The Environment and Natural Resources Ministry: The Old K-Factor Remains Relevant

Only Ho Chi Minh City has halted procedures, while other provinces continue to process land-related applications

Ho Chi Minh City was expected to issue a new land price framework on August 1, but as only six steps have been completed, it has not yet been implemented. However, the city has temporarily halted related administrative procedures, while other provinces continue to process land-related applications, including those for change of land use purpose.

Specifically, Binh Duong province is still applying the land price adjustment coefficient (K coefficient) that took effect on January 1, 2024, instead of the 2023 land price framework. Land prices in 2024 are 15-30% higher than in 2023, depending on the area and location.

With regard to the 2024 Land Law, which took effect on August 1, the Binh Duong Department of Natural Resources and Environment is in the process of completing the necessary legal procedures. Currently, the tax authority in Binh Duong continues to calculate land use fees based on land prices issued on January 1, 2024, unaffected by the 2024 Land Law. Therefore, all applications are being processed without accumulation. The processing of administrative procedures related to land, including applications for change of land use purpose, has slightly increased compared to the same period last year, but the increase is not significant.

The leader of the Binh Duong Tax Department also affirmed that the locality is applying land use fee calculations based on Decision 36/2020 of the Provincial People’s Committee, using the current land price framework without any changes.

Mr. Nguyen Ngoc Thuong, Deputy Director of the Dong Nai Department of Natural Resources and Environment, said that Dong Nai’s land price framework is being formulated in accordance with the old Land Law and is still in effect, with no adjustments made so far.

According to regulations, the land price adjustment coefficient can be applied until December 31, 2025. Therefore, the Dong Nai Department of Natural Resources and Environment is advising the Provincial People’s Committee to direct the adjustment and supplementation of some newly opened or upgraded roads. Specifically, the prices of land in the high-tech industrial park in Cam My district need to be adjusted, as the infrastructure has been completed. In addition, some road names that were previously surveyed incorrectly will be amended to comply with regulations.

Under the 2024 Land Law, the land price framework must include prices for resettlement areas. Therefore, Dong Nai province will issue land prices for some resettlement areas to promptly serve compensation, support, and resettlement work.

“Regarding land price fluctuations, there have been very few land transactions before or after August 1. This year, Dong Nai has seen little fluctuation in land-related applications, including those for change of land use purpose,” said Mr. Thuong.

In Binh Thuan province, Mr. Phan The Hanh, Director of the Provincial Department of Finance, said that Binh Thuan is still calculating land use fees based on the land price framework issued on January 1, 2024. If there are any changes, they will take effect from January 1, 2025.

According to the Binh Thuan Tax Department, land use fee collection in the first six months of the year reached only VND 315 billion, equivalent to 26.2% of the estimate (VND 1,200 billion), mainly from land use fees of households and individuals.

In Hanoi, a new K coefficient has been applied since July 29 in accordance with Decision No. 45/2024/QD-UBND. Meanwhile, the leaders of the Departments of Natural Resources and Environment in the Mekong Delta provinces of Dong Thap, An Giang, Vinh Long, Soc Trang, Hau Giang, and Tra Vinh, among others, said that they are still applying the old K coefficient, with no changes so far.

To be applied until the end of 2025

Mr. Dao Trung Chinh, Director of the Department of Land Planning and Development under the Ministry of Natural Resources and Environment, affirmed that the 2024 Land Law allows the current land price framework issued by the provincial People’s Committees to continue to be applied until December 31, 2025. If this framework is applied, localities can still use the K coefficient to address specific cases.

According to Mr. Chinh, the 2024 Land Law does not prohibit provinces from using the old land price framework to calculate land use fees, including for applications for change of land use purpose.

However, in Ho Chi Minh City, since the beginning of August, the tax authorities in the districts, Thu Duc City, and Ho Chi Minh City have only determined financial obligations for applications transferred to the tax authorities before July 31. For applications transferred from August 1 (the effective date of the 2024 Land Law) onwards, the tax authorities are awaiting guidance from the Ho Chi Minh City Tax Department.

The reason given by the tax authorities in the districts, Thu Duc City, and Ho Chi Minh City is that the 2024 Land Law has abolished the land price framework and the land price adjustment coefficient (K coefficient), and now only refers to the land price framework to calculate land use fees. Without the K coefficient, the tax authorities cannot base the calculation of land use fees on the 2020 land price framework. Meanwhile, Decree 103 on land use fees and land rent in accordance with the new Land Law took effect on August 1, but the adjusted price framework has not yet been issued. Therefore, the district tax departments are waiting for specific guidance from the Ho Chi Minh City Tax Department before determining the financial obligations for applications for change of land use purpose.

According to lawyer Tran Duc Phuong, from the Ho Chi Minh City Bar Association, the land price framework with the K coefficient adjustment, issued under Decision 02/2020/QD-UBND dated January 16, 2020, by the Ho Chi Minh City People’s Committee, is valid until December 31, 2024. Of course, this decision remains valid until a new land price framework is issued and the K coefficient is removed.

“Article 257.1 of the 2024 Land Law allows localities to apply the old land prices until December 31, 2025, or adjust the land price framework depending on the actual situation. Thus, when Ho Chi Minh City’s adjusted land price framework has not been issued, the old land price framework remains valid until December 31, 2025,” said lawyer Phuong.

Many experts also said that the K coefficient will only be removed when a new land price framework or an adjusted land price framework that reflects market prices is issued. Currently, other provinces have not formulated a new land price framework or an adjusted land price framework, so they are still applying the old land prices and the K coefficient in accordance with Article 257.1 of the 2024 Land Law, and are processing land-related applications as usual. Does this mean that these provinces are suffering tax losses, and that Article 257.1 of the 2024 Land Law, which allows the application of old land prices until December 31, 2025, is incorrect?