Circular No. 59-TC/TCT provides additional guidance on reducing or exempting agricultural land use tax when natural disasters or adversities occur.

CIRCULAR

OF THE MINISTRY OF FINANCE NUMBER 59 TC/TCT ON SEPTEMBER 1, 1997

GUIDELINES FOR ADDITIONAL APPLICATIONS REGARDING TAX REDUCTION AND EXEMPTION FOR AGRICULTURAL LAND USE WHEN NATURAL DISASTERS OCCUR

AGRICULTURAL LAND IN CASE OF NATURAL DISASTERS AND EPIDEMICS

In implementing the Law on Land Use Tax for Agricultural Land, the Ministry of Finance issued Circular No. 89 TC/TCT dated November 9, 1993 to guide the implementation of Decree No. 74/CP dated October 25, 1993 of the Government. Circular No. 03 TC/TCT dated January 21, 1997 supplemented Circular No. 89 TC/TCT dated November 9, 1993 regarding tax reduction and exemption for agricultural land use when natural disasters occur. Now, the Ministry of Finance supplements the guidelines for tax reduction and exemption for agricultural land use as follows:

1. Implement tax reduction and exemption for agricultural land use according to Circular No. 03 TC/TCT dated January 21, 1997 of the Ministry of Finance based on the area of agricultural land that has been affected by natural disasters, leading to a decrease in harvest yield. The reduction and exemption of taxes will be determined based on the damage ratio in that area for the taxpayer household; if the tax ledger is established per crop, then the reduction and exemption of taxes will be considered for each crop.

2. For households eligible for a 50% tax reduction on agricultural land use according to the recorded tax amount, the tax reduction shall first be applied according to the policy provisions. If such households suffer losses due to natural disasters, they may continue to be eligible for tax reduction according to the guidance provided in Circular No. 03, but the maximum reduction shall not exceed 50% of the remaining recorded tax amount for the year or the recorded tax amount for the crop (in cases where localities establish tax ledgers per crop).

3. Regarding the calculation of tax reduction and exemption for households with agricultural land exceeding the quota:

a. In cases where the damaged area of the taxpayer does not exceed the quota specified for each region, only the tax reduction and exemption according to the regulations will be considered, without additional tax reduction and exemption.

b. In cases where the damaged area of the taxpayer exceeds the quota specified for each region, the taxpayer will be eligible for tax reduction and exemption for both the supplementary tax on the excess area and the damaged area.

The calculation of additional tax reduction and exemption is based on the following formula:

The average damage ratio of the taxpayer is calculated by dividing the total production loss of the taxpayer by the total production on the damaged area, based on the reference yield used for land classification for taxation purposes.

The reference yield for land classification for taxation purposes is the average yield in the locality when rechecking the land classification.

Example: Household A in the Mekong Delta has 5 hectares of agricultural land use rights, including 2 hectares of Class 1 land and 3 hectares of Class 2 land (one-crop rice field). Among them, the excess area subject to supplementary tax is 2 hectares. The reference yield for land classification for taxation purposes for Class 1 land is 5,500 kg/ha, and for Class 2 land is 5,000 kg/ha.

a. Household A's tax payment under normal conditions:

The total recorded tax for Household A is: (2 ha x 550) + (3 ha x 460) = 2,480 kg of rice

The average recorded tax for Household A is: 2,480 kg ÷ 5 ha = 496 kg/ha

The supplementary tax payable by Household A is: 496 kg/ha x 20% x 2 ha = 198.4 kg

The total tax payable by Household A is: 2,480 + 198.4 = 2,678.4 kg

b. In case the area affected by natural disasters exceeds the quota:

During the year, the taxpayer suffered losses on 4 hectares, including:

- 1 hectare of Class 1 land with a 10% loss

- 0.5 hectare of Class 2 land with a 15% loss

- 1 hectare of Class 1 land with a 25% loss

- 1.5 hectares of Class 2 land with a 25% loss.

* Determining the average damage ratio of the taxpayer:

* The tax reduction amount for Household A according to Circular No. 03 is:

(1 ha x 550 kg/ha x 10%) + (0.5 ha x 460 kg/ha x 15%) +

(1 ha x 550 kg/ha x 60%) + (1.5 ha x 460 kg/ha x 60%) = 833.5 kg

* The supplementary tax reduction and exemption amount for Household A for 1 hectare of excess area damaged, calculated according to the above formula, is:

496 kg/ha x 20% x 1 ha x 19.88% = 19.72 kg

* The total tax reduction for Household A in the year is:

833.5 kg + 19.72 kg = 853.22 kg

* The remaining tax payable by Household A is: 2,678.4 - 853.22 = 1,825.18 kg

4. In the same field, if some plots of land are damaged due to subjective reasons of the agricultural producer (such as incorrect timing, inadequate timely care...) while the entire field has a normal harvest, these individual households suffering poor yields separately do not qualify for tax reduction and exemption according to Circular No. 03.

5. For households eligible for tax reduction and exemption under social policy provisions, only the portion of land within the quota will be considered for tax reduction and exemption.

This circular takes effect for tax reduction and exemption applications from the spring-summer crop of 1997.

Any issues encountered during implementation should be promptly reported to the Ministry of Finance for study and resolution.

In the course of implementation, any difficulties should be promptly reflected to the Ministry of Finance for study and resolution.