Committee for Urging the Collection of Arrears of Taxes, Land Use Fees, and Land Rentals direct the departments and sectors to closely coordinate with the Hanoi Tax Department in urging the collection of tax and fee arrears.
They also recommended strengthening inspections and handling of cases that intentionally violate and delay the payment of taxes and fees. Additionally, they suggested continuing to review projects with financial obligations related to land and promptly resolving them according to their authority.
Phu Luong New Urban Area (Ha Dong District) is among the projects with large tax debts awaiting processing.
Simultaneously, they proposed reviewing and imposing sanctions on cases of deliberate misuse of land, delayed implementation, and intentional delay in fulfilling financial obligations to the state budget.
In situations where investors lack the financial capacity to continue with their projects, the committee recommended resolutely revoking the projects, land allocation decisions, and land leases. They suggested transitioning to auctions or bidding to select capable investors, thereby preventing land resource wastage and budget revenue losses.
Furthermore, they advised directing relevant agencies to review and resolve the proposals of the tax authority during the supervision process.
Notable cases with substantial tax debts include: Investment and Construction Joint Stock Company Trung Viet, representing the investor consortium of the Phu Luong New Urban Area project (Ha Dong); Vinaland Real Estate Investment Joint Stock Company with the Dreamland Plaza mixed-use building project; Investment and Development Corporation 18 with the project of high-rise apartments and housing for workers in industrial parks;
Stone Table Lakeside Real Estate Company Limited with the Stone Table Lakeside Housing Project; Huanghe Construction Engineering Company Limited with the 2.5-road project from Dam Hong to National Highway 1A in the form of BT; and Lam Son Company Limited with the Phu Lam high-end commercial, service, office, and residential complex project.
