Circular No. 120/2005/TT-BTC guiding the implementation of Government Decree No. 142/2005/NĐ-CP dated November 14, 2005 on land rental fees and water surface rental fees

CIRCULAR

GUIDELINES FOR IMPLEMENTING DECREE NO. 142/2005/NĐ-CP OF THE GOVERNMENT DATED NOVEMBER 14, 2005 ON COLLECTION OF LAND RENT AND WATER SURFACE RENT

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BASED ON THE LAND LAW;

Pursuant to Decree No. 77/2003/NĐ-CP dated July 1, 2003 of the Government stipulating the functions, tasks, authorities, and organizational structure of the Ministry of Finance;

Pursuant to Decree No. 142/2005/NĐ-CP dated November 14, 2005 of the Government on collecting land rental fees and water surface rental fees;

THE MINISTRY OF FINANCE ISSUES GUIDELINES ON THE COLLECTION OF LAND RENT AND WATER SURFACE RENT AS FOLLOWS:

PART A

GENERAL PROVISIONS

I. SCOPE OF APPLICATION

THESE GUIDELINES REGULATE THE COLLECTION OF LAND RENT AND WATER SURFACE RENT IN THE CASES OF LEASING LAND AND WATER SURFACES AS PROVIDED FOR IN ARTICLE 1 OF DECREE NO. 142/2005/NĐ-CP OF THE GOVERNMENT ON THE COLLECTION OF LAND RENT AND WATER SURFACE RENT (HEREINAFTER REFERRED TO AS DECREE NO. 142/2005/NĐ-CP), INCLUDING:

1. THE STATE LEASING LAND AS PROVIDED FOR IN ARTICLE 35 OF THE LAND LAW, WITH THE SCOPE OF LAND AS PROVIDED FOR IN ARTICLE 13 OF THE LAND LAW (ANNEX 01).

2. THE STATE PERMITTING TRANSITION FROM GRANTING LAND TO LEASING LAND IN THE FOLLOWING CASES:

2.1. TRANSITION FROM GRANTING LAND WITHOUT PAYMENT OF LAND USE FEES TO LEASING LAND.

2.2. TRANSITION FROM GRANTING LAND WITH PAYMENT OF LAND USE FEES TO LEASING LAND.

3. THE STATE LEASING WATER SURFACES AND SEABEDS (COLLECTIVELY REFERRED TO AS LEASING WATER SURFACES) IN THE VIETNAMESE CONTINENTAL SHELF AND EEZ OUTSIDE THE SCOPE OF LAND AS PROVIDED FOR IN ARTICLE 13 OF THE LAND LAW.

II. OBJECTS SUBJECT TO THE COLLECTION OF LAND RENT AND WATER SURFACE RENT

THE OBJECTS SUBJECT TO THE COLLECTION OF LAND RENT AND WATER SURFACE RENT AS PROVIDED FOR IN ARTICLE 2 OF DECREE NO. 142/2005/NĐ-CP; PARAGRAPH 1 AND PARAGRAPH 2 OF THIS PROVISION ARE GUIDED AS FOLLOWS:

1. PARAGRAPH 1 PROVIDES FOR THE CASES WHERE THE STATE COLLECTS ANNUAL LAND RENT FROM LEASING LAND; SOME SPECIFIC CASES ARE GUIDED AS FOLLOWS:

1.1. HOUSEHOLDS AND INDIVIDUALS WHO HAVE THE NEED TO CONTINUE USING THE AREA OF AGRICULTURAL LAND EXCEEDING THE QUOTA ALLOCATED BEFORE JANUARY 1, 1999 AND WHOSE LAND USE PERIOD HAS EXPIRED MAY CONTINUE TO USE THE LAND FOR HALF THE ORIGINAL PERIOD OF ALLOCATION, AFTER WHICH THEY MUST TRANSITION TO LEASING LAND AS PROVIDED FOR IN PARAGRAPH 2 OF ARTICLE 67 OF THE LAND LAW.

1.2. HOUSEHOLDS AND INDIVIDUALS WHO DO NOT DIRECTLY ENGAGE IN AGRICULTURE, FORESTRY, AQUACULTURE, OR SALT PRODUCTION WHO WERE GRANTED LAND WITHOUT PAYMENT OF LAND USE FEES FOR ECONOMIC PURPOSES MUST TRANSITION TO LEASING LAND AS PROVIDED FOR IN SUBPARAGRAPH B OF PARAGRAPH 4 OF ARTICLE 82 OF THE LAND LAW, WHICH IS FURTHER ELABORATED IN PARAGRAPH 1 OF ARTICLE 75 OF DECREE NO. 181/2004/NĐ-CP OF THE GOVERNMENT ON THE IMPLEMENTATION OF THE LAND LAW (HEREINAFTER REFERRED TO AS DECREE NO. 181/2004/NĐ-CP).

1.3. ECONOMIC ORGANIZATIONS, HOUSEHOLDS, AND INDIVIDUALS LEASING LAND FOR BUSINESS FACILITIES, MINERAL ACTIVITIES, CONSTRUCTION MATERIAL PRODUCTION, CERAMIC PRODUCTION AS PROVIDED FOR IN PARAGRAPH 1 OF ARTICLES 93, 94, AND 95 OF THE LAND LAW; LEASING LAND TO IMPLEMENT AGRICULTURAL, FORESTRY, AQUACULTURE, AND SALT PRODUCTION PROJECTS AS PROVIDED FOR FROM ARTICLE 74 TO 82 OF THE LAND LAW; LEASING LAND TO BUILD PUBLIC WORKS WITH COMMERCIAL PURPOSES AS PROVIDED FOR IN SUBPARAGRAPH B OF PARAGRAPH 5 OF ARTICLE 6 OF DECREE NO. 181/2004/NĐ-CP.

1.4. ECONOMIC ORGANIZATIONS LEASING LAND TO INVEST IN INFRASTRUCTURE DEVELOPMENT FOR TRANSFER OR LEASE OF ALREADY INFRASTRUCTURED LAND, INCLUDING THE DEVELOPMENT OF INDUSTRIAL ZONES, HIGH-TECH ZONES, ECONOMIC ZONES, RURAL COMMUNITIES, URBAN COMMUNITIES, AND OTHER INFRASTRUCTURE DEVELOPMENT CASES.

1.5. PUBLIC SERVICE UNITS THAT ARE LEASED LAND BY THE STATE TO IMPLEMENT INVESTMENT PROJECTS APPROVED BY COMPETENT STATE AUTHORITIES MUST PAY LAND RENT AS PROVIDED FOR IN DECREE NO. 142/2005/NĐ-CP AND GUIDED IN THESE GUIDELINES.

1.6. ORGANIZATIONS THAT HAVE BEEN GRANTED LAND BY THE STATE WITHOUT PAYMENT OF LAND USE FEES, RECEIVED LEGAL TRANSFER RIGHTS FROM OTHERS, OR GRANTED LAND WITH PAYMENT OF LAND USE FEES WHERE THE FUNDS FOR TRANSFER RIGHTS OR LAND USE FEES PAID TO THE STATE COME FROM THE STATE BUDGET AND ARE NOW USED FOR BUSINESS PURPOSES OR TO BUILD PUBLIC WORKS WITH COMMERCIAL PURPOSES; IF SUCH ORGANIZATIONS CHOOSE TO LEASE THE LAND, THEY MUST PAY LAND RENT.

2. PARAGRAPH 2 PROVIDES FOR THE CASES WHERE THE STATE COLLECTS ANNUAL RENT OR ONE-TIME RENT FOR THE ENTIRE LEASE PERIOD FOR LEASING LAND AND WATER SURFACES; SOME SPECIFIC CASES ARE GUIDED AS FOLLOWS:

2.1. SUBPARAGRAPH B PROVIDES FOR FOREIGN ORGANIZATIONS WITH DIPLOMATIC FUNCTIONS, NON-GOVERNMENTAL ORGANIZATIONS LEASING LAND TO BUILD OFFICES INCLUDING FOREIGN REPRESENTATIVE OFFICES, CONSULAR OFFICES, AND OTHER FOREIGN OFFICES WITH DIPLOMATIC FUNCTIONS RECOGNIZED BY THE VIETNAMESE GOVERNMENT; OFFICES OF UNITED NATIONS ORGANIZATIONS, INTERGOVERNMENTAL ORGANIZATIONS, AND NON-GOVERNMENTAL ORGANIZATIONS; AND REPRESENTATIVES OF NON-GOVERNMENTAL ORGANIZATIONS.

2.2. SUBPARAGRAPH C PROVIDES FOR ECONOMIC ORGANIZATIONS, HOUSEHOLDS, INDIVIDUALS, VIETNAMESE RESIDENTS ABROAD, AND FOREIGN ORGANIZATIONS AND INDIVIDUALS PERMITTED BY THE STATE TO USE WATER SURFACES AND SEABEDS OUTSIDE THE GROUPS OF LANDS AS PROVIDED FOR IN ARTICLE 13 OF THE LAND LAW TO IMPLEMENT INVESTMENT PROJECTS INCLUDING JOINT VENTURE COMPANIES WITH FOREIGN CAPITAL, VIETNAMESE PARTIES IN JOINT VENTURE CONTRACTS PERMITTED BY THE STATE TO LEASE WATER SURFACES AND SEABEDS TO IMPLEMENT INVESTMENT PROJECTS.

2.3. VIETNAMESE RESIDENTS ABROAD, FOREIGN ORGANIZATIONS, AND INDIVIDUALS PERMITTED BY THE STATE TO LEASE LAND IN URBAN AREAS TO IMPLEMENT INVESTMENT PROJECTS FOR CONSTRUCTING HOUSING FOR SALE OR RENT MUST:

A) PAY ANNUAL LAND RENT FOR HOUSING PROJECTS FOR RENT.

B) PAY ONE-TIME LAND RENT FOR THE ENTIRE LEASE PERIOD FOR HOUSING PROJECTS FOR SALE OR RENT; WHEN SELLING HOUSING, THE INVESTOR MUST PAY THE DIFFERENCE BETWEEN THE LAND USE FEE AND THE RENT PAID TO THE STATE AS FOLLOWS:

- FOR VILLA HOUSING, THE AMOUNT MUST BE PAID WITHIN ONE MONTH FROM THE DATE OF SIGNING THE HOUSING SALES CONTRACT.

- FOR APARTMENT HOUSING, THE DIFFERENCE MUST BE PAID AT THE LATEST AT THE END OF THE PROJECT.

THE LAND USE FEE IS CALCULATED BASED ON THE LAND PRICE SET BY THE PEOPLE'S COMMITTEE OF THE PROVINCE OR CITY DIRECTLY UNDER THE CENTRAL GOVERNMENT (HEREINAFTER REFERRED TO AS THE PROVINCIAL PEOPLE'S COMMITTEE) AT THE TIME OF PAYING THE DIFFERENCE.

3. ORGANIZATIONS THAT HAVE BEEN GRANTED LAND BY THE STATE WITHOUT PAYMENT OF LAND USE FEES OR LAND RENT BUT USE PART OF THE LAND FOR BUSINESS PURPOSES OR PUBLIC WORKS WITH COMMERCIAL PURPOSES WITHOUT SELECTING THE OPTION TO PAY LAND USE FEES MUST PAY LAND RENT.

III. OBJECTS NOT SUBJECT TO THE COLLECTION OF LAND RENT

The objects exempt from land rent as stipulated in Article 3 of Decree No. 142/2005/NĐ-CP; Clause 1 and Clause 3 of this Article shall be guided as follows:

1. Clause 1 provides for individuals to whom the State grants land without collecting land use fee according to Article 33 of the Land Law, including cases where the State grants land without collecting land use fee to organizations, individuals, and overseas Vietnamese to build common infrastructure in high-tech zones; to construct training areas, research and development zones, and high-tech application zones; to establish high-tech business incubators aimed at supporting research activities, trial production, and forming high-tech manufacturing enterprises according to Point a, Clause 2, Article 85 of Decree No. 181/2004/NĐ-CP.

2. Clause 3 specifies the area of land for constructing shared infrastructure projects within industrial zones; it refers to the area of land for building shared infrastructure within industrial zones as approved by competent authorities, which the industrial zone does not directly use for production and business purposes, nor transfer, lease, or sell to others for production and business purposes, public works with commercial purposes, or residential purposes according to the planning approved by competent authorities; projects leasing land before Decree No. 142/2005/NĐ-CP took effect shall not implement the provisions of Clause 3, Article 3 of Decree No. 142/2005/NĐ-CP.

PART B

SPECIFIC PROVISIONS

I. The land rental price specified in Article 4 of Decree No. 142/2005/NĐ-CP shall be guided as follows:

1. Clause 1 provides that the annual land rental price is calculated at 0.5% of the land price based on the purpose of the leased land as issued by the Provincial People's Committee in accordance with the Government's regulations; in cases where land is leased for construction of houses for sale or sublease, the land price for determining the rental price is the residential land price.

2. Clause 2 provides that for land located in urban areas, commercial centers, service centers, transportation hubs, concentrated residential areas with special profitability and advantages for use as production and business premises, commerce, and services; based on local realities, the Provincial People's Committee decides to issue higher land rental prices than 0.5% of the land price, but not exceeding four times, i.e., the highest rental price equals 2% of the land price issued by the Provincial People's Committee; specific contents are as follows:

- Land with special profitability and advantages for use as production and business premises, commerce, and services is determined according to the guidance provided in Item c, Point 2, Section II of Circular No. 114/2004/TT-BTC dated November 26, 2004, of the Ministry of Finance guiding the implementation of Decree No. 188/2004/NĐ-CP dated November 16, 2004, of the Government regarding methods for determining land prices and price ranges for various types of land.

- The Provincial People's Committee bases its decisions on local realities to determine specific locations such as commercial centers, service centers, transportation hubs, and concentrated residential areas.

3. Clause 3 provides that for land in remote, mountainous, island, economically disadvantaged, and extremely disadvantaged regions; land used for agricultural, forestry, aquaculture, salt-making purposes, and land used as production and business premises for investment projects in encouraged sectors and particularly encouraged sectors; based on local conditions and requirements for encouraging investment, the Provincial People's Committee decides to issue lower land rental prices than 0.5% of the land price, but the lowest rental price must equal 0.25% of the land price issued by the Provincial People's Committee according to the Government's regulations; specific guidance is as follows:

- Remote, mountainous, island, economically disadvantaged, and extremely disadvantaged regions; investment projects in encouraged sectors and particularly encouraged sectors as prescribed by the Government or the Prime Minister.

- The Provincial People's Committee bases its decisions on local realities to specify specific rental prices for each location and investment sector; the lowest price must equal 0.25% of the land price issued by the Provincial People's Committee.

4. Clause 4 provides that the rental price for land in cases of auctioning land use rights or tendering projects using leased land is the winning bid price; in such cases, the land rent payer cannot deduct compensation and support costs from the land rent payable.

II. Framework Price for Leasing Water Surface:

The framework price for leasing water surface as stipulated in Article 5 of Decree No. 142/2005/NĐ-CP shall be guided as follows:

1. Clause 1 on the framework price for leasing water surface is specifically guided as follows:

a) Fixed water surface project as stipulated in Point a refers to water surface used for fixed projects at a specific location; clearly defining the location and fixed coordinates of the leased water surface throughout the project period.

b) Non-fixed water surface project as stipulated in Point b refers to water surface leased without specifying a location or fixed coordinates within a certain range, and the project operates non-fixedly at a specific water surface location.

2. Clause 3 on the rental price for sea surface for oil and gas exploitation projects in Vietnam's territorial waters and continental shelf applies the maximum price of the framework price for leasing water surface as stipulated in Clause 1 and Clause 2, Article 5 of Decree No. 142/2005/NĐ-CP.

III. Determination of the rental price for each specific project as stipulated in Article 6 of Decree No. 142/2005/NĐ-CP shall be guided as follows:

1. Regarding Clause 1; based on the land price issued by the Provincial People's Committee according to Decree No. 188/2004/NĐ-CP dated November 16, 2004, of the Government on methods for determining land prices and price ranges for various types of land; the Provincial People's Committee issues the percentage ratio to calculate the rental price for land as stipulated in Article 4 of Decree No. 142/2005/NĐ-CP for each type of land, type of city, type of commune, region, street category, location, and land grade.

2. Regarding Clause 2; based on the land price issued by the Provincial People's Committee; based on the percentage to calculate the rental price of land as prescribed by the Provincial People's Committee according to the guidance at Point 1 of this Section; based on the actual land use of each project, each case transferred by the natural resources and environment agency:

- The Director of the Department of Finance shall take the lead in coordinating with relevant agencies to determine the rental price of land for each specific project for economic organizations, overseas Vietnamese, organizations, and individuals leasing land. On this basis, issue decisions on the rental price of land for each specific project and case and transfer them to the natural resources and environment agency and the tax authority at the same level. - The Finance Office shall take the lead in coordinating with functional agencies at the district level to submit to the Chairman of the District People's Committee for decision on the rental price of land for each specific case for households and individuals leasing land.

IV. Determining the land rental fee and water surface rental fee as stipulated in Article 7 of Decree No. 142/2005/ND-CP; some contents are guided as follows:

1. Clause 1 provides that "The annual land rental fee and water surface rental fee is equal to the area leased multiplied by the rental price of land and water surface"; the leased area is determined according to the lease decision of the competent state agency. In cases where the actual area used differs from the area recorded in the decision of the competent state agency, the rental fee will be calculated based on the actual area used; in cases where land allocated without payment of land use fee is used for production, business, or service purposes and must pay the rental fee, the area for calculating the rental fee is the actual area used for production, business, or service purposes.

For oil and gas exploitation projects in Vietnam's territorial waters and continental shelf, the sea surface area for calculating the rental fee is the actual area used by the contractor.

The time of commencement and collection of the land rental fee and water surface rental fee shall be implemented according to the provisions of Clause 2 of Article 7 of Decree No. 142/2005/ND-CP.

2. Clause 3 regarding "An entity granted land rental by the State which has prepaid land compensation and support fees may deduct these amounts from the land rental fees payable; if the land compensation and support fees have not been fully deducted by the end of the lease term, they may be deducted from the extended lease term"; the land compensation and support fees (referred to collectively as land compensation fees) can only be deducted from the land rental fees payable for the area subject to rental fee payment and are specifically guided as follows:

a) In cases where the land rental fee is paid once for the entire lease period, the land compensation fee can be deducted from the total land rental fee for the entire lease period; if the total land rental fee for the entire lease period is greater than the land compensation fee, the difference should be paid once into the state budget; if the total land rental fee for the entire lease period is less than the land compensation fee, it shall be handled according to the provisions of Clause 3 of Article 7 of Decree No. 142/2005/ND-CP and the guidance provided in Subpoint b of Point 2 of this Section.

b) In cases where the land rental fee is paid annually, the period during which no land rental fee needs to be paid (expressed in years, abbreviated as n) due to deduction of land compensation fees from the land rental fees payable is determined as follows:

n

Land compensation fees deducted from the land rental fees payable

- The annual land rental fee payable = the project's land rental price multiplied by the area subject to land rental fee payment.

b1- In cases where the lease period requiring payment of the land rental fee (abbreviated as N) is longer than the number of years during which land compensation fees can be deducted (N > n), the excess period (N - n) must pay the annual land rental fee according to regulations.

b2- In cases where the lease period requiring payment of the land rental fee (N) is shorter than the number of years during which land compensation fees can be deducted (N < n: the lease period ends without fully deducting the land compensation fees), then:

- If continuing to lease the land, there is no need to pay the land rental fee for the remaining years (n - N); after this period (from year n + 1), the land rental fee must be paid according to regulations.

- If not continuing to lease the land, and the State reclaims the land, compensation will be made as follows:

The land compensation amount when the State reclaims the land

Remaining years

d) Projects exempted from land rental fees and water surface rental fees as stipulated in Clause 3 and Clause 4 of Article 14 of Decree No. 142/2005/ND-CP, the land compensation fees can be deducted

from the land rental fees payable immediately after the exemption period for land rental fees and water surface rental fees.

V. Applying the land rental price and water surface rental price as stipulated in Article 9 of Decree No. 142/2005/ND-CP; Clause 2 and Clause 4 are guided as follows: 1. Clause 2 concerning projects leasing land and water surfaces before January 1, 2006, which are subject to annual land rental fees and water surface rental fees, now must recalculate the rental price according to the provisions of Articles 4, 5, and 6 of Decree No. 142/2005/ND-CP and the guidance provided in Sections I, II, and III of Part II of this Circular.

V. The land rental price and water surface rental price specified in Article 9 of Decree No. 142/2005/NĐ-CP shall be applied as follows:

1. Clause 2 regarding land and water surface rental projects before January 1, 2006 that are subject to annual land and water surface rental payments must now re-determine the rental prices according to Articles 4, 5, and 6 of Decree No. 142/2005/NĐ-CP and the guidance provided in Sections I, II, and III of Part II of this Circular.

2. Clause 4 concerning cases of land leasing and water surface leasing before January 1, 2006, which have been decided (announced, agreed upon) by competent state agencies; in cases where the lease payment for the entire lease period has been paid in one lump sum but not yet submitted or only partially submitted for some years, the unpaid lease payment period must be recalculated according to the rental price stipulated in Decree No. 142/2005/NĐ-CP and the guidance provided in this Circular.

VI. Transfer from land allocation to land leasing for households and individuals as prescribed in Article 10 of Decree No. 142/2005/NĐ-CP; Clause 1 is specified as follows:

1. Households and individuals who are allocated agricultural land within the limit of agricultural land use by competent state agencies when changing the purpose of land use to non-agricultural production and business purposes and choosing the form of land leasing shall calculate the land rental price based on the price of non-agricultural production and business land and deduct the value of the right to use agricultural land from the lease payment due, but the deduction amount shall not exceed the lease payment due.

The value of the right to use agricultural land deducted from the lease payment due shall be calculated based on the area subject to lease payment, at the agricultural land price at the time of deduction from the lease payment due.

2. Households and individuals who are granted land with land use fees or receive transfers of land use rights from lawful land users, now transferring to land leasing, shall deduct the value of transferred land use rights from the lease payment due, but the deduction amount shall not exceed the lease payment due.

The value of the granted land and the received transferred land deducted from the lease payment due shall be calculated based on the area subject to lease payment, at the price of the granted land type and the received transferred land type at the time of deduction from the lease payment due.

VII. Transfer from land allocation to land leasing for organizations as prescribed in Article 11 of Decree No. 142/2005/NĐ-CP; some contents in Clause 1 and Clause 3 are specified as follows:

1. Organizations that are granted land with land use fees or receive lawful transfers of land use rights, where the land use fees paid and transfer payments made do not originate from the state budget, the value of the granted land use rights and received transfers can be deducted from the lease payment due, calculated based on the area subject to lease payment, at the price of the granted land type and received transferred land type issued by the provincial People's Committee at the time of deduction of the land use rights value from the lease payment due, but the deduction amount shall not exceed the lease payment due (after deducting exempted lease payments as stipulated in Clause 3, Clause 4, and Clause 7 of Article 14 of Decree No. 142/2005/NĐ-CP).

2. In cases where the lease payment due exceeds the value of the land use rights deducted from the lease payment due, the difference shall be paid annually into the state budget during the lease term. When paying the lease payment for a given year, it shall be paid at the annual rental price of that year. If the organization requests to pay the difference in one lump sum into the state budget, it may immediately pay the determined difference. The determination of the remaining number of years for lease payment shall be carried out as follows:

PART C

EXEMPTION AND REDUCTION OF LAND RENT AND WATER SURFACE RENT

I. PRINCIPLES FOR EXEMPTION AND REDUCTION OF LAND RENT AND WATER SURFACE RENT AS PROVIDED IN ARTICLE 13 OF DECREE NO. 142/2005/NĐ-CP; CLAUSE 5 PROVIDES AS FOLLOWS: A PROJECT THAT IS OPERATING AND HAS BEEN GRANTED AN EXEMPTION OR REDUCTION OF LAND RENT AND WATER SURFACE RENT BUT THE LEVEL OF BENEFIT IS LOWER THAN THAT PROVIDED IN ARTICLES 14 AND 15 OF DECREE NO. 142/2005/NĐ-CP SHALL BE ENTITLED TO THE EXEMPTION OR REDUCTION AS PROVIDED IN ARTICLES 14 AND 15 OF DECREE NO. 142/2005/NĐ-CP FOR THE REMAINING PERIOD OF EXEMPTION OR REDUCTION. THE AMOUNT OF EXEMPTION OR REDUCTION AND THE REMAINING PERIOD OF EXEMPTION OR REDUCTION SHALL BE CALCULATED BASED ON THE TIME PROVIDED IN ARTICLES 14 AND 15 OF DECREE NO. 142/2005/NĐ-CP MINUS THE TIME ALREADY ELAPSED BEFORE THE EFFECTIVE DATE OF DECREE NO. 142/2005/NĐ-CP.

II. EXEMPTION OF LAND RENT AND WATER SURFACE RENT AS PROVIDED IN ARTICLE 14 OF DECREE NO. 142/2005/NĐ-CP; CLAUSE 1, CLAUSE 2, AND CLAUSE 4 PROVIDE AS FOLLOWS:

 1. CLAUSE 1 AND CLAUSE 4 PROVIDE AS FOLLOWS: PROJECTS IN THE ENCOURAGED INVESTMENT SECTORS, ESPECIALLY THOSE WITH SPECIAL ENCOURAGEMENT; LOCATED IN ECONOMICALLY AND SOCIO-ECONOMICALLY DIFFICULT AREAS, ESPECIALLY EXTREMELY DIFFICULT AREAS AS DEFINED BY THE GOVERNMENT, INCLUDING FOREIGN ORGANIZATIONS AND FOREIGN INDIVIDUALS USING LAND IN HIGH-TECH ZONES TO BUILD COMMON INFRASTRUCTURE OF HIGH-TECH ZONES; TO BUILD TRAINING AREAS, RESEARCH AND DEVELOPMENT AREAS, AND HIGH-TECH APPLICATION AREAS; TO BUILD HIGH-TECH ENTERPRISE INCUBATION AREAS TO SUPPORT RESEARCH ACTIVITIES, TRIAL PRODUCTION, AND FORMATION OF HIGH-TECH PRODUCTION ENTERPRISES AS PROVIDED IN POINT A, SUB-CLAUSE 2, ARTICLE 85 OF DECREE NO. 181/2004/NĐ-CP.

2. CLAUSE 2 PROVIDES AS FOLLOWS:

a) PROJECTS LEASING LAND TO BUILD APARTMENTS FOR WORKERS IN INDUSTRIAL ZONES THAT ARE ENTITLED TO EXEMPTION FROM LAND RENT SHALL NOT INCLUDE THE COST OF PAYING LAND RENT IN THE STRUCTURE OF THE SELLING PRICE OF HOUSING OR THE RENTAL PRICE OF HOUSING AND MUST BE APPROVED BY THE PROVINCE PEOPLE'S COMMITTEE FOR THE SELLING PRICE OF HOUSING AND THE RENTAL PRICE OF HOUSING.

b) PROJECTS LEASING LAND TO BUILD PUBLIC WORKS WITH COMMERCIAL PURPOSES (SOCIALIZED) IN THE HEALTH, EDUCATION, CULTURE, SPORTS, SCIENCE AND TECHNOLOGY SECTORS INCLUDING THE USE OF LAND TRANSFERRED FROM NON-PAYMENT OF LAND USE FEES TO BE USED FOR PUBLIC PURPOSES TO LEASE FOR THE CONSTRUCTION OF PUBLIC WORKS WITH COMMERCIAL PURPOSES IN THE ABOVE SECTORS. THE LIST OF PROJECTS IN THE HEALTH, EDUCATION, CULTURE, SPORTS, AND SCIENCE AND TECHNOLOGY SECTORS THAT ARE ENTITLED TO EXEMPTION FROM LAND RENT IS GUIDED AT THIS POINT BY THE MINISTRIES AND SECTORAL AGENCIES.

THE EXEMPTION OF LAND RENT AS PROVIDED IN CLAUSE 1 AND CLAUSE 2, ARTICLE 14 OF DECREE NO. 142/2005/NĐ-CP AND GUIDED AT POINT 1 AND POINT 2 OF THIS SECTION SHALL BE IMPLEMENTED FOR THE ENTIRE LEASE PERIOD AS STATED IN THE STATE DECISION ON LEASING THE LAND.

3. EXEMPTION FROM LAND RENT UNTIL THE YEAR 2010 FOR THE AREA OF AGRICULTURAL LAND WITHIN THE LIMIT SET BY LAW FOR HOUSEHOLDS, FARMER HOUSEHOLDS, AND COOPERATIVE MEMBERS WHO HAVE RECEIVED ASSIGNMENTS FROM ENTERPRISES AND AGRICULTURAL COOPERATIVES AND NOW TRANSITION TO LEASING THE LAND ACCORDING TO THE LAW ON LAND.

III. REDUCTION OF LAND RENT AND WATER SURFACE RENT AS PROVIDED IN ARTICLE 15 OF DECREE NO. 142/2005/NĐ-CP; CLAUSE 1, CLAUSE 2, CLAUSE 4, AND CLAUSE 5 PROVIDE AS FOLLOWS:

1. CLAUSE 1 PROVIDES A 50% REDUCTION IN THE AMOUNT OF LAND RENT DUE FOR THE ENTIRE LEASE PERIOD FOR LAND USED FOR PRODUCTION AND BUSINESS SERVICES OF COOPERATIVES. FOR AGRICULTURAL COOPERATIVES, THE AREA ELIGIBLE FOR A 50% REDUCTION IN LAND RENT AS PROVIDED IN CLAUSE 1, ARTICLE 15 OF DECREE NO. 142/2005/NĐ-CP DOES NOT INCLUDE THE AREA OF LAND ASSIGNED WITHOUT PAYMENT OF LAND USE FEES AS PROVIDED IN CLAUSE 5, ARTICLE 33 OF THE LAND LAW.

2. CLAUSE 2 PROVIDES THAT IF LAND IS LEASED FOR USE IN AGRICULTURE, FORESTRY, AQUACULTURE, OR SALT PRODUCTION AND IS DAMAGED BY NATURAL DISASTERS OR FIRES, THEN:

- IF THE DAMAGE IS LESS THAN 40% OF THE YIELD, THE REDUCTION IN LAND RENT SHALL BE IN PROPORTION TO THE PERCENTAGE OF DAMAGE.

- IF THE DAMAGE IS 40% OR MORE, THE LAND RENT FOR THE YEAR OF DAMAGE SHALL BE EXEMPTED.

- THE LEVEL OF DAMAGE IS DETERMINED BY THE PERCENTAGE OF THE VALUE OF THE HARVEST IN THE NORMAL PRODUCTION SEASON IMMEDIATELY PRECEDING THE DAMAGED SEASON OR THE MOST RECENT NORMAL PRODUCTION SEASON. THE VALUE OF THE PRODUCT AND THE YIELD OF THE UNDAMAGED SEASON ARE DETERMINED BASED ON THE STATISTICAL REPORTS. THE PROCEDURE AND PROCEDURES FOR DETERMINING THE LEVEL OF DAMAGE SHALL BE IMPLEMENTED ACCORDING TO THE REGULATIONS FOR DETERMINING DAMAGE FOR EXEMPTION AND REDUCTION OF TAX ON AGRICULTURAL LAND USE.

3. A 50% REDUCTION IN ANNUAL LAND RENT UNTIL THE YEAR 2010 FOR THE AREA OF AGRICULTURAL LAND OF OBJECTS NOT ELIGIBLE FOR EXEMPTION FROM LAND RENT AS GUIDED IN POINT 3, SECTION II, PART C AND THE AREA OF AGRICULTURAL LAND EXCEEDING THE LIMIT SET BY LAW FOR HOUSEHOLDS, FARMER HOUSEHOLDS, AND OTHER AGRICULTURAL PRODUCERS.

4. CLAUSE 4, IN CASE THE LEASED LAND BELONGS TO A PROJECT FOR BUILDING OFFICES FOR FOREIGN DIPLOMATIC MISSIONS, CONSULAR POSTS, AND INTERNATIONAL ORGANIZATION REPRESENTATIONS IN VIETNAM ACCORDING TO INTERNATIONAL TREATIES TO WHICH VIETNAM IS A PARTY OR ON THE BASIS OF RECIPROCITY, THE REDUCTION SHALL BE ACCORDING TO THE PROVISIONS OF THE INTERNATIONAL TREATY SIGNED OR THE AGREEMENT REACHED.

4. Clause 4, in cases where rented land is part of a project for constructing office premises for foreign diplomatic missions, consular offices, and international organization representative offices in Vietnam under international treaties to which Vietnam is a party or based on the principle of reciprocity, the reduction shall be made according to the provisions of the signed international treaty or the agreed principle.

PART D

COLLECTION OF LAND RENT AND WATER SURFACE RENT

I. The procedure for determining land rent and water surface rent to be paid is stipulated in Article 17 of Decree No. 142/2005/NĐ-CP; detailed guidance is as follows:

1. Clause 1, for new cases of land leasing and water surface leasing; the Department of Finance and the People's Committee at district level shall send the decision on the unit price of land and water surface leasing to the natural resources and environment agency and tax authority at the same level. Within five working days from the date of receiving complete land administration files, the tax authority shall determine the amount of land and water surface rent and issue a Notice to the person obligated to pay. The Notice of payment of land and water surface rent shall be made in two copies; one copy sent to the payer of the land and water surface rent; one copy retained by the tax authority. One copy shall be sent to the entity subject to land and water surface rental payments; one copy shall be kept at the tax authority.

2. Clause 2, for entities currently using rented land or water surfaces prior to the effective date of Decree No. 142/2005/NĐ-CP and which must re-determine the rental prices, shall base their re-determined rental prices on the results sent by the financial agency (People's Committee) at the same level; the natural resources and environment agency shall adjust the rental prices, and the tax authority shall re-determine the rental payments due according to the new prices, and notify the person obligated to pay according to the guidance provided in Point 1 of Section I of this Part.

2. Clause 2, for cases where land and water surface are being used before the effective date of Decree No. 142/2005/NĐ-CP and require re-determination of the rental price, based on the results of the re-determined rental price sent by the finance agency (People's Committee) at the same level; the natural resources and environment agency shall adjust the rental price, and the tax authority shall re-determine the land and water surface rent payable according to the new price, sending a Notice to the person obligated to pay in accordance with point 1 of Section I of this Part.

4. For land rental applications submitted after the effective date of Decree No. 142/2005/NĐ-CP, entities granted land and water surface rentals by the State and eligible for exemption from rental fees under Article 14 (except Clause 6) of Decree No. 142/2005/NĐ-CP, or entitled to reduced rental fees under Clause 1 and Clause 4 of Article 15 of Decree No. 142/2005/NĐ-CP, must declare their eligibility for exemption or reduction of rental fees along with their land and water surface rental application documents to the land registration office or the natural resources and environment agency for transfer to the tax authority.

3. For ongoing projects that still enjoy exemptions or reductions in land and water surface rent as provided for in Clause 5 of Article 13 of Decree No. 142/2005/NĐ-CP, the entity renting land and water surface from the State shall submit declaration forms requesting continued exemption or reduction of rent to the direct tax management authority.

II. The tax authority directly managing the taxpayer shall determine the land and water surface rental payments due according to Article 18 of Decree No. 142/2005/NĐ-CP.

4. For cases of land leasing after the effective date of Decree No. 142/2005/NĐ-CP, entities renting land and water surface from the State, which fall under the category eligible for rent exemption as stipulated in Article 14 (except Clause 6) of Decree No. 142/2005/NĐ-CP, and those eligible for rent reduction as stipulated in Clauses 1 and 4 of Article 15 of Decree No. 142/2005/NĐ-CP must declare and request exemption or reduction of rent along with the lease application documents for land and water surface to the land registration office or the natural resources and environment agency for them to forward to the tax authority.

1. Organizations, households, and individuals shall base their payment of land and water surface rental fees on the notification issued by the tax authority and submit the payment at the location specified in the Land and Water Surface Rental Payment Notification (Form No. 03-05/TTĐ attached to Joint Circular No. 30/TTLT/BTC-BTNMT dated April 18, 2005 guiding the circulation of land user obligation documents). 5. Entities renting land and water surface from the State, which fall under the category eligible for rent exemption as stipulated in Clause 6 of Article 14, and those eligible for rent reduction as stipulated in Clauses 2 and 3 of Article 15 of Decree No. 142/2005/NĐ-CP must declare and request exemption or reduction of rent to the direct tax management authority.

II. The tax authority directly managing the taxpayer shall determine the land and water surface rent payable in accordance with Article 18 of Decree No. 142/2005/NĐ-CP.

III. Collection of land and water surface rent as stipulated in Article 19 of Decree No. 142/2005/NĐ-CP is guided as follows:

1. Organizations, households, and individuals shall base their payment of land and water surface rent on the Notice issued by the tax authority, paying the rent at the designated payment location specified in the Notice of Payment of Land and Water Surface Rent (according to Model No. 03-05/TTĐ attached to Circular Joint No. 30/TTLT/BTC-BTNMT dated April 18, 2005 guiding the circulation of land user financial obligation documents). The maximum deadline for payment is thirty working days from the date of receipt of the Notice.

1. Point a, Clause 1, Clause 2 shall be implemented as follows: The exchange rate for converting foreign currency to Vietnamese Dong (VND) shall be based on the average inter-bank foreign exchange market rate published by the State Bank of Vietnam at the time of payment.

2. When collecting land and water surface rent, the tax authority or the State Treasury must use revenue collection vouchers for state budget funds in accordance with Circular No. 80/2003/TT-BTC dated August 13, 2003, guiding the concentration and management of state budget revenues through the State Treasury.

V. Complaints and complaint resolution as stipulated in Article 23 of Decree No. 142/2005/NĐ-CP shall be implemented as follows:

3. The tax authority shall coordinate with the State Treasury at the same level to organize the collection of land and water surface rent in a convenient manner for the payer, ensuring the safety of the rent payments deposited into the state budget. Even if a complaint is not resolved, the entity still must pay the full amount of the notified land and water surface rental fees within the prescribed deadline.

IV. Handling outstanding issues regarding the collection of land and water surface rent as stipulated in Article 20 of Decree No. 142/2005/NĐ-CP is guided as follows:

1. Point a, Clause 1, Clause 2 are guided as follows: The exchange rate for converting foreign currency to Vietnamese Dong (VND) shall be applied according to the average inter-bank foreign exchange trading rate published by the State Bank of Vietnam at the time of payment.

4. Within thirty days from the expiration of the resolution period specified in Article 36 of the Law on Complaints and Petitions, or from the date of receipt of the first complaint resolution decision if the complainant disagrees, the complainant has the right to file a complaint with the superior authority of the entity that determined and notified the rental payments due, or to initiate legal proceedings in court. In remote areas with difficult access, this period may be extended but not exceed forty-five days.

2. Clause 2 provides for the payment of overdue land and water surface rent: Overdue land and water surface rent must be fully paid in 2006. If there is still an arrears at the end of 2006, starting from January 1, 2007, a daily late payment penalty of 0.02% (two ten-thousandths) will be imposed on the overdue rent, and the tax authority shall report to the competent People's Committee for consideration of non-compliance with the legal obligations of land and water surface users.

VI. Implementation.

1. The People's Committee of the province shall be responsible for directing levels and sectors under local management to coordinate with financial agencies, tax agencies, and state treasuries within their jurisdiction to implement the collection of land rental fees and water surface rental fees in accordance with the provisions of Decree No. 142/2005/NĐ-CP and the guidance provided in this Circular, inspecting and handling violations or complaints regarding incorrect declarations or confirmations that cause losses to the State budget or the land users.

2. The General Department of Taxation shall be responsible for:

- Directing the organization of the collection of land rental fees and water surface rental fees according to the administrative reform procedures, receiving files from natural resources and environmental agencies to determine compensation for land, the value of land use rights to be deducted from the land rental fees payable, the number of years still required to pay the rental fees; land rental fees and water surface rental fees paid in one lump sum, annually, ... and notifying the payment of land rental fees and water surface rental fees, other revenues (if any). - Directing the examination and decision on exemptions and reductions of land rental fees and water surface rental fees; handling difficulties related to the collection of land rental fees and water surface rental fees.

- Specifying declaration forms, certificates, and record books for the collection and payment of land rental fees and water surface rental fees; specifying the declaration form for requesting exemptions and reductions of land rental fees and water surface rental fees in accordance with Decree No. 142/2005/NĐ-CP and this Circular.

3. The Central Treasury shall be responsible for directing the organization of the collection of land rental fees and water surface rental fees in accordance with the national budget revenue collection procedures and coordinating with tax agencies to facilitate the payment of land rental fees and water surface rental fees into the State budget.

4. The responsibilities of land lessees and water surface lessees shall be implemented in accordance with Clause 4, Article 21 of Decree No. 142/2005/NĐ-CP.

5. This Circular shall take effect fifteen days from the date of publication in the Official Gazette.

This Circular replaces the guidance on land leasing and the payment of land rental fees and water surface rental fees in Circular No. 35/2001/TT-BTC dated May 25, 2001, issued by the Ministry of Finance guiding the payment of land rental fees and joint venture capital contributions using the value of land use rights of domestic organizations, households, and individuals; Point 1, Section II, Part B of Circular No. 20/2002/TT-BTC dated February 28, 2002, issued by the Ministry of Finance guiding the implementation of Decree No. 71/2001/NĐ-CP dated October 5, 2001, of the Government on preferential investment in housing construction for sale and lease; guidance on the collection of land rental fees and water surface rental fees in Circular No. 98/2002/TT-BTC dated October 24, 2002, issued by the Ministry of Finance guiding the implementation of tax exemptions and reductions for investment beneficiaries under Decree No. 51/1999/NĐ-CP dated July 8, 1999, of the Government detailing the implementation of the Law on Encouraging Domestic Investment (amended) No. 03/1998/QH10.

Any previous regulations contrary to this Circular are hereby abolished.

During the implementation of this Circular, if any difficulties arise, it is requested that the People's Committees of provinces and centrally-administered cities promptly report to the Ministry of Finance for study and resolution./.

During the implementation of this Circular, if any issues arise, please promptly report them to the Ministry of Finance for study and resolution by the People's Committees of provinces and centrally-administered cities./.