Land use fees are in dire need of a transparent formula
Mr. Nguyen Van T., representing a prominent real estate company in Hai Duong, shared his concerns: “We are willing to pay taxes and fees as regulated, but the challenge lies in the lack of a clear formula for land use fees. The process of land price determination often takes months, hindering project progress and increasing financial costs and risks.”
According to Mr. T, this situation not only delays project implementation but also drives up housing prices, making them unaffordable for most people.
An investor in a large urban project in Phu Tho province shared: “I feel like land use fees are floating. I have a project of several hundred hectares, and the land was allocated in different phases. The land use fee for Phase 1 was calculated, but Phase 2’s fee was multiple times higher, leaving us stunned. With such high land use fees, completing the project and keeping prices competitive is a daunting task.”
In Phase 1, the land use fee was temporarily set at VND 12 million/m2, but it soared to VND 60 million/m2 in Phase 2, bewildering the investor.
Dr. Nguyen Van Dinh, Chairman of the Vietnam Real Estate Brokers Association, stated that many companies with projects are unable to proceed due to bottlenecks in land use fee calculations. Numerous completed projects cannot be sold as they await the fulfillment of financial obligations. The risks associated with high land use fees are ever-present.
Moreover, when a project extends for many years, even decades, before the land use fee is determined, it increases the costs for businesses. During the waiting period, companies must bear interest expenses and opportunity costs.
Notably, for projects that were temporarily calculated for land use fees in the past, businesses continue to face significant challenges regarding additional payments, which exceed initial estimates, leading to potential losses. In the past, several companies have failed to fulfill their financial obligations due to unforeseen increases in land use fees.
Businesses struggle with high land use fees.
Land use fees constitute a significant portion of real estate costs. When expenses arise, developers have no choice but to consider adjusting property prices upward. Meanwhile, in major cities, especially Hanoi, real estate prices have consistently reached new highs.
The regulation on supplementary land use fee payments needs revision
On May 26, 2025, the Ministry of Finance announced a draft decree amending and supplementing several articles of Decree No. 103/2024/ND-CP dated July 30, 2024, on land use and land rental fees and Decree No. 104/2024/ND-CP dated July 31, 2024, on the Land Development Fund.
The draft retains the provision that cases with decisions on land allocation, land lease, land use purpose conversion, conversion from land lease payment by annual rent to one-time payment, detailed planning adjustment, etc., but without land price decisions, must pay supplements for the period without land use or land rental fees. The collection rate is 5.4%/year calculated on the amount to be paid.
Sharing his opinion on supplementary land use fees, Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association, stated that the regulation on supplementary land use fee payments is not entirely reasonable for businesses, especially in cases where businesses “agree to acquire land use rights” to implement investment projects. The reason is that real estate and commercial housing investors are not at fault when government agencies have not issued land price decisions or presented price plans to the People’s Committees with competent authority.
“Recently, a real estate investor in Thu Duc was stunned to receive a notice that the land use fee for their project exceeded VND 300 billion. Meanwhile, a unit previously appraised the land use fee to be over VND 50 billion. As they needed money for business operations, the investor had sold some products to customers based on prices calculated on the temporarily estimated land price,” Mr. Chau illustrated.
Currently, the cost of land use fees has increased by more than five times. This predicament leaves the investor in a difficult position: selling at the old price would result in a significant loss, while increasing the price to ensure profitability would make the selling price uncompetitive in the market.
Therefore, legal experts propose amending “Point d, Clause 2, Article 257” to exclude the supplementary payment for the period without land price determination. This amendment is crucial as it reduces businesses’ expenses and prevents real estate price hikes.
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“The proposal for an additional land use fee of 5.4% annually is utterly unreasonable and poses a significant challenge for businesses. This additional fee could potentially result in a double loss for companies, leaving them vulnerable to the burden of compounded taxes.”
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“Resolution 68/TW aims to safeguard small and medium-sized enterprises from being ousted from their own turf. The resolution addresses the misuse of policies and the distortion of mechanisms, which could otherwise threaten the very existence of these businesses.”
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“The recent regulation mandating supplementary land-use fee payments has been deemed unreasonable by experts. They argue that delays in land price determination are often due to bureaucratic lag rather than enterprise inaction. This discrepancy highlights the need for a more nuanced approach that considers the complexities involved in land valuation and enterprise operations.”
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“Land use fees are invariably a significant burden for businesses investing in and developing real estate projects. Even after paying these fees, businesses often face unforeseen risks.”
