Implementing a 3.6%/Year Levy on Additional Land Use Fees

Decree 291, recently issued by the Government, amends and supplements certain provisions of Decree 103 regarding land use fees and land rental fees. The decree takes effect from November 6, 2025.

In cases where a land lease decision has been made, or there is a change in land use purpose, conversion from annual land rental to a one-time payment for the entire lease period, land use extension, adjustment of land use duration, or detailed planning adjustments for projects as per land laws and related regulations before the 2024 Land Law takes effect, but the land price for calculating rental fees has not been determined, the fee is calculated at 3.6%/year on the payable land rental amount, depending on the specific case.

The period for which land use fees have not been calculated starts from the time they should have been calculated until the 8th working day after the land price decision for fee calculation is issued.

If the land price for calculating land use fees is determined using the land price adjustment factor method, the period for which land use fees have not been calculated starts from the time they should have been calculated until the 8th working day after the land price decision for fee calculation is issued.

For land prices calculated using direct comparison, deduction, or residual methods, the period for which land use fees have not been calculated starts from the time they should have been calculated until the 8th working day after the land price decision for fee calculation is issued.

After deducting the maximum time, state agencies must complete the determination of specific land prices for calculating land use fees within 180 days.

Decree 291 also stipulates that if additional land use fees have been paid under Decree 103, they will be recalculated according to this new decree. If there is an increase between the recalculated amount and the amount already paid, the land user must pay the difference.

If the recalculated additional payment is less than what has already been paid, the difference will be refunded by deducting it from land use fees, land rental fees, or other financial obligations as per tax regulations.

If there are no other financial obligations to deduct from, the refund will be made in cash according to state budget laws or other relevant regulations.

Previously, in the draft amendment to Decree 103 on land use fees and land rental fees, the Ministry of Finance proposed maintaining the additional fee at 5.4% per year for unpaid land amounts.

Experts argue that the provision for provisional additional land use fees is unreasonable and could create significant challenges for real estate businesses.

According to Dr. Nguyễn Văn Đính, Chairman of the Vietnam Real Estate Brokerage Association (VARS), many businesses with projects are unable to proceed due to delays in calculating land use fees. Numerous completed projects cannot be sold as they await financial obligation fulfillment. The risks associated with rising land use fees are substantial.

Moreover, projects delayed for years or even decades before land use fees are calculated incur additional costs for businesses. During the pricing wait, companies bear interest expenses and opportunity costs.

Particularly, for projects previously subject to provisional land use fee calculations, businesses face significant challenges with higher-than-expected additional payments, risking losses. Many companies have struggled to meet financial obligations due to unforeseen increases in land use fees.

Land use fees constitute a major portion of real estate costs. When costs arise, developers may adjust property prices upward. Currently, real estate prices in major cities, especially Hanoi, have consistently reached new highs.

“If housing prices continue to rise, accessing homes may become increasingly difficult for most people, leading to social welfare consequences,” warned Mr. Đính.