Decision No. 179/1998/QD-BTC On Issuing Regulations on Land Rent, Water Surface Rent, and Sea Surface Rent for Foreign Investment Forms in Vietnam

 

Pursuant to …;

Regarding the issuance of the Provision on land rent, water surface, and sea surface applicable to foreign investment forms in Vietnam
forms of foreign investment in Vietnam

THE MINISTER OF FINANCE

Pursuant to the Law on Foreign Investment in Vietnam dated November 12, 1996;

Pursuant to the Land Law dated July 14, 1993;

Pursuant to Decree No. 12/CP dated February 18, 1997 of the Government detailing the implementation of the Law on Foreign Investment in Vietnam;

Pursuant to Decree No. 10/1998/NĐ-CP dated January 23, 1998 of the Government on certain measures to encourage and ensure the operation of direct foreign investment in Vietnam.

DECISION:

Article 1The Provision on land rent, water surface, and sea surface applicable to foreign investment forms in Vietnam is hereby issued together with this Decision.

Article 2. This Decision shall take effect fifteen days from the date of signature and shall replace Decision No. 1417 TC/TCĐN dated December 31, 1994 of the Minister of Finance.

Article 3Ministers, Heads of ministerial-level agencies, Heads of agencies under the Government, Chairpersons of People's Committees of provinces and centrally governed cities shall, within their respective functions, tasks, and powers, be responsible for directing relevant units to implement this Decision.

 

 

PROVISIONS

ON LAND RENT, WATER SURFACE, AND SEA SURFACE APPLICABLE TO FOREIGN INVESTMENT FORMS IN VIETNAM
(Issued together with Decision No. 179/1998/QĐ-BTC dated February 24, 1998 of the Minister of Finance)

Article 1.- Subjects required to pay land rent.

Joint ventures, wholly foreign-owned enterprises, and parties participating in business cooperation contracts (hereinafter referred to as foreign-invested enterprises) that are granted land, water surface, and sea surface (collectively referred to as land) leases by the Socialist Republic of Vietnam for use in implementing projects must pay land rent according to these Provisions.

Article 2.- Subjects not required to pay land rent.

1. Joint ventures and foreign parties are not required to pay land rent in the following cases:

- Joint ventures where the Vietnamese party contributes capital through land rent;

- Business cooperation contracts under the form of profit sharing, where land rent has been included in the share of products allocated to the Vietnamese party.

2. The Vietnamese party participating in joint ventures and business cooperation contracts as stipulated in Clause 1 of this Article shall be responsible for paying land rent in accordance with this Decision.

Article 3.- Rental rates for land, water surface, and sea surface are specified as follows:

1. Urban land:

1.1. Urban land refers to land within city centers, town centers, and market towns as defined in Article 55 of the Land Law. The rental rate for urban land is specified as follows:

Unit of measurement: USD/m2/year

Group 1:1,0012,00Group 2:0,809,60Group 3:0,607,20Group 4:0,354,20Group 5:0,182,16

List of urban groups attached as Appendix No. 1.

1.2. For urban areas located in mountainous regions, remote areas, and economically disadvantaged areas, the rental rate is determined at 80% of the rate prescribed in Clause 1.1 of this Article; specifically, for market towns in these areas, the rental rate is determined at 50% of the rate prescribed in Clause 1.1 of this Article.

1.3. The rental rate for urban land is calculated as follows:

Land tax rateMinimum price level specifiedSystem coefficientSystem coefficientSystem coefficient1 year=for each urban groupxlocationxinfrastructurexindustry(USD/m2/year)x&(USD/m2/year)

The coefficients are determined as follows:

a. Location coefficient (site):

- Location 1 with a coefficient of 3 applies to plots of land with a frontage adjacent to the main streets of the city, major traffic junctions within the city, very favorable for production, business, services, tourism, and living activities, with the highest potential profitability and actual land prices;

- Location 2 with a coefficient of 2.5 applies to plots of land with a frontage not adjacent to the main streets but adjacent to other streets or alleys directly connected to the main streets, favorable for production, business, services, tourism, and living activities, with lower potential profitability than location 1, and actual land prices lower than those of location 1;

- Location 3 with a coefficient of 2 applies to plots of land without a frontage adjacent to streets, relatively favorable for production, business, services, tourism, and living activities, with lower potential profitability than location 2, and actual land prices lower than those of location 2;

- Location 4 with a coefficient of 1 applies to plots of land without any frontage adjacent to streets or alleys, less favorable for production, business, services, tourism, and living activities, with the lowest land prices in the city.

Based on the above provisions, depending on the characteristics of each city, when determining the rental rate for plots of land with standards between two locations, the coefficient between the two locations can be applied.

b. Infrastructure coefficient:

- Coefficient 2 applies to plots of land meeting the following conditions:

+ Favorable transportation;

+ Nearby power supply facilities capable of meeting project needs;

+ Nearby water supply facilities capable of being used for the project.

- Coefficient 1.7 applies to plots of land lacking one of the above conditions.

- Coefficient 1.4 applies to plots of land lacking two of the above conditions.

- Coefficient 1 applies to plots of land lacking all three of the above conditions.

c. Industry coefficient:

- Group 1 with a coefficient of 1 applies to industries such as electricity generation and distribution, water supply and drainage, mining industry, metallurgy, machinery and equipment manufacturing, basic chemicals, fertilizers, pesticides, oil refining, gas, oil pipelines, gas pipelines, processing of agricultural, forestry, fishery products, agriculture, forestry, fisheries, medical examination and treatment, schools, pharmaceutical production, medical equipment and devices, sports, environmental pollution control and waste management, construction of bridges and roads, infrastructure development, housing for sale or lease, industrial zones, export processing zones, high-tech zones, and production facilities using advanced technology;

- Group 2 with a coefficient of 1.5 applies to other industries not mentioned in Group 1 and Group 3.

- Group 3 has a coefficient of 2: applicable to commerce and tourism industries, hotels, restaurants, financial leasing, consulting, brokerage, real estate business (excluding infrastructure development, housing construction for sale or lease), finance, banking, insurance, auditing;

In cases where a project operates in multiple industries with different coefficients, the rental land price per unit area for each industry shall be calculated based on the land area used for each industry, and then the overall rental land price per unit area shall be determined; If it is not possible to determine the land area used for each industry, the industry coefficient applied to the total leased land area of the entire project shall be that of the main business industry of the project.

1.4. For newly established districts and wards from rural areas outside urban areas, during a period of 10 years starting from the year of the establishment decision, the rental land price shall be applied according to the rental land price of urban areas with lower rental prices as follows:

- Urban group 1, the minimum rental land price shall not be lower than the minimum rental land price of urban group 3;

- Urban group 2, the minimum rental land price shall not be lower than the minimum rental land price of urban group 4;

- Urban group 3, the minimum rental land price shall not be lower than the minimum rental land price of urban group 5;

- For urban groups 4 and 5, the minimum rental land price shall be 50% of the specified rental land price for those urban areas.

2. Non-urban land:

Non-urban land refers to land not within the scope defined in Clause 1 of this Article, the rental land price is regulated as follows:

2.1. For residential land, specialized-use land, agricultural land, forestry land, aquaculture land, unused land (with potential for agricultural, forestry, or aquaculture production).

a. For land of communes adjacent to urban areas:

Unit of measurement: USD/m2/year

1. Commune with one side adjacent to urban group 1: 0.181,082. Commune with one side adjacent to urban group 2: 0.100,60

b. Other regions:

Unit of measurement: USD/m2/year

Plain0,0600,360Hilly0,0450,270Mountainous0,0200,120

The rental price for non-urban land is determined as follows:

Land tax rateMinimum prescribed priceRateRateRate1 year=for each type of communelocationinfrastructurestructureindustry(USD/m2/year)(USD/m2/year)   development trade

The rates are defined as follows:

Location rate (site):

+ Location 1 with a rate of 3: applicable to plots of land having at least one side adjacent to urban areas, transportation hubs, along major traffic routes, adjacent to industrial zones, commercial areas, tourist areas, favorable for production, business, service, tourism, living activities, and with the highest profitability and actual land prices;

+ Location 2 with a rate of 2.5: applicable to plots of land adjacent to plots in location 1, relatively favorable for production, business, service, tourism, living activities, with lower profitability compared to plots in location 1, and with actual land prices lower than the average actual land prices of location 1;

+ Location 3 with a rate of 2: applicable to plots of land not included in locations 1, 2, and 4;

+ Location 4 with a rate of 1: applicable to plots of land far from roads, unfavorable for production, business, service, tourism, and living activities, with the lowest average actual land prices.

For plots of land whose standards fall between two locations, the rate between the two locations shall be applied.

Infrastructure development rate:

- Coefficient 2 applies to plots of land meeting the following conditions:

+ Favorable transportation;

+ Proximity to power supply facilities capable of meeting the project's needs;

+ Proximity to water supply systems near the perimeter of the project site, usable for the project.

- A rate of 1.5 applies to plots lacking 1 to 2 of the above conditions.

- Coefficient 1 applies to plots of land lacking all three of the above conditions.

Industry rate: uniformly applied to all industries at 1.

2.2. For non-urban land that is currently not residential land, not specialized-use land, and cannot be used for agricultural, forestry, or aquaculture production, the rental land price ranges from 100 to 600 USD/ha/year, and the specific price for each project is determined according to Clause 2.1 of this Article. Specifically, for land in rocky mountainous areas, barren hills, and poor-quality land difficult to use; if used for projects other than industrial production, services, tourism, and commerce, the rental land price ranges from 30 to 100 USD/ha/year;

The specific price for each project is decided by the competent authority issuing the investment permit.

2.3. For projects using land for agricultural, forestry, and aquaculture production, the rental land price is calculated at 50% of the price specified in Clauses 1 and 2 of this Article.

3. Water surface rental fees.

3.1. River, lake, and bay water surfaces have rental fees ranging from 75 to 525 USD/ha/year.

Specifically, for architectural structures built on water surfaces within urban areas, the rental fee is applied as for urban land as stipulated in Clause 1 of this Article.

3.2. Sea surface rental fees range from 150 to 600 USD/km2/year. For cases where the rental area is not fixed, the rental fee ranges from 1,500 to 7,500 USD/year.

4. For the following projects, the land rental fee is calculated based on the minimum price set for each type of land:

- Projects not using ground surface (not affecting ground surface production activities), but utilizing space above the ground surface (excluding aviation activities), such as constructing overpasses, conveyor belts, and similar cases;

- Mineral exploration and extraction projects that regularly use land.

5. The following cases are exempt from paying land rental fees:

- Mineral surveying and exploration activities, underground construction projects that do not affect the current land use status of organizations and individuals using the land; however, compensation for damages caused by the project must be provided according to the Minerals Law;

- Underground mineral extraction activities that do not use surface land; if damage occurs, compensation must be provided according to the Minerals Law.

Article 4. - Organizations and individuals leasing land, in addition to paying the land lease fee according to the unit price set forth in this Regulation, must also bear all costs for compensation for land and property attached to the land of persons whose land is being reclaimed for their own lease, in accordance with Vietnamese law.

Article 5.-

The land lease price for each project shall be stable for at least five years. When adjusted upwards, the increase shall not exceed fifteen percent of the previously stipulated rate. If the leased land project has not reached five years from the date of determining the previous lease price, the current lease price shall still apply until it reaches five years, then it will be recalculated based on the new price.

The adjustment of increasing the land lease price does not apply to the following cases:

1. Paying once upfront for the entire duration of the project's operation, where the unit price for land lease has been determined or the land lease fee has already been prepaid at the time of adjustment;

2. Prepaying the land lease fee once for multiple-year periods starting from the first year of each lease period, during which there is an increase in the land lease fee;

3. The Vietnamese party being permitted by the State to use the land lease fee to contribute capital to joint ventures or participate in business cooperation contracts with foreign organizations or individuals, where the unit price for land lease has been determined at the time of adjustment.

Article 6. - Authority to determine the land tax price

Based on this Regulation, upon the proposal of the Director of the Department of Finance, the People's Committees of provinces and centrally governed cities:

- Decide on the unit price for land lease for projects for which they issue investment permits;

- Propose in writing the unit price for land lease for projects under the investment permit authority of the Ministry of Planning and Investment or agencies authorized by the Ministry of Planning and Investment to issue investment permits; In this case, the Ministry of Planning and Investment or the agency authorized by the Ministry of Planning and Investment decides on the land lease price;

The Ministry of Finance only participates in providing opinions on determining the unit price for land lease in cases where the Ministry of Planning and Investment, agencies authorized by the Ministry of Planning and Investment, or provincial-level People's Committees request.

Article 7. - Time of payment for land lease.

The time of payment for land lease is the time when the enterprise receives the land for use. In cases where the land has not yet been handed over but the enterprise has already used the land, the time of payment for land lease is calculated from the time the enterprise uses the land.

Article 8. - Exemption and reduction of land lease fees.

The exemption and reduction of land lease fees are implemented as follows:

1. Investment projects under the Build-Operate-Transfer (BOT), Build-Transfer-Operate (BTO), or Build-Transfer (BT) regimes are exempted or reduced from land lease fees according to the provisions of the Government.

2. Investment projects for developing industrial infrastructure, export processing zones, high-tech parks are entitled to a twenty percent reduction in land lease fees payable.

3. During the basic construction period, construction projects for bridges, roads, airports, ports, power plants, forests, long-term industrial tree plantations, and perennial fruit trees not falling within the scope of projects specified in Clause 1 of this Article are exempted from paying land lease fees, while other projects are entitled to a fifty percent reduction in land lease fees payable. In cases where a project includes several independent construction items or phases, the basic construction period is calculated based on the item with the largest proportion of investment capital.

For forest planting projects, during the business operation period, a ninety percent reduction in land lease fees payable is granted.

4. In cases where the land lease fee is prepaid once for multiple years starting from the first year, the reduction in land lease fees is as follows:

- Paying for five years results in a five percent reduction in the land lease fees for those five years, paying for a lease term exceeding five years results in an additional one percent reduction for each additional year, but the total reduction shall not exceed twenty-five percent of the land lease fees payable for that period;

- In cases where the land lease fee is prepaid for the entire lease term exceeding thirty (30) years, a thirty percent reduction in the land lease fees payable is granted.

The implementation of reductions and exemptions of land lease fees according to this Decision shall only be applied to projects issued investment permits from the effective date of this Decision.

Article 9.- Provisions on payment of land rent.

1. The payment of land rent shall be regulated as follows:

1.1. Enterprises must submit the declaration form for land rent payment (Annex No. 2) and related documents to the land rent collection agency no later than one month from the date of calculating the land rent as stipulated in Article 7 of this Regulation.

1.2. The basis for calculating land rent is the area of land leased, the lease term, and the rental price per unit area. Specifically:

- The area for calculating land rent is the actual area handed over; - The lease term is the period recorded in the decision on granting land lease issued by the competent state agency;

- The rental price per unit area is determined according to the decision of the competent state agency as stipulated in Article 6 of this Regulation.

1.3. Land rent is calculated annually. For the first year and the last year of the lease term, it is calculated based on the actual number of months used in that year.

1.4. The land rent for each year shall be paid in two installments, each installment being 50% of the total annual rent due, with payments made no later than June 30 and December 31 of each year.

1.5. Land rent can be paid in US dollars (USD) or Vietnamese dong (VND). If paid in Vietnamese dong, it shall be converted to US dollars (USD) at the average actual buying and selling rate in the inter-bank foreign exchange market announced by the State Bank of Vietnam at the time of payment.

1.6. Land rent shall be deposited into the State Budget at the National Treasury designated by the collection agency and according to the current State Budget Manual. In case of overpayment, the excess amount shall be deducted from the land rent due in the next period; if there is no subsequent period, the State Budget shall refund the overpaid amount.

2. In cases where foreign organizations or individuals cooperate with Vietnamese organizations to lease land from the State for construction of housing, they must pay land rent until the end of the lease term. Organizations or individuals purchasing housing have the responsibility to pay land use fees in accordance with Vietnamese laws.

Article 10.- Land rent for certain special cases.

1. Vietnamese organizations or individuals permitted by the State to use the value of land use rights to contribute capital in joint ventures or business cooperation contracts with foreign organizations or individuals shall agree on the value of land use rights, but it must not be lower than the land rent calculated based on the rental price per unit area specified in this Regulation.

2. In special cases involving land in urban centers with exceptional profitability and commercial advantages, if agreement is reached with foreign parties and approved by the investment licensing authority, the rental price may be set higher than the rental price for that city as specified in this Regulation.

Article 11.- Provisions on handling violations; rewards and complaints resolution.

1. Violation Handling

- Violations of regulations on registration, declaration, and payment of land rent, water surface, and sea surface shall be penalized according to the Government's Decree No. 22/CP dated April 17, 1996, on administrative penalties in the field of taxation;

- Failure to pay land rent or late payment of fines shall result in a daily penalty of 0.2% of the overdue amount.

2. Complaints:

Enterprises have the right to file complaints regarding issues related to land rent (excluding issues related to determining the leased land area) with the agency deciding the land rent price.

In case of disagreement with the decision of the People's Committee or the investment licensing authority, enterprises have the right to appeal to the Ministry of Finance. The agency receiving the complaint shall be responsible for resolving it within thirty days from the date of receipt of the complaint; in complex cases, the resolution period shall not exceed forty-five days.

3. Organizations or individuals who abuse their positions or powers to misappropriate or cause loss of land rent shall be required to compensate the full amount misappropriated or lost, and depending on the severity of the violation, they may be subject to disciplinary action, administrative penalties, or criminal liability as prescribed by law.

4. Individuals who discover violations of the provisions of this Regulation shall be rewarded according to the general regulations of the State.

Article 12.- Implementation Provisions.

1. Foreign-invested enterprises and parties involved in joint venture contracts shall strictly comply with this regulation.

2. The General Department of Taxation shall be responsible for directing local tax bureaus to collect land lease fees according to this regulation.

3. Provincial Departments of Finance under the direct jurisdiction of the Central Government shall be responsible for:

- Determining the unit price of land lease fees to be submitted to the People's Committee of the province for decision or to be submitted by the People's Committee of the province to competent state agencies for decision; - Regularly reporting the unit prices of land lease fees for investment projects already licensed in their locality to the Ministry of Finance.

4. The State Asset Management Agency shall be responsible for leading and coordinating with relevant units to guide and determine land lease fees and unit prices when requested by sectors or localities for specific projects; inspecting the implementation of this Decision.

5. This regulation shall only apply to projects licensed from the date this regulation takes effect. For cases where the unit price of land lease fees has been decided by competent state agencies according to previous legal documents before this regulation takes effect, they shall be implemented according to those documents.

In cases where land lease fees have been stipulated before this regulation and are deemed unreasonable, adjustments may be considered upon proposal by the People's Committee of the province and review by the Ministry of Finance.

6. Any difficulties encountered during implementation shall be reported to the Ministry of Finance for study and resolution.

APPENDIX 1

LIST OF URBAN AREAS CLASSIFIED BY GROUPS

Group 1: Inner city areas of Hanoi and Ho Chi Minh City.

Group 2: Inner city areas of cities: Vung Tau, Bien Hoa, Hai Phong.

Group 3: Inner city areas of cities, towns, and market towns as follows:

1. Gia Lam 5. Duc Giang 9. Nha Be

2. Van Dien (Thanh Tri) 6. Hue 10. Hoc Mon

3. Cau Dien (Tu Liem) 7. Da Nang 11. Binh Chanh

4. Ha Dong 8. Nha Trang 12. Thu Duc

Group 4: Inner city areas, towns, and market towns as follows:

1. Dong Anh 2. Yen Vien 3. Soc Son

4. Bac Ninh 5. Hai Duong 6. Do Son

7. Ha Long 8. Nam Dinh 9. Ninh Binh

10. Phu Ly 11. Phuc Yen 12. Viet Tri

13. Vinh 14. Qui Nhon 15. Thanh Hoa

16. Tan An 17. Can Tho 18. Thu Dau Mot

19. Da Lat 20. Ba Ria 21. My Tho.

Group 5: Remaining inner city areas, towns, and market towns.

ANNEX NO. 2

FORM FOR PAYMENT OF LAND LEASE FEES, WATER SURFACE LEASE FEES, AND COASTAL AREA LEASE FEES

1- Enterprise name:

2- Address:

3- Investment license number and date:

4. Account number: Open at Bank:

5- Date of land lease decision:

Declaration SectionLand area leased (sq m)Start date of land lease fee calculationUnit price of land lease fee (USD/sq m/year)Amount to be paid in 199... (USD)NotesLot A     Lot B     Lot...     Total     

First period: on the...day of each year...

Second period: on the...day of each year...

The enterprise commits to ensuring the accuracy of the declared data above and strictly adhering to the payment deadlines for land lease fees accepted by the tax authority.

..., day..., month..., year...

Enterprise director

Comments of the Tax Authority