Circular No. 112/2003/TT-BTC guides the exemption and reduction of agricultural land use tax from 2003 to 2010 pursuant to Decree No. 129/2003/NĐ-CP dated November 3, 2003 of the Government.

I. SUBJECTS AND AMOUNT OF EXEMPTION AND REDUCTION OF AGRICULTURAL LAND USE TAX

1. Some terms in this Circular are understood as follows:

1. 1. Agricultural household: Is a family household or individual granted agricultural land by the State for long-term stable use according to Decree No. 85/1999/NĐ-CP dated August 28, 1999 of the Government.

1. 2. Agricultural and forestry farm household: Are households with members who are employees of agricultural farms or forestry farms (including independent accounting state-owned enterprises producing agricultural products) granted agricultural land by the farm for long-term stable use through economic contracts for agricultural production according to planning, and registered in the tax ledger when granting agricultural land production contracts.

1. 3. Tendered land: Is agricultural production land managed by organizations or administrative units that do not directly produce but lease out for tender; organizations or individuals winning the tender organize their own production and annually pay back in cash or products to the managing unit of agricultural production land through a contract.

1. 4. Limit of agricultural production land: Is the specific limit of the area of agricultural production land prescribed in Decree No. 85/1999/NĐ-CP dated August 28, 1999 of the Government on amending and supplementing certain provisions of the regulations on granting agricultural land to family households and individuals for long-term stable use for agricultural production purposes, and adding the granting of salt-making land to family households and individuals for long-term stable use.

The limit of agricultural production land is specified as follows:

"1. For annual crop cultivation land, aquaculture land, and salt-making land:

a) In the provinces: Ca Mau, Bac Lieu, Kien Giang, Soc Trang, Can Tho, An Giang, Vinh Long, Tra Vinh, Dong Thap, Tien Giang, Long An, Ben Tre, Tay Ninh, Binh Duong, Binh Phuoc, Dong Nai, Ba Ria-Vung Tau and Ho Chi Minh City, not exceeding 3 hectares for each type of land;

b) In other provinces and centrally-administered cities, not exceeding 2 hectares for each type of land.

2. For perennial crop cultivation land:

a) In plain communes, not exceeding 10 hectares;

b) In midland and mountainous communes, not exceeding 30 hectares.

3. For vacant land, barren hills, tidal land, water surface of bays and lakes, reclaimed land, and land reclamation, the limit of land use for households and individuals is decided by the People's Committee of the province or centrally-administered city based on the local land fund and production capacity, ensuring the implementation of policies encouraging and creating favorable conditions for using these types of land for agricultural production, aquaculture, and salt-making.

4. Households using multiple types of land for annual crop cultivation, perennial crop cultivation, aquaculture, salt-making, and vacant hill, tidal, water surface of bays and lakes, reclaimed, and sea reclamation land, the limit of land use is determined separately for each type of land according to the provisions of points 1, 2, and 3 of this clause."

2. Subjects exempted from agricultural land use tax within the limit include:

2. 1. Agricultural households having agricultural production land, including cases where such agricultural households have the right to use land obtained through gifts, inheritance, or lawful transfer of land use rights for agricultural production.

2. 2. Agricultural and forestry farm households receiving stable land allocation contracts from agricultural farms or forestry farms through contracts on agricultural land allocation between the farm and the agricultural or forestry farm household for agricultural production.

2. 3. Commune cooperative members (Cooperative) receiving stable land allocation contracts from the commune cooperative for agricultural production (excluding agricultural production land obtained through tendering); households and individuals voluntarily contributing farmland to establish agricultural production cooperatives according to the Law on Cooperatives.

3. Subjects exempted from agricultural land use tax on the entire area of land include:

3. 1. Poor households as decided by the provincial or centrally-administered city People's Committee based on the poverty standard set by the Ministry of Labor, Invalids, and Social Affairs.

3. 2. Organizations, households, and individuals having agricultural production land in particularly difficult communes under the program for economic and social development of particularly difficult mountainous, remote, and border communes according to Decision No. 135/1998/QĐ-TTg dated July 31, 1998 of the Prime Minister.

4. Subjects entitled to a 50% reduction in agricultural land use tax include:

A 50% reduction in the annual tax recorded in the agricultural land use tax ledger for subjects whose agricultural production land area does not fall within the scope of exemption from agricultural land use tax as stipulated in point 2, point 3, Section I of this Circular:

4. 1. Economic organizations, political organizations, socio-political organizations, occupational associations, military units, and administrative and public service units (including research institutes and experimental stations) currently managing and using land for agricultural production or allocating land to other organizations, households, or individuals through contracts for agricultural production.

4. 2. Households of civil servants, employees of state economic organizations, private households, families of professional military personnel, officers in the armed forces, including those who have retired or lost their ability to work, with agricultural production land obtained through the transfer of land use rights, gifts, inheritance, garden land, pond land, reclaimed land, hill land, riverbank land, lake land, bay land, river and lake land...

4. 3. Subjects entitled to exemption from agricultural land use tax within the limit as stipulated in point 2, Section I, of this Circular, with agricultural production land exceeding the limit.

II. SOME SPECIFIC CASES

1. Organizations, households, individuals who are granted land leases by the State or lease land from other organizations, households, or individuals for agricultural production and pay annual land lease fees shall not be exempted or granted reductions in agricultural land use tax as provided in this Circular.

2. In cases where a household pays agricultural land use tax and has both areas of annual crop cultivation land and perennial crop cultivation land, the limit on the area of agricultural land eligible for tax exemptions or reductions shall be calculated separately for each type of land based on annual crops and perennial crops.

Example 1: Mr. A, a farmer residing in the Red River Delta region, has two types of agricultural production land: 3 hectares of annual crop cultivation land (the prescribed limit is 2 hectares) and 15 hectares of perennial crop cultivation land (the prescribed limit is 10 hectares). Mr. A is exempt from agricultural land use tax for the areas within the limits, which are 2 hectares of annual crop cultivation land and 10 hectares of perennial crop cultivation land. For the excess areas, he receives a 50% reduction in tax on 1 hectare of annual crop cultivation land and 5 hectares of perennial crop cultivation land.

3. In cases where a household that pays agricultural land use tax is allocated annual crop cultivation land or declared such land on their tax return but later changes to perennial crop cultivation or fruit trees, the area of land remains classified under the limit for annual crop cultivation land. The rate of agricultural land use tax for land converted from annual crop cultivation to perennial crop cultivation shall be implemented according to Clause 3, Article 9 of the Law on Agricultural Land Use Tax as follows:

 For perennial fruit trees planted on annual crop cultivation land, the tax rate is as follows:

1.3 times the tax rate for annual crop cultivation land of the same category, if it belongs to Category 1, 2, or 3 land;

 The same tax rate for annual crop cultivation land of the same category, if it belongs to Category 4, 5, or 6 land.

4. In cases where a household registers their permanent residence in one commune but has agricultural production land in other communes (including communes in different districts or provinces), and such land is within the tax exemption limit, the limit on the area of agricultural land is determined as follows:

- The limit on agricultural production land is determined separately for each type of land, which is the total area of each type of land across different communes added together.

- The declaration, payment, and exemption/reduction of tax for households with agricultural production land in different communes shall first consider the tax exemption for the communes where the household does not have a permanent residence before considering the tax exemption for the commune where the household has a permanent residence. Specifically:

 + Households with agricultural production land in different communes must declare the area of land, the tax category, and obtain confirmation from the People's Committee of the commune where they have the land. Based on this confirmation, the People's Committee of the commune where the household has a permanent residence will aggregate the total area to determine the amount of agricultural production land within the tax exemption limit and the excess area subject to a 50% tax reduction, then notify the People's Committee of the commune where the household has the land in writing to implement the tax exemption and reduction.

+ In cases where a household has agricultural production land in another locality than their registered permanent residence, but does not declare and does not provide confirmation from the People's Committee of the commune where they have the land to the People's Committee of the commune where they have a permanent residence, they are only considered for a 50% tax reduction, not tax exemption.

 Example 2: Mr. A, a farmer, has 2 hectares of annual crop cultivation land in Commune H, Province B, his place of permanent residence in the South Delta (the limit on agricultural production land for annual crops is 3 hectares). In Commune K, where he does not have a permanent residence, he has 4 hectares of annual crop cultivation land confirmed by the People's Committee of Commune K, with an average recorded tax of 500 kg/ha over the entire area.

 + Based on the confirmation from the People's Committee of Commune K regarding Mr. A's agricultural production land of 4 hectares, the People's Committee of Commune H determines the total area of annual crop cultivation land of Mr. A as 6 hectares. According to regulations, Mr. A is exempted and reduced taxes as follows:

 Mr. A is exempt from agricultural land use tax for 3 hectares within the limit in Commune K, while the remaining 3 hectares exceeding the limit (1 hectare in Commune K and 2 hectares in Commune H) receive a 50% tax reduction. The People's Committee of Commune H, where Mr. A has a permanent residence, notifies the People's Committee of Commune K in writing about the tax exemption for Mr. A's 3 hectares in Commune K, and a 50% tax reduction for the 1 hectare in Commune K annually, while also notifying the Tax Office in the district containing Commune K to monitor and manage.

+ If Mr. A does not declare and does not provide confirmation from the People's Committee of Commune K, Mr. A is only exempt from agricultural land use tax for 2 hectares in Commune H, while the remaining 4 hectares in Commune K only receive a 50% tax reduction.

5. In cases where the area of agricultural production land exceeds the limit, the amount of tax recorded for the excess area is calculated based on the average tax recorded per hectare of annual or perennial crop cultivation land of the household. The specific calculation method is as follows:

The amount of tax recorded (kg) for the excess area = Excess area (ha) x Average tax recorded per hectare (kg/ha) x 1.2

 Where: The average tax recorded per hectare = Total tax recorded (kg) of the household paying tax, excluding additional tax on the excess area / Total declared area (ha) for the agricultural land use tax ledger.

The factor 1.2 is the multiplier for calculating the additional tax on the excess area at an additional tax rate of 20%.

6. In cases where a household has agricultural production land in the same commune and the excess area is damaged by natural disasters:

- If the area damaged by natural disasters is still within the limit, no tax reduction due to natural disasters will be considered.

- If the area damaged by natural disasters exceeds the limit, only the excess area damaged by natural disasters will be considered for tax reduction.

* Example 3: Mr. B, a farmer in the Red River Delta region, has 3 hectares of annual crop cultivation land, thus Mr. B has 1 hectare exceeding the limit, with an annual recorded tax of 1,600 kg of rice (average recorded tax is 500 kg/ha, additional tax of 20% on the excess 1 hectare is 100 kg).

 * In cases where there are no natural disasters in the year or the damage caused by natural disasters is less than the limit, Mr. B is exempted and reduced taxes as follows:

+ Exemption of tax for land area within the limit:

 2 ha x 500 kg/ha = 1,000 kg.

+ Reduction of 50% tax for land area exceeding the limit:

1 ha x 500 kg/ha x 1,2 x 50% = 300 kg.

+ Total amount of tax exempted and reduced for Mr. B:

1,000 kg + 300 kg = 1,300 kg.

+ Amount of tax Mr. B still has to pay:

1,600 kg - 1,300 kg = 300 kg.

 * In case during the year, Mr. B's agricultural production land area affected by natural disasters is 2.5 ha; the average level of damage is 28%. The calculation of exemption and reduction is as follows:

- For the 0.5 ha exceeding the limit within the area affected by natural disasters, with an average damage rate of 28%, according to the provisions of the Law on Land Tax, 60% of the recorded tax will be reduced. Therefore, after reducing 50% of the tax on the 0.5 ha exceeding the limit, it will be further reduced by 60% due to natural disasters, resulting in 40% of the remaining tax to be paid. Calculating, Mr. B must pay 60 kg (600 kg/ha x 0.5 ha x 50% x 40%).

- For the 0.5 ha exceeding the limit not affected by natural disasters, the tax is reduced by 50%, resulting in 150 kg (600 kg/ha x 0.5 ha x 50% = 150 kg).

 - The total tax on the area exceeding the limit after reduction that Mr. B still has to pay is: 210 kg (150 kg + 60 kg).

7. Households paying taxes have agricultural production land areas in different communes affected by natural disasters.

- In cases where the total affected area of households in different communes combined is less than or equal to the exempted land area within the limit, the household will not be eligible for tax reduction on the affected area.

 - In cases where the total affected area of households in different communes combined exceeds the exempted land area within the limit, the excess area affected by natural disasters will be eligible for tax reduction under the Law on Land Tax.

- In cases where households have agricultural production land in other localities affected by natural disasters but do not declare and do not have confirmation from the People's Committee of the commune where the household has agricultural production land sent to the People's Committee of the commune where the household has permanent residence, the household will not be eligible for tax reduction under the Law on Land Tax for the affected area.

* Example 4: According to the example mentioned above, suppose during the year, Household A was affected by natural disasters as follows:

+ In Commune K where Household A does not have permanent residence, there is an affected area of 2.5 ha; the average damage rate is 28%, the tax reduction rate according to regulations is 60% (confirmed by the People's Committee of Commune K sent to the People's Committee of Commune H).

+ In Commune H where Household A has permanent residence, the affected area is 2 ha, the average damage rate is 35%; the tax reduction rate according to regulations is 80%.

The People's Committee of Commune H summarizes the total agricultural production land area of Household A as 6 ha; of which the affected area is 4.5 ha, the average damage rate across the entire affected area is 31.1% [(2.5 ha x 28% + 2 ha x 35%) : 4.5 ha], the tax reduction rate according to regulations is 80%. The exempted land area within the limit is 3 ha; the area eligible for tax reduction due to natural disasters is 1.5 ha. The specific calculation is as follows:

 + In Commune K, Household A is exempted from land tax on an area of 3 ha (the affected area due to natural disasters is 2.5 ha, less than the exempted area of 3 ha), leaving 1 ha exceeding the limit; the land tax to be paid is: (500 kg/ha x 1.2 x 50%) = 300 kg.

+ In Commune H, Household A has 2 ha exceeding the limit; the tax to be paid is 600 kg due to natural disasters affecting 2 ha, but only 1.5 ha exceeding the limit is eligible for tax reduction due to natural disasters; therefore, Household A is eligible for tax reduction on the area of land exceeding the limit affected by natural disasters: (1.5 ha x 500 kg/ha x 1.2 x 50% x 80%) = 360 kg.

The tax Household A still has to pay in Commune H is: (600 kg - 360 kg) = 240 kg.

 The total tax Household A still has to pay is: (300 kg + 240 kg) = 540 kg.

III. IMPLEMENTATION:

1. Establishing annual tax registers:

 Based on the annual tax register of the Land Tax in 2003, the Tax Office coordinates with the People's Committee of the commune, ward to determine the subjects eligible for tax exemption and reduction from 2003 onwards to establish the tax register as follows:

1. 1. Establishing the original tax register to monitor subjects eligible for tax exemption under the Land Tax: The original tax register includes indicators such as the total agricultural production land area of the household (including all members of forest farms, cooperative members), determining the exempted land area within the limit, the area exceeding the limit eligible for tax reduction, and transferring the excess area of the household to the tax register specified at point 1.2 below for tax management.

Subjects eligible for tax exemption based on the original register are the basis for monitoring tax-exempt subjects from the 2003 tax year to the 2010 tax year. Tax-exempt subjects only need to submit one application for tax exemption procedures for multiple years. In subsequent years, if the tax-exempt subject changes the basis for calculating tax, the exempted tax amount will be recalculated and submitted to the competent state authority for decision; simultaneously adjusting the tax register for tax exemption accordingly.

1. 2. Establishing a tax register to monitor subjects eligible for a 50% reduction in the recorded annual Land Tax:

Subjects with agricultural production land areas exceeding the limit, who are not rural households, economic organizations, political organizations, political-social organizations, social-professional organizations, military units, and administrative-servicing units managing and using agricultural production land, shall establish a separate Land Tax register (excluding the agricultural production land area of forest farms, cooperatives already allocated to forest farm members and cooperative members, which have established a tax register as stipulated in point 1.1 above). Based on this tax register, tax collection and payment, assessment, and annual tax exemption and reduction procedures shall be carried out in accordance with current regulations.

2. For rural, forest farm members, cooperative members receiving stable land allocations from forest farms, the following applies:

Based on each contract regarding the area, grade of land, and the recorded annual Land Tax, each household shall self-declare. Each household shall be issued a tax declaration form similar to that for rural households. The tax authority shall coordinate with forest farms to check and verify each household's tax declaration forms and include them in the original tax register as the basis for directly reviewing and deciding on tax exemptions and reductions for each taxpayer.

3. For households contributing farmland to establish agricultural production cooperatives, the original tax ledger shall be established based on the certificate of land use rights for agricultural production of each household (if not yet issued with a certificate of land use rights, it shall be based on the declaration of each household when joining the cooperative, confirmed by the People's Committee of the commune).

4. The dossier, procedures, formalities, and authority to decide on exemption and reduction of land fund tax shall be implemented according to current regulations.

5. For households that overpaid land fund tax in 2003 and previous years (if any), the excess tax paid shall be offset against the tax payable in the following year or refunded by the provincial or centrally governed municipal budget. The refund of overpaid land fund tax shall be carried out in accordance with Circular No. 68/2001/TT-BTC dated August 24, 2001, of the Ministry of Finance.

Households that still owe unpaid land fund tax and do not fall within the scope of debt cancellation or tax exemption and reduction under current laws shall continue to have their taxes collected by the Provincial Tax Department to ensure fairness among taxpayers and the strict enforcement of the law.

6. Tax officials and individuals who abuse their positions and powers to collect taxes contrary to policy and regulations; issue decisions to reduce or exempt land fund tax beyond their authority, contrary to legal provisions, causing damage to the State and taxpayers shall be liable for compensation and may be subject to administrative penalties or criminal prosecution depending on the severity of the violation.