A Proposal to Reduce Land Use Fees for Residential Purposes

Ho Chi Minh City Real Estate Association (HoREA) provides feedback on the draft amendment decree, adding and modifying several clauses in the Government’s Decree No. 103, which regulates land use fees and land rent.

HoREA proposes two options for consideration: “Option 1” suggests retaining and amending Clause 2, Article 1 of the draft amendment decree, which modifies Clause 1, Article 8 of Decree No. 103. “Option 2” involves drafting a Government resolution that authorizes setting lower land use fees for areas within the residential land allowance and higher fees for areas exceeding the allowance when households and individuals are granted permission for land use purpose conversion to residential, land use right recognition, or land use extension.

HoREA prefers “Option 2” as it aligns with Article 14, Clause 2 of the Law on Promulgation of Legal Documents, which allows the Government to issue resolutions to address urgent and important issues arising from practical situations for a specified period.

However, HoREA suggests that the implementation of the Government resolution should be accompanied by amendments to Article 159, Clause 1, Point a of the 2024 Land Law as proposed in “Option 1,” ensuring that the resolution remains effective until the amended Land Law comes into force. After that, the relevant content will be detailed in a decree.

HoREA also notes that “Option 2,” which involves the Government resolution delegating the provincial level to set land use fees, may result in inconsistencies and significant discrepancies in fee calculations across localities. This could lead to issues with uniform application of the law nationwide, potential revenue shortfalls, and complaints, especially in areas bordering different provinces.

To address this, HoREA recommends that the Government resolution specify a 20% reduction in land use fees for areas within the residential land allowance and a 30% increase for areas exceeding the allowance. This ensures a consistent approach while accounting for variations in land prices across localities, as reflected in the current land price tables, which have increased significantly compared to the past.

Additionally, considering the expected ability to adjust land prices using a “land price adjustment coefficient” as per the draft Law on Amending and Supplementing a Number of Articles of the Land Law, HoREA suggests that the Government resolution take this into account when determining land use fees for households and individuals.

Finally, HoREA proposes that if the Government opts for “Option 2” and issues a resolution amending Clause 1, Article 8 of Decree No. 103 regarding land use fees for converting agricultural land or non-residential land to residential land, the decree should include a transitional provision authorizing the provincial People’s Committees to refund the difference in fees already paid by households and individuals.