Many businesses expressed their opinions on the new land price list at the 79th HUBA Entrepreneur Cafe program organized by the Ho Chi Minh City Business Association (HUBA) on the morning of November 9, 2024.
ANNUAL LAND PRICES MAY INCREASE
According to Mr. To Ngoc Ngoi, Director of Saigon Import-Export Forest Products Joint Stock Company, the application of the new land price list will significantly increase land rental costs for businesses.
“My company rents a plot of land on Truong Dinh Street (Vo Thi Sau, District 3) as an office, with an area of 1,235 sq. m. According to the old land price list, the annual land rent the company has to pay to Ho Chi Minh City is more than VND 4.246 billion/year. According to the regulations of the new land price list, the company has to pay more than VND 6.103 billion, an increase of more than 30%. This is truly a change beyond the endurance of our company…”, said Mr. Ngoi.
Mr. Ngoi also proposed a reasonable adjustment roadmap to help businesses adapt and avoid a “shock”. Besides, the time of application of the adjustment needs to be calculated so that enterprises have enough time to adjust their contracts.
Mr. Nguyen Ngoc Hoa, Chairman of HUBA, stated that the proposed method of calculating the land rent price could increase the rent significantly. According to the new calculation method, the price of land for production and business purposes other than agricultural land will increase by 35-50%, and the price of land for commercial and service purposes will increase by 18-53%. This causes difficulties for businesses in their production and business activities and affects the city’s investment attraction.
Mr. Tran Van Muoi, Chairman of Nhan Muoi Real Estate Company, said that his company and its partners are considering implementing a project in Area 103 (Thanh My Loi, Thu Duc City, Ho Chi Minh City). Previously, land prices in this area fluctuated around VND 7 million/sq. m, but according to the new land price list, the price has soared to VND 84 million/sq. m. With enterprises still facing many difficulties, the adjustment of the new land price list will make it even harder for them…
Concerned about determining the time of application of the new land price list for industrial parks, Mr. Tran Ngoc Dung, Director of An Thien Pharmaceutical Joint Stock Company, said that his company is renting land under a contract that allows for a one-time payment for a 50-year period, starting from 2013, which is different from enterprises that make annual land rent payments.
However, from 2017 to 2018, many enterprises wanted to invest and pay land rent but could not finish the process and did not receive land-use certificates.
“So, will enterprises like ours, renting non-agricultural land and production land in industrial parks as mentioned above, be retrospectively applied according to the new land price list?” Mr. Dung asked.
Regarding land prices in industrial parks and export processing zones, Ms. Bui Thi Nu, Chief of Office of Ho Chi Minh City’s Industrial Parks and Export Processing Zones Authority (HEPZA), said that there are currently 17 industrial parks and export processing zones in Ho Chi Minh City, of which 6 have completed their financial obligations and are not affected by the new land price list. However, the remaining 11 have to pay annual land rent, with contracts signed at different stages and with different agreed policies.
Specifically, there are annual land rent contracts in which the land rent price is stable for 5 years, and each adjustment is not more than 15%. However, some areas could not agree on this policy and are still affected by the new land price list.
“Enterprises are concerned about the annual land price. Currently, we are registering at the rate of 0.25%-0.3%. We have proposed to ensure that the new land price does not affect enterprises,” said Ms. Nu.
TEMPORARILY NO MAJOR IMPACT ON REAL ESTATE
Commenting on the new land price list in Ho Chi Minh City and its impact on the real estate market, Mr. Dao Quang Duong, Deputy Head of the Land Economy Department of the Ho Chi Minh City Department of Natural Resources and Environment, affirmed that the new land price list does not affect business costs, site clearance costs, etc.
Up to now, land costs have been operating under a mechanism where enterprises negotiate with people according to market prices. Land prices follow the law of supply and demand. Therefore, in theory, real estate is not affected.
Mr. Duong said that the new land price list in Ho Chi Minh City is only equivalent to 60% of the market price.
However, for manufacturing and trading enterprises, there will be an impact in two aspects: tax on non-agricultural land use and land rent when the State leases land and collects money annually.
First, regarding the tax on non-agricultural land use, Mr. Duong said that it would affect the input costs of production and business activities with the current rate of 0.15%/year. This rate will be applied for 5 years according to the Law on Tax on Non-Agricultural Land Use 2012.
Because the tax cycle has not ended, this rate will remain unchanged until the end of 2027, so it will not have a strong impact on enterprises during this period.
Second, regarding annual land rent, when the land price list increases, the tax increases, and the ground rent also increases, directly affecting enterprises.
Specifically, Annual Land Rent = Percentage (%) of Land Rent Calculation (x) Land Price for Land Rent Calculation (where the percentage (%) of land rent calculation per year is currently between 0.25%-3%).
According to the new regulations of the 2024 Land Law, the People’s Committee of the provincial level will adjust the land rent rate to suit the actual conditions of the locality.
Ho Chi Minh City Department of Finance is currently drafting a proposal to apply a new rate of 0.25%-1% (a 50% reduction compared to the current rate). The goal is to ensure that the price of commercial land does not increase too much, helping enterprises not to face strong fluctuations in costs.
Regarding land-related dossiers submitted to the tax agency, Mr. Giang Van Hien, Deputy Director of Ho Chi Minh City Tax Department, said that Decision 79 on the new land price list was issued by the People’s Committee of Ho Chi Minh City on October 21, 2024, and took effect on October 31, 2024. Therefore, in the last 10 days, the tax agency has handled more than 16,000 dossiers of enterprises and individuals. The dossiers that were successfully handled during this period were applied with the old land price list. Land-related dossiers submitted after October 31, 2024, will be calculated according to the new land price list.
Since the decision to issue the new land price list was made, the Ho Chi Minh City Tax Department has not received any proposals or questions from enterprises or individuals.
In response to the question about the case where the enterprise has paid the land use tax but only received a paper stating “Temporary Receipt”, how will the land price be calculated when applying for a red book (land-use certificate)?
According to Mr. Giang Van Hien, Deputy Director of Ho Chi Minh City Tax Department, in principle, if the amounts are temporarily received, the tax agency cannot determine the completion of the tax payment obligation. The tax agency will calculate the collection of land use fees at the time when the enterprise has sufficient conditions for collection, and it is only then considered to have completed the tax payment obligation. If there is a discrepancy, the enterprise must make a supplementary payment. For specific cases of each enterprise, they should contact the Ho Chi Minh City Tax Department for accurate calculations. The tax agency will apply the new land price according to Decision 79 from October 31, 2024; before that, the old price will be applied.
Pursuing Criminal Charges Against Former Chairman of Binh Thuan People’s Committee Le Tien Phuong and 16 Other Accused Individuals
Former Binh Thuan People’s Committee Chairman Le Tien Phuong and several other former provincial leaders have been indicted in a case related to the Phan Thiet Beach Tourism Urban Area project.
The Tax Department’s New Update: “No More Land-Related Documents Accepted After Today in Ho Chi Minh City”
By the end of October 30th, the tax department in Ho Chi Minh City will lock their books and cease accepting applications for financial obligations related to land matters via their electronic inter-agency system.
Enhancing Trade Defense Capabilities
Enhancing trade defense capabilities and understanding the use of trade defense measures is an essential and inevitable trend to protect the legitimate interests of businesses.
The New Big Player in Danang’s Land Market: Who is the Mystery Investor?
Danang leads the way in land consumption, accounting for a staggering 71% of primary consumption, according to DKRA Consulting’s August 2024 report.
Tax Talk: Engaging in Policy Dialogues with Businesses Across Five Provinces and Cities
Dialogue is a vital “channel” for the tax industry to listen and absorb practical reflections on the current tax policies that are not yet reasonable. This process enables the industry to make appropriate recommendations and amendments.
