The Art of Unlocking Land Use: Navigating Tax Complexities

The parents of N.T.T.H in Hoc Mon district, Ho Chi Minh City, own a plot of agricultural land measuring almost 1,000 sq. m in Xuan Thoi Thuong commune. They wish to change the land’s purpose to residential and divide it among their three children. However, this plan is hindered by the “hanging” planning of the over 300-hectare Xuan Thoi Thuong Industrial Park project.

Numerous hardships

Last year, Chị H. shared the joy of the locals when they learned that the government had decided to remove this industrial park from the city’s industrial park development plan. Her family had endured numerous disadvantages for an extended period, and they had barely finished celebrating the city’s elimination of the planning when they became concerned about rising land prices.

According to Chị H., when compared to the city’s current land price table, which sets the price at VND 780,000/sq. m, the proposed new land price table sets the price at nearly VND 23 million/sq. m. “The plan to change the land’s purpose to residential for my sisters to live independently is impractical because no one has that kind of money. Now the family doesn’t know what to do,” Chị H. said.

Similarly, Mr. N.T.D.’s family owns a 1,000 sq. m plot of agricultural land along National Highway 22. With a large family, he intends to change the land’s purpose so that he can divide it among his children in a few years. However, according to the draft adjusted land price table, his family cannot imagine how they will be able to afford the land use fee if they change the purpose of this land. He is concerned that he will be unable to transfer even a few hundred square meters.

Aside from these cases, during the period from the end of July 2024 to the beginning of August 2024, many people in outlying districts such as Cu Chi, Hoc Mon, Binh Chanh, and Thu Duc went to submit applications for land-use conversion and land-use recognition to take advantage of the land price table set by Decision 02/2020 of the Ho Chi Minh City People’s Committee. However, while the land registration authority accepted the applications for processing, the tax authority temporarily halted the resolution of cases involving financial obligations pending further instructions.

Early guidance

Mr. Nguyen Van Dung, Head of the Democratic and Legal Advisory Board of the Hoc Mon District Fatherland Front Committee, stated that in the past, before the 2024 Land Law took effect, people rushed to declare their land use rights, but their applications were temporarily suspended.

“The land registration authority does not resolve tax payments; they say they are awaiting instructions. If taxes are not paid, the land use certificates will not be granted, of course,” Mr. Dung stated. He also mentioned that his family has been using the land for 24 years, but if the adjusted land price table is applied, they will be unable to do so because they cannot afford it.

Ms. Ung Thi Xuan Huong, Vice President of the Ho Chi Minh City Lawyers Association, also reported that taxpayers’ applications involving financial obligations were not being processed by the tax authority. According to her, this is against regulations, and she has requested that the Department of Natural Resources and Environment investigate and advise the Ho Chi Minh City People’s Committee to issue a directive. “If a new decision is issued and applied, it will not be retroactive because the law states that heavier financial obligations cannot be retroactive… The issuance of legal normative documents takes effect after a period of time, but the tax authority has hastily halted the processing of applications, significantly impacting the rights of the people,” Ms. Huong stated.

Regarding this issue, the leader of the Land Economy Department of the Ho Chi Minh City Department of Natural Resources and Environment stated that the department has proposed and will soon provide guidance to the people.

Response from the tax authority

Speaking to the Nguoi Lao Dong newspaper, a leader of the Ho Chi Minh City Tax Department confirmed that many applications for land-use conversion by Ho Chi Minh City residents are “on hold.” The main reason is that the tax authority is awaiting specific land price guidance from the Ho Chi Minh City People’s Committee.

This is because Article 3 of Clause 277 of the 2024 Land Law, which took effect on August 1, stipulates that the land price proposal submitted to the competent authority before the effective date of this Law shall be decided by the competent authority according to the proposed land price. Meanwhile, the Ho Chi Minh City land management agency has submitted a new land price for approval. As a result, if the tax authority calculates the land use fee based on the old land price, it will be criticized by higher authorities for failing to comply with the 2024 Land Law. Consequently, the resolution of applications for land-use conversion has been “frozen.”

“To address this issue, the Ho Chi Minh City tax sector has reported and is awaiting instructions from the Ho Chi Minh City People’s Committee on whether to calculate the land use fee based on the old or new land price table. Once this issue is resolved, the bottleneck in land-use conversion will be resolved,” the Ho Chi Minh City Tax Department leader said.

T.Tho