Decree No. 121/2010/ND-CP Amending and Supplementing Certain Provisions of Decree No. 142/2005/ND-CP dated November 14, 2005 of the Government on Land Rent and Water Surface Rent Collection.

DECREE

Amending and supplementing some articles of Decree No. 142/2005/NĐ-CP dated November 14, 2005 of the Government on land rent and water surface rent

 _________________________

THE GOVERNMENT

Pursuant to the Law on Organization of the Government dated December 25, 2001;

Based on the Land Law dated November 26, 2003;

Based on the Investment Law dated November 29, 2005;

Pursuant to the Law on Tax Administration dated November 29, 2006;

Considering the proposal of the Minister of Finance,

DECREE:

Article 1. Scope of amendment and supplementation

This Decree stipulates the amendment and supplementation of some articles of Decree No. 142/2005/NĐ-CP dated November 14, 2005 of the Government on land rent and water surface rent (hereinafter referred to as Decree No. 142/2005/NĐ-CP).

Article 2. Amendment and supplementation of some articles of Decree No. 142/2005/NĐ-CP as follows:

1. Amend Article 1 as follows:

"Article 1. Scope of regulation This Decree regulates land rent and water surface rent when:
1. The State leases land, including land on the surface and underground parts of buildings constructed on the surface according to the provisions of the Land Law.
2. The State leases underground land for constructing underground works for business purposes according to approved planning without using the surface land.
3. Transferring from the form of land granted by the State to leasing land.
4. The State leases water surfaces."

2. Amend point a, point c Clause 2 Article 2 as follows:

"a) Overseas Vietnamese, foreign organizations and individuals (including joint venture economic organizations between domestic and foreign investors) lease land to implement investment projects in agriculture, forestry, aquaculture, salt production; construction of production and business premises; construction of public facilities with business purposes; construction of infrastructure for transfer or lease; mining activities, production of building materials, pottery; construction of houses for sale or lease.
c) Economic organizations, households, individuals; overseas Vietnamese, foreign organizations and individuals (including joint venture economic organizations between domestic and foreign investors) lease water surfaces and sea surfaces not belonging to the groups of land specified in Article 13 of the Land Law to implement investment projects."

3. Supplementing Article 5a as follows:

"Article 5a. Rental price of land
1. In cases where land is leased with annual land rent payments, the annual rental price of land shall be calculated at 1.5% of the land price according to the purpose of the leased land issued by the People's Committee of the province or centrally governed city (hereinafter referred to as the provincial People's Committee) in accordance with the Government's regulations on methods for determining land prices and price ranges for various types of land. If the land price prescribed by the provincial People's Committee at the time of leasing land is not in line with the actual market price of land transfer rights under normal conditions, the provincial People's Committee shall base its decision on the actual market price of land transfer rights in the locality to determine a specific price that is appropriate.
2. For land located in urban areas, commercial centers, service centers, transportation hubs, concentrated residential areas with special profitability and advantages in using land for production and business premises, trade and services, the provincial People's Committee shall decide on the maximum rental price of land not exceeding two (02) times the rental price of land as stipulated in Clause 1 of this Article based on local realities.
3. For land in remote, mountainous, island, economically and socially disadvantaged areas, land used for agricultural, forestry, aquaculture, salt production purposes; land used for production and business premises of projects in encouraged investment sectors, particularly encouraged investment sectors, the provincial People's Committee shall decide on the minimum rental price of land not less than 0.5 times the rental price of land as stipulated in Clause 1 of this Article based on local realities.
4. In cases where the State leases land with payment of land rent once for the entire lease period, the amount of land rent payable shall be equal to the amount of land use fee payable in the case of granting land with payment of land use fee for the same purpose and duration of land use. If the project operation period recorded on the Investment Certificate (Investment License) differs from the lease period in the case of paying land rent once as stipulated in this point, the project operation period shall be adjusted to match the lease period.
5. The rental price of land in cases of auctioning land use rights or bidding for projects using leased land is the winning bid price, specifically as follows:
a) Auctioning land use rights or bidding for projects using leased land for the form of paying land rent once for the entire lease period, the rental price of land is the winning bid price. The amount of land rent payable in this case is the winning bid price multiplied (x) by the area of leased land multiplied (x) by the lease period (equal to the amount of land use fee payable and corresponding to the case of auctioning land grant with payment of land use fee).
b) Auctioning land use rights or bidding for projects using leased land for the form of paying land rent annually, the rental price of land is the winning bid price; this price is stable for ten years. After the stabilization period, the adjustment of the rental price of land applies like the case of the State leasing land with annual land rent payments but not through auction, but the adjustment rate of the next ten-year stabilization period does not exceed 30% of the rental price of land during the previous stabilization period.
6. For architectural constructions built on water surfaces belonging to one of the groups of land specified in Article 13 of the Land Law, the rental price of land as stipulated in Clauses 1, 2, 3, 4, and 5 of this Article shall apply.
7. The rental price of land for constructing underground works (not the underground part of buildings constructed on the surface) shall be determined not exceeding 30% of the rental price of land on the surface with the same purpose of use. The specific rental price of land shall be applied by the provincial People's Committee in accordance with local realities."

4. Amend Clause 1 Article 6 as follows:

"1. Based on the land price and rental price of land stipulated in Article 5a of this Decree, the provincial People's Committee shall issue the rental price of land (the ratio percentage of land price according to the purpose of leased land) for each type of land, type of city, type of commune, region, type of street, category of land."

5. Supplement Clause 3 Article 7 as follows:

"3. In case the person renting land from the State pre-funds compensation, support, resettlement, and organizational expenses for compensation and clearance according to the approved plan, they shall be allowed to deduct the amount prepaid from the rent payable for the land according to the approved plan; The deduction amount shall not exceed the total rent payable for the land.

Any remaining compensation, support, resettlement, and organizational expenses for compensation and clearance that have not been deducted from the rent payable (if any) shall be included in the project's investment capital.

6. Amend Clause 1 Article 8 as follows:

"1. The unit price of land rental for each project shall remain stable for five years. Upon expiration of this period, if the land price set and announced by the provincial People's Committee varies by no more than 20% compared to the land price used to calculate the land rental fee at the time of determining the previous unit price, then the Department of Finance (in cases where economic organizations, overseas Vietnamese, foreign organizations, and individuals lease land) or the District People's Committee (in cases where households and individuals lease land) shall decide on the unit price of land rental for the next term.

If the land price set and announced by the provincial People's Committee varies by 20% or more compared to the land price used to calculate the land rental fee at the time of determining the previous unit price, the Department of Finance shall take the lead in re-evaluating and submitting to the provincial People's Committee for a decision to adjust accordingly, serving as the basis for the Department of Finance (in cases where economic organizations, overseas Vietnamese, foreign organizations, and individuals lease land) or the District People's Committee (in cases where households and individuals lease land) to adjust the unit price of land rental for the subsequent term (five years).

7. Amend Clause 2 of Article 9 as follows:

"2. For projects leasing land or water surface before January 1, 2006, which pay annual land or water surface rental fees without having adjusted the unit price of land rental, the re-evaluation of the unit price of land rental shall be carried out as follows:
a) Projects with investment certificates (investment permits), decisions on land leasing, or land leasing contracts issued (signed) by competent state agencies that specify the unit price of land or water surface rental and principles for adjusting the unit price shall continue to implement the adjustment principles specified in the investment certificate (investment permit); land leasing decision or land leasing contract.
b) Projects not covered by point a of Clause 2 of this Article shall adjust the unit price of land rental according to the provisions of Articles 5a, 5, and 6 of this Decree.

8. Supplement Article 12a as follows:

"Article 12a. Determination of financial obligations for investment projects using land with origins from economic organizations currently leasing land from the State on an annual payment basis.
1. Economic organizations currently leasing land from the State on an annual payment basis, if permitted by competent authorities to invest new projects in real estate (residential buildings, rental housing), shopping centers, services on leased State land, then:
a) In the case where the economic organization implements the investment project itself, it must convert from annual land rental payments to land allocation with land use fees.
b) In the case where the economic organization is permitted by competent state agencies to form joint ventures or partnerships with other economic organizations (forming a new legal entity) to implement the investment project, the new legal entity must implement land allocation with land use fees (if the new legal entity falls under the category eligible for land allocation with land use fees); must switch to land leasing with one-time payment for the entire lease period (if the new legal entity falls under the category eligible for land leasing with one-time payment for the entire lease period).
2. In the case where the competent state agency recovers land currently leased to an economic organization to allocate to another economic organization for a new real estate investment project (residential buildings, rental housing), shopping centers, services, it must implement land allocation through public auction of land use rights or public auction of land leasing with one-time payment for the entire lease period.
3. The determination of land use fees and one-time land rental payments for the entire lease period for the cases stipulated in Clause 1 and the cases of land allocation and leasing that cannot be implemented through public auction as stipulated in Clause 2 of this Article shall be carried out according to the regulations of the Government. The land price for calculating land use fees and one-time land rental payments shall be decided by the provincial People's Committee in line with the actual market price under normal conditions.

9. Amend Clause 2 of Article 13 as follows:

"2. In the case where the land lessee or water surface lessee is both exempted from land or water surface rental fees and entitled to reduced land or water surface rental fees, they shall be exempted from land or water surface rental fees; upon expiration of the exemption period, they shall be entitled to reduced land or water surface rental fees for the remaining lease period; in cases where multiple levels of reduced land or water surface rental fees apply, they shall enjoy the highest level of reduction.

10. Amend Clause 4 of Article 14 as follows:

"4. Starting from the date the project is completed and put into operation, specifically as follows:
a) Three (3) years for projects in the Encouraged Investment Fields List, located at new production and business facilities of economic organizations undergoing relocation according to planning or due to environmental pollution.
b) Seven (7) years for projects investing in areas with difficult socio-economic conditions.
c) Eleven (11) years for projects investing in areas with extremely difficult socio-economic conditions; projects in the Special Encouraged Investment Fields List; projects in the Encouraged Investment Fields List located in areas with difficult socio-economic conditions.
d) Fifteen (15) years for projects in the Encouraged Investment Fields List located in areas with extremely difficult socio-economic conditions; projects in the Special Encouraged Investment Fields List located in areas with difficult socio-economic conditions."

The list of sectors encouraged for investment, particularly encouraged sectors, areas with difficult socio-economic conditions, and areas with especially difficult socio-economic conditions shall be implemented in accordance with the provisions of the Government.

11. Amend Clause 1 and Clause 2 of Article 18 as follows:

"1. In the case of annual land rent payment or water surface lease payment

Any advance payment (if any) for compensation, support, resettlement, and organization costs for compensation and clearance according to the approved plan shall be deducted from the annual land rent payable, converted into corresponding years or months of land rent payment at the rental price at the time of determining the initial land rent payable, and considered as the completed period of annual land rent payment. The remaining period of land lease shall continue to apply annual land rent payment as follows:
a) Normal case

b) In the case of reduction in land rent or water surface lease payment as stipulated in Clause 2 or Clause 3 of Article 15 of this Decree.

Note: 

- Compensation, support, resettlement, and organization costs for compensation and clearance (if any) shall be converted into years or months and deducted from the period of land rent payment, but the maximum deduction shall not exceed the period of land rent payment.

- The year of land rent or water surface lease payment shall be calculated according to the Gregorian calendar from January 1st to December 31st each year. In the first year of land lease or water surface lease, if the lease period is less than 12 months, the land rent or water surface lease payment for the first year and the last year shall be calculated based on the number of leased months.

2. In the case of one-time payment for the entire lease period.

Note:

- Compensation, support, resettlement, and organization costs for compensation and clearance (if any) shall be deducted from the one-time land rent payable, but the maximum deduction shall not exceed the amount of one-time land rent payable.

- The number of years for land rent or water surface lease payment shall be the total number of lease years minus the number of exempted years for land rent or water surface lease payment (if any)"

12. Amend Clause 1 of Article 22 as follows:

"1. In the case of late payment of land rent or water surface lease payment into the State budget, the lessee must pay a fine; the late payment penalty for land rent or water surface lease payment shall be carried out according to the level prescribed by the Law on Tax Administration and guiding documents."

Article 3. Implementation Provisions

1. This Decree takes effect from March 1, 2011.

2. Handling some existing issues when this Decree takes effect;

a) In the case where the investor has advanced payment for compensation, support, resettlement, and organization costs for compensation and clearance according to the approved plan under the compensation, support, and resettlement policy when the State recovers land before October 1, 2009, the cost of land compensation and support can be deducted from the land rent payable, but the deduction amount shall not exceed the amount of land rent payable.

In the case where the investor has advanced payment for compensation, support, resettlement, and organization costs for compensation and clearance according to the approved plan under the provisions of Government Decree No. 69/2009/NĐ-CP dated August 13, 2009, the advance payment amount shall be deducted from the land rent payable according to Article 15 of Government Decree No. 69/2009/NĐ-CP dated August 13, 2009.

b) For cases that have signed land lease contracts and determined the unit price of land rent during the stable land rent period (five years), the unit price of land rent shall be adjusted according to this Decree only after the end of the stable period.

3. Abolish the following provisions:

Article 12 of Decree No. 69/2009/NĐ-CP dated August 13, 2009, of the Government supplements provisions on land planning, land prices, land recovery, compensation, support, and resettlement.

Article 4. Implementation

The Ministry of Finance shall be responsible for guiding the implementation of this Decree. Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairpersons of provincial People's Committees under the central city authorities shall be responsible for implementing this Decree./.