CIRCULAR

Guidelines for implementing Decree No. 13/2006/NĐ-CP dated January 24, 2006 of the Government on determining the value of land use rights to be included in the asset value of organizations granted land by the State without payment of land use fees

Regarding the determination of the value of land use rights to be included in the asset value of organizations granted land by the State without payment of land use fees

of organizations to which the State allocates land without collecting land use fees

Based on the Land Law dated November 26, 2003;

Pursuant to Decree No. 14/1998/NĐ-CP dated March 6, 1998 of the Government on state asset management;

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

Pursuant to Decree No. 13/2006/NĐ-CP dated January 24, 2006 of the Government on determining the value of land use rights to be included in the asset value of organizations granted land by the State without payment of land use fees;

The Ministry of Finance hereby provides guidelines for determining the value of land use rights to be included in the asset value of organizations granted land by the State without payment of land use fees as follows:

I - GENERAL PROVISIONS

1 - Object and scope of application as stipulated in Article 1 of Decree No. 13/2006/NĐ-CP dated January 24, 2006 of the Government on determining the value of land use rights to be included in the asset value of organizations granted land by the State without payment of land use fees, some cases are guided as follows:

1.1 - Regarding the scope of application: This Circular guides certain contents regarding the determination of the value of land use rights to be included in the asset value of organizations according to Article 1 of Decree No. 13/2006/NĐ-CP dated January 24, 2006 of the Government on determining the value of land use rights to be included in the asset value of organizations granted land by the State without payment of land use fees (hereinafter referred to as Decree No. 13/2006/NĐ-CP).

1.2 - Regarding the object stipulated in Clause 6 of Article 1 of Decree No. 13/2006/NĐ-CP: land granted by the State to organizations for use with payment of land use fees but exempted from land use fees according to Article 12 of Decree No. 198/2004/NĐ-CP dated December 3, 2004 of the Government on collecting land use fees and guided in Circular No. 117/2004/TT-BTC dated December 7, 2004 of the Ministry of Finance must determine the value of land use rights including land granted to organizations for the implementation of:

a) Investment projects in industries, professions, and fields of preferential investment and implemented in areas of preferential investment as prescribed by the Government;

b) Investment projects in areas with difficult economic and social conditions and areas with particularly difficult economic conditions as prescribed by the Government;

c) Student dormitory construction projects funded by the State budget;

d) Construction projects of high-rise residential buildings for workers in industrial zones;

e) Construction projects of public facilities with business purposes (socialized) in the fields of education, health care, culture, physical education, and sports.

2 - Basis for determining the value of land use rights stipulated in Article 2 of Decree No. 13/2006/NĐ-CP is guided as follows:

2.1 - Clause 1 stipulates that the area of land subject to the determination of the value of land use rights is the area currently being used, land granted according to the decision of the competent state authority, land received through the transfer of land use rights; guiding certain specific contents as follows:

a) In the case where inventory has been carried out, the area is based on the actual inventory and reported for handling the results of the land inventory according to Directive No. 28/2004/CT-TTg dated July 15, 2004 of the Prime Minister.

b) If a certificate of land use right has been issued, the area recorded on the certificate of land use right is the area subject to the determination of the value of land use rights.

2.2 - Clause 2 stipulates that the land price for determining the value of land use rights is the price of the type of land granted; the land price for determining the value of land use rights is the land price issued by the People's Committee of the province according to the Government's regulations at the time of determining the value of land use rights.

II - SPECIFIC PROVISIONS

1 - The land price for determining the value of land use rights stipulated in Article 4 of Decree No. 13/2006/NĐ-CP is the price of the type of land currently being used; the type of land currently being used is determined according to Article 13 of the Land Law 2003.

2 - The adjustment of the value of land use rights stipulated in Article 6 of Decree No. 13/2006/NĐ-CP; Clause 1 and Clause 2 of this article are guided as follows:

2.1 - Point a of Clause 1 is guided as follows: organizations must adjust the value of land use rights in the asset value when the area of land used changes compared to the area of land already determined the value of land use rights due to the implementation of land inventory according to the Land Law; all cases of discrepancies between records and actual inventory must have a report explaining the reasons clearly with the superior management agency and the state financial agency at the same level.

2.2 - Clause 2 is guided as follows: organizations must adjust the value of land use rights in the asset value when the competent state authority permits a change in the purpose of land use, the land price for determining the value of land use rights in this case is the land price according to the new purpose of land use.

In the case where an organization must adjust the value of land use rights according to Article 6 of Decree No. 13/2006/NĐ-CP, the organization reports to the Department of Finance of the provincial city directly under the central government; the Department of Finance takes the lead in coordinating with relevant departments to adjust the value of land use rights and sends the adjustment results according to Clause 2, Article 9 of Decree No. 13/2006/NĐ-CP.

3 - The accounting of the value of land use rights into the asset value stipulated in Article 7 of Decree No. 13/2006/NĐ-CP; Clause 3 of this article is guided as follows:

The value of land use rights determined according to Decree No. 13/2006/NĐ-CP of the Government shall be accounted for in fixed assets and recorded separately in the accounting books of the organization both in terms of land area and the value of land use rights according to current laws on accounting.

The value of land use rights determined according to Decree No. 13/2006/NĐ-CP and guided in this Circular shall not be used for transferring land use rights, calculating compensation for land, determining the value of land use rights when implementing the corporatization of state-owned enterprises, and other transactions.

4- The recovery and transfer of land use rights in accordance with Article 8 of Decree No. 13/2006/NĐ-CP; Clause 3 of this provision shall be guided as follows:

4.1- The transfer of land use rights shall mainly be carried out through public auction; in cases where the transfer is made pursuant to a decision of a competent state agency (designated sale), the transfer price must closely match the actual transfer price of land use rights in the locality at the time of transfer; the determination of the value of land use rights for compensation purposes, determining the value of land use rights when implementing corporate shareholding, and conducting other civil transactions must comply with current laws on compensation and resettlement support, corporate shareholding, and civil transactions, etc.

4.2- All proceeds from the sale of assets including the transfer of land use rights (after deducting reasonable and legitimate expenses related to the transfer of land use rights, and expenses invested in land using non-state budget funds that have not yet been recovered) must be deposited into the state budget in accordance with regulations on state asset management.

4.3- In cases where organizations must invest in building new headquarters due to relocation to another location or reorganization of office space, they may use the proceeds from the transfer of land use rights to implement investment projects approved by competent state agencies in accordance with regulations on relocating headquarters, production and business facilities according to planning due to environmental pollution or reorganization and rearrangement of administrative offices, public institutions, and state-owned enterprises.

5- The procedure for determining the value of land use rights stipulated in Article 9 of Decree No. 13/2006/NĐ-CP; guidance is as follows:

5.1- Clause 1 is guided as follows:

Organizations currently using land in accordance with Article 1 of Decree No. 13/2006/NĐ-CP shall prepare a report and submit it to the Department of Finance where the organization uses the land; the report includes:

- A letter requesting the determination of the value of land use rights to be included in the organization's asset value.

- A certified copy of the documents specified in Clause 1, Article 9 of Decree No. 13/2006/NĐ-CP. In cases where there are no documents proving land use rights, the organization must provide an explanatory document confirmed by the People's Committee of the district, county, town, or provincial city regarding the history of land use and the fact that the currently used land has no disputes.

5.2- Clause 2 is guided as follows: the document determining the value of land use rights to be sent to relevant agencies shall be implemented according to the attached Model Record in this Circular.

6- Regarding the deadline for determining the value of land use rights as stipulated in Article 10 of Decree No. 13/2006/NĐ-CP; specific guidance is as follows:

6.1- Clause 1 is guided as follows: the initial determination of the value of land use rights shall be implemented after the effective date of Decree No. 13/2006/NĐ-CP and this Circular and completed before December 31, 2007.

6.2- Clause 2 is guided as follows: adjustments to the value of land use rights shall be made thirty days after a state agency makes a decision to change the purpose of land use; after completing a comprehensive inventory and reassessment of assets; after changes in the area of land use as stipulated in Article 6 of Decree No. 13/2006/NĐ-CP; or in accordance with the guidance of the Ministry of Finance.

7- Management of the value of land use rights for organizations granted land without payment of land use fees, or granted land with payment of land use fees but exempted from such payments, shall be carried out in accordance with Article 11 of Decree No. 13/2006/NĐ-CP.

III- IMPLEMENTATION

1- Ministries, ministerial-level agencies, government agencies, central agencies of mass organizations, and State-owned corporations established by the Prime Minister's decision shall direct and guide subordinate units and state-owned companies under their management to prepare reports on land use and submit them to the Department of Finance (where the organization uses the land) in accordance with the guidance provided in Section 5, Part II of this Circular. Annually, they shall report to the Department of Finance when there are changes in the area of land use or changes in the purpose of land use so that the Department of Finance can adjust the value of land use rights in accordance with state asset management regulations; check the management and use of land by organizations under their management; handle violations in land management within their authority in accordance with state asset management regulations.

Annually, on December 31, organizations using land that are required to determine the value of land use rights as stipulated in Point 6.2, Section 6, Part II of this Circular shall submit reports in accordance with asset reporting procedures to the Department of Finance (where the organization uses the land), superior supervisory agencies, and local financial authorities using the attached Forms 01BC/HCSN; 02THBC/HCSN; 01BC/DNNN; 02THBC/DNNN in this Circular.

2- Chairmen of People's Committees of provinces and centrally-administered cities shall be responsible for:

a) Directing the Department of Finance to coordinate with relevant agencies to organize and guide the determination of the value of land use rights to be included in asset values for organizations granted land without payment of land use fees within their jurisdictions, and to compile and report results to the Ministry of Finance using the attached Forms 01TH/HCSN and 02TH/DNNN in this Circular.

b) Inspect the management and use of land by organizations within their jurisdiction, handle violations within their authority or refer to higher authorities for handling violations in land management as follows:

- For organizations under local management, both measures prescribed by laws on land and laws on state asset management shall be applied.

- For organizations under central management, the powers stipulated in Clause 1 and Clause 2 of Article 36 of Government Decree No. 181/2004/NĐ-CP dated October 29, 2004 on the implementation of the Land Law shall be applied after obtaining opinions from ministries, ministerial-level agencies, government agencies, central agencies of mass organizations, and State-owned corporations established by the Prime Minister, and the Ministry of Finance.

3- This Circular shall take effect fifteen days from the date of publication in the Official Gazette. During implementation, if any difficulties arise, the relevant ministries, sectors, localities, and state-owned corporations are requested to promptly report to the Ministry of Finance for further study and guidance./.