Circular No. 332/2016/TT-BTC amends and supplements certain provisions of Circular No. 76/2014/TT-BTC dated June 16, 2014, of the Ministry of Finance guiding certain provisions of Decree No. 45/2014/NĐ-CP dated May 15, 2014, of the Government on land use fee collection.

CIRCULAR

AMENDMENTS AND SUPPLEMENTS TO CERTAIN ARTICLES OF THE CIRCULAR NO. 76/2014/TT-BTC DATED JUNE 16, 2014 OF THE MINISTRY OF FINANCE GUIDING CERTAIN PROVISIONS OF THE DECREE NO. 45/2014/NĐ-CP DATED MAY 15, 2014 OF THE GOVERNMENT ON THE COLLECTION OF LAND USE RIGHT TRANSFER FEES

The Government issues this Decree on management and development of industrial clusters.

Pursuant to Decree No. 45/2014/NĐ-CP dated May 15, 2014 of the Government on the collection of land use fees;

Pursuant to Decree No. 118/2015/NĐ-CP dated November 12, 2015 of the Government detailing and guiding the implementation of certain provisions of the Investment Law;

Pursuant to the Decree No. 135/2016/NĐ-CP dated September 9, 2016 of the Government amending and supplementing certain Articles of the Government's Decrees on the collection of land use right transfer fees, land lease fees, and water surface lease fees;

Pursuant to Decree No. 215/2013/NĐ-CP dated December 23, 2013, promulgated by the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

At the proposal of the Director of the State Asset Management Agency,

The Minister of Finance hereby issues this Circular amending and supplementing certain provisions of the Circular No. 76/2014/TT-BTC dated June 16, 2014 of the Ministry of Finance guiding certain provisions of the Decree No. 45/2014/NĐ-CP dated May 15, 2014 of the Government on the collection of land use right transfer fees.

Article 1. Supplement Clause 3, Clause 4, Clause 5 as follows:

1. Supplement Clause 3 as follows:

"3. In cases where the extension of the land use period is granted according to Point i, Clause 1, Article 64 of the Land Law 2013, in addition to the land use right transfer fee payable according to regulations, the land user must pay an additional amount of money for the extended period, which is determined by multiplying the price of land with the same purpose specified in the Land Price Table by the land price adjustment factor by the percentage rate by the area subject to the land use right transfer fee by the extended period at the time when the competent state authority permits the extension of the land use period.

The additional amount payable shall be collected once within thirty days from the date the competent state authority issues the extension decision. If the investor accelerates the project implementation schedule and puts the land into use before the end of the extended period, the excess payment corresponding to the remaining extended period will be considered as overpayment and handled according to the tax management laws. The determination of the land use commencement date or the project implementation progress shall be carried out according to the guidance of the natural resources and environment agency.

The tax authority shall base on the document issued by the competent state authority granting the extension of the land use period to determine and notify the amount payable by the land user.

2. Supplement Clause 4 as follows:

"4. In cases where the State grants land with land use right transfer fees but does not put the land into use or delays the land use progress compared to the investment project schedule without being eligible for the extension of the land use period or is eligible for the extension of the land use period but does not make the necessary procedures to obtain the extension or has exceeded the extension period according to Point i, Clause 1, Article 64 of the Land Law 2013 and still does not put the land into use and the State has not made a decision to reclaim the land; in addition to the land use right transfer fee payable according to regulations, the land user must pay an additional amount as follows:

a) In cases where the land user is not eligible for the extension of the land use period or is eligible for the extension of the land use period but does not make the necessary procedures to obtain the extension:

- The additional amount payable by the land user during the period of non-use of the land is determined based on the annual land lease fee payable. The annual land lease fee payable is determined by multiplying the price of land with the same purpose specified in the Land Price Table by the land price adjustment factor by the percentage rate by the area subject to the land use right transfer fee.

- The period of non-use of the land is calculated from the date the State grants the land until the date the State makes a decision to reclaim the land.

b) In cases where the land user is eligible for the extension of the land use period but when the extension period ends, the State has not made a decision to reclaim the land, the additional amount payable during the period of non-use of the land is determined according to the provision at Point a of this Clause. The period of non-use of the land is determined according to the provision at Point a of this Clause minus the extended period for which the additional payment has been made according to Clause 1 of this Article.

c) In cases where the competent state agency, inspection, audit sends a document to the tax authority regarding the land user who has been granted land by the State but does not put the land into use or delays the land use progress, the tax authority shall cooperate with the natural resources and environment agency to determine and notify the additional amount payable according to Points a and b of this Clause together with the annual land lease fee payable according to regulations until the date the competent state authority issues the decision to reclaim the land according to the land law.

d) In cases where the land user submits a document requesting to return the land according to the land law, they are exempted from paying the additional amount payable according to Points a and b of this Clause from the date the competent state authority receives the land return document until the date the decision to reclaim the land is made."

3. Supplement Clause 5 as follows:

"5. Determination of the starting price for auctioning the land use rights to grant land with land use right transfer fees

a) In cases where the area subject to the land use right transfer fee of the plot or the auctioned land area has a value (calculated based on the land price in the Land Price Table) under 30 billion VND for central cities; under 10 billion VND for mountainous and highland provinces; under 20 billion VND for other provinces, then the starting price is the specific land price determined by the finance department based on the land price in the Land Price Table and the land price adjustment factor issued by the provincial People's Committee.

- The land price adjustment factor to determine the starting price is the land price adjustment factor issued by the provincial People's Committee to determine the land price for calculating the land use right transfer fee in cases of granting land with land use right transfer fees not through auction. In cases where the plot or the auctioned land area belongs to urban areas, transportation hubs, concentrated residential areas with advantages and profitability, the Department of Finance shall report to the provincial People's Committee to decide to increase the land price adjustment factor to determine the starting price based on the actual situation in the locality.

- The announcement of the auction-winning land price and the land use right transfer fee payable shall be carried out according to the Joint Circular No. 88/2016/TTLT/BTC-BTNMT.

b) In cases where the area subject to land use fee calculation for a plot of land or auction zone has a value (calculated based on the land price in the Land Price Table) of VND 30 billion or more for centrally-administered cities; VND 10 billion or more for mountainous and highland provinces; VND 20 billion or more for other provinces, the starting price shall be the specific land price determined by the Department of Natural Resources and Environment, which shall then be transferred to the Land Valuation Council of the locality, chaired by the Department of Finance, for valuation. The land valuation shall be carried out in accordance with Circular Joint Circular No. 87/2016/TTLT-BTC-BTNMT.

c) The Chairman of the Provincial People's Committee approves the starting price for the auction of land use rights for the transfer of land with payment of land use fees, or delegates such approval authority to the Director of the Department of Finance or the Chairman of the District People's Committee.

d) For applications requesting the determination of the starting price for the auction of land use rights for the transfer of land with payment of land use fees that were received by competent state agencies before November 15, 2016 (the date when Decree No. 135/2016/NĐ-CP took effect), such agencies shall continue to take the lead in implementing this process.

Article 2. Supplement Clause 4 as follows:

"4. In cases where an investment project (granted land use rights by the State without auctioning according to the provisions of the Land Law 2013) involves mixed land use forms (granting land with land use fees, granting land without land use fees, leasing land) and the investor voluntarily pays advance compensation and clearance costs, the deduction of compensation and clearance costs according to the approved plan shall be calculated separately for each type of area. The compensation and clearance costs for the portion of land used for public purposes granted without land use fees shall be allocated proportionally to the areas subject to land use fees and lease fees based on the ratio of each part's area to the total area required to pay land use fees and lease fees, in accordance with the regulations for deduction; any remaining compensation and clearance costs (if any) shall be included in the project's investment capital.

The allocation of compensation and clearance costs as stipulated in this Clause shall not be applied to the lease fees for underground construction parts (not being the underground part of surface construction) or for the underground part of surface construction projects where the underground construction area exceeds the surface land area.

Example:

Project A Urban Area has a total land area of 100 hectares, including: 50 hectares for land granted with land use fees, 30 hectares for land leased with a one-time payment for the entire lease period, and 20 hectares for land used for public purposes granted without land use fees. The total compensation and clearance costs according to the plan approved by the competent state agency, deducted from the financial obligations for land use fees and lease fees of the project, amount to VND 1,000 billion; the land use fees payable for the area granted with land use fees is VND 800 billion, and the one-time lease fee payable is VND 350 billion. The allocation and deduction of compensation and clearance costs are detailed as follows:

- Compensation and clearance costs per hectare of the project is VND 10 billion: 100 hectares = VND 10 billion/hectare; accordingly:

+ Compensation and clearance costs for the area granted with land use fees: VND 10 billion/hectare x 50 hectares = VND 500 billion.

+ Compensation and clearance costs for the area leased with a one-time payment for the entire lease period: VND 10 billion/hectare x 30 hectares = VND 300 billion.

+ Compensation and clearance costs for the area used for public purposes granted without land use fees: VND 10 billion/hectare x 20 hectares = VND 200 billion.

- Allocation of compensation and clearance costs for the area used for public purposes (VND 200 billion) to the remaining areas as follows:

+ Allocation to the area granted with land use fees:

+ Allocation to the area leased with a one-time payment for the entire lease period:

- Deduction of compensation and clearance costs corresponding to each type of area as follows:

+ Compensation and clearance costs of the project allocated to the area subject to land use fees and deducted from the land use fees payable: VND 500 billion + VND 125 billion = VND 625 billion; the remaining land use fees payable: VND 800 billion - VND 625 billion = VND 175 billion.

+ Compensation and clearance costs of the project allocated to the area subject to lease fees and deducted from the lease fees payable: VND 300 billion + VND 75 billion = VND 375 billion. Since the lease fee payable is VND 350 billion, the remaining compensation and clearance costs of the project allocated to the area subject to lease fees that have not been fully deducted amount to VND 25 billion, which will be included in the project's investment capital."

Article 3. Supplement Clause 3 as follows:

“3. Reduce land use fees for land used in infrastructure projects for cemeteries and graveyards that are transferred with infrastructure as follows:

a) In cases where the State allocates land from December 27, 2015 to the date this Circular takes effect, and such cases are eligible for reduced land use fees according to Decree No. 118/2015/NĐ-CP and submit applications for reduced land use fees according to regulations, they shall enjoy the reduced land use fees stipulated in this Circular.

b) Reduce 50% of the land use fee for projects located in particularly difficult socio-economic areas or investment projects with a capital scale of VND 6,000 billion or more, which have disbursed at least VND 6,000 billion within three years from the date the competent state agency issues the Investment Registration Certificate or approves the investment proposal for projects not required to go through the Investment Registration Certificate issuance process.

c) Reduce 30% of the land use fee for projects located in difficult socio-economic areas or rural investment projects employing 500 workers or more (excluding part-time workers and those with contracts shorter than 12 months).

d) Reduce 20% of the land use fee for projects not covered under Points b and c of this Clause.

đ) Investors eligible for reduced land use fees due to investment projects with a capital scale of VND 6,000 billion or more or rural investment projects employing 500 workers or more as stipulated in Points b and c of this Clause shall only be entitled to reduced land use fees if they provide a request for preferential reduction of land use fees accompanied by proof of having disbursed at least VND 6,000 billion in investment funds or documentation proving the employment of 500 workers as specified in Points c and d of Clause 1, Article 16 of Decree No. 118/2015/NĐ-CP. The tax authority will determine and issue a Decision on the reduction of land use fees according to the law. If during inspection and verification, the project does not meet the conditions for reduced land use fees as prescribed, the investor must repay the State budget the amount of land use fees already reduced and late payment interest calculated based on the reduced land use fees according to the law on tax management, the amount of land use fees to be repaid will be determined according to policy and land prices at the time the tax authority issues the Decision on the reduction of land lease fees.”

Article 4. Supplement Clause 6 as follows:

"6. In cases where individuals were allocated land without payment of land use fees or leased land according to the law before July 1, 2004, or were granted land leases with annual payments after July 1, 2004, and had paid compensation and land clearance costs according to approved plans (including self-negotiated compensation or self-transfer agreements) before July 1, 2004; when transferring to land allocation with payment of land use fees from July 1, 2004 onwards but have yet to complete their obligations regarding land use fee payments (not yet determined and notified of the land use fees payable according to the law; or have been determined and notified of the land use fees payable according to the law but have not yet paid; or have been determined and notified of the land use fees but are inconsistent with the law at the time of determination and need to be re-determined according to the law), they may deduct the compensation and support for land according to the approved plan or the value of the land use rights for the purpose of legitimate transfer received approval from the competent state agency (for self-negotiated compensation or self-transfer agreements at the time of agreement) from the land use fees payable. The amount deductible is the compensation and support for land or the value of land use rights for the purpose of legitimate transfer allocated for the remaining period of land lease or land allocation without payment of land use fees corresponding to the area subject to land use fee collection that has not been accounted for in production and business costs; if the deductible amount has been accounted for in production and business costs, only the remaining unaccounted amount (if any) can be deducted, the deduction amount cannot exceed the land use fees payable.

The finance department shall take the lead and coordinate with the tax department, natural resources and environment department, and other relevant departments (if necessary) to determine the amount of self-negotiated compensation and land clearance that can be deducted from the land use fees payable and the compensation and support provided when the State recovers land at the time the competent state agency approves self-negotiated compensation and land clearance.

Article 5. Effective Date

1. This Circular takes effect from February 10, 2017.

2. During implementation, if difficulties or obstacles arise, relevant agencies, units, organizations, and individuals are requested to promptly report to the Ministry of Finance for consideration and resolution./.