JOINT CIRCULAR No. 7/LB-TT GUIDING THE CLASSIFICATION OF HOUSE RANKS AND LAND RANKS AND THE DETERMINATION OF PROPERTY TAX VALUES FOR HOUSES AND LAND

 CIRCULAR JOINT

NO. 7/LB-TT SEPTEMBER 30, 1991 CONSTRUCTION-FINANCE-NATIONAL PRICING COMMISSION AND NATIONAL LAND MANAGEMENT AGENCY GUIDELINES FOR CLASSIFYING HOUSING TYPES, LAND TYPES, AND ASSESSING PROPERTY TAX VALUES. - Pursuant to the Land Tax Ordinance adopted by the State Council on June 29, 1991.

- Pursuant to Decree No. 270/HĐBT dated September 14, 1991 of the Council of Ministers detailing the implementation of the Land Tax Ordinance.

The Ministry of Construction, Ministry of Finance, National Pricing Commission, and National Land Management Agency provide guidelines for classifying housing types, land types, and assessing property tax values as follows:

I. HOUSING:

1. Housing Classification:

In principle, when classifying houses to determine taxable value, it is based on the quality of major structural components and the utility value of each house. Houses are classified into six categories: villa, Class I, Class II, Class III, Class IV, and temporary housing according to the following criteria:

a) Villa:

a.1 - A standalone house with a garden and surrounding fence;

a.2 - Load-bearing structure with reinforced concrete frames, floors, and walls, or brick walls;

a.3 - Enclosure and partition walls made of reinforced concrete or brick;

a.4 - Flat or tiled roof with good soundproofing and insulation systems;

a.5 - High-quality finishing materials inside and outside the house;

a.6 - Full and convenient living amenities (kitchen, toilet, shower, electricity, water) of good quality;

a.7 - Number of floors is not limited, but each floor must have at least two rooms for living.

b) Class I House:

b.1 - Reinforced concrete or brick load-bearing structure with a design life exceeding 80 years;

b.2 - Enclosure and partition walls made of reinforced concrete or brick;

b.3 - Reinforced concrete flat roof or tiled roof with good insulation system;

b.4 - High-quality finishing materials inside and outside the house;

b.5 - Full and convenient living amenities (kitchen, toilet, shower, electricity, water) without limitation on number of floors.

c) Class II House:

c.1 - Reinforced concrete or brick load-bearing structure with a design life exceeding 70 years;

c.2 - Enclosure and partition walls made of reinforced concrete or brick;

c.3 - Reinforced concrete flat roof or Fibroociment tiled roof;

c.4 - Relatively high-quality finishing materials inside and outside the house;

c.5 - Full living amenities. Number of floors is not limited.

d) Class III House:

d.1 - Load-bearing structure combining reinforced concrete and brick or brick alone, with a design life exceeding 40 years;

d.2 - Enclosure and partition walls made of brick;

d.3 - Tiled or Fibroociment roof;

d.4 - Finishing materials using common materials;

d.5 - Normal living amenities, equipped with ordinary toilet and shower facilities. Maximum height is two floors.

e) Class IV House:

e.1 - Load-bearing structure made of brick or wood, with a maximum design life of 30 years;

e.2 - Enclosure and partition walls made of brick (22 cm or 11 cm thick);

e.3 - Tiled or Fibroociment roof;

e.4 - Low-quality finishing materials;

e.5 - Low-quality living amenities.

f) Temporary Housing:

f.1 - Load-bearing structure made of wood, bamboo, or rattan;

f.2 - Surrounding fence or earthen wall;

f.3 - Thatched or straw roof;

f.4 - Low-quality living amenities and conditions.

2. Housing Grading:

Due to the fact that houses are often not fully consistent with the above standards, each housing category can be divided into two or three grades based on the following main criteria:

- Meeting four initial criteria for villas and three initial criteria for Class I, II, III, and IV houses will be graded as Grade 1.

- If only 80% of Grade 1 criteria are met, it will be graded as Grade 2.

- If less than 70% of Grade 1 criteria are met, it will be graded as Grade 3.

- Temporary housing does not have grades.

3. Taxable Value of Housing: The taxable value of housing is determined for each category and grade based on construction costs and average market prices in the locality.

To ensure reasonable correlation between localities, the Ministries set the average taxable value for each housing category and grade as follows: Unit: 1,000 VND/m2 for taxation

Temporary Housing

a) The taxable area of a house (Ssd) includes:

- Living and working space (Sc)

- Ancillary areas such as kitchen, toilet, bathroom, storage (Sp)

- For Class III and below, Sp is calculated at 50%

- Balcony and loggia areas (Sbc) are calculated at 50%:

Ssd = Sc + Sp + 50% Sbc

For Class III and below:

Ssd = Sc + 50% Sp + 50% Sbc

b) The taxable value of housing is determined per square meter of usable space. For multi-story residential buildings, the taxable value decreases by a percentage from the first floor as follows:

- Floors 3 and 4 decrease by 5%

- Floor 5 decreases by 10%

- Floors 6-10 decrease by 20%

- Floors 11 and above decrease by 30%

II. LAND:

A. Residential Land in Cities, Towns, and Urban Centers.

1. Land Classification:

Land classification is based on its profitability and different usage values in urban areas, regions, locations, and land categories.

a) Regarding city type: Based on Decision No. 132-HĐBT dated May 5, 1990 of the Council of Ministers and the requirements for taxing real estate, cities in Vietnam are categorized into seven types.

b) Regarding region:

These cities are divided into five regions: plains, midlands, mountains, coastal areas, and tourist zones.

c) Regarding location:

Within each city, land is divided into three zones based on location, including:

- Central urban area: The zone with the highest population density and building density in the city, meeting at least two out of three central criteria: political, economic exchange, cultural-scientific-sports-tourism.

- Sub-central area: The area adjacent to the central urban area, with secondary centers (satellite areas, district centers). Building density and population density are moderate, with relatively complete infrastructure and public services (transportation, electricity, water...).

- Peripheral area: Residential areas outside the sub-central area where infrastructure is incomplete and transportation nodes are still in the process of urbanization.

d) Regarding category: Within each zone, land is divided into special, high, medium, and low categories.

d) Regarding classification: Within each area, land is divided into categories: special, high, medium, low:

- Special category: is land located in central attraction areas of cities, with particularly advantageous positions for business activities, trading, living, traffic, water and electricity...

- High category: is land with good positions attractive for business activities, trading, living. - Medium category: is land less advantageous for business activities, trading, living.

- Low category: is land not advantageous for business activities, trading, living.

2. Land value for tax calculation:

The land value for tax calculation is determined based on the land category and the transfer price of residential land in each area. The Inter-Ministerial Board shall stipulate the average tax calculation land prices for various categories of residential land as follows:

a) For cities and towns:

Unit of measurement: 1,000 VND/m²

b) For market towns (urban type VI), land is divided into four categories:

- Special category: the average tax calculation price is 400,000 VND/m²

- High category: 100,000 VND/m²

- Medium category: 60,000 VND/m²

- Low category: 30,000 VND/m²

c) For small market towns, along national highways, provincial roads and main traffic routes (urban type VII): The lowest land tax rate must not be less than three to four times the highest agricultural tax rate in the region.

Provincial People's Committees directly under the Central Government shall specify the applicable tax rates for the aforementioned regions in accordance with local realities.

3. Determining the land tax calculation value:

a) Land tax calculation value: Residential land categories in each city, town, and market town have different profitability and usage values, therefore, the valuation for tax calculation must use different coefficients according to the location of the plot, specifically:

- Street frontage position (frontage) (K1) coefficient 1 to 1.5

- Advantageous for business and living (K2) 1.2 to 2

- In alleyways (K3) 0.6 to 0.8

- Far from street (K4) 0.4 to 0.6

- Not advantageous for business and living (K5) 0.5 to 0.7

- Mountain urban areas (K6) coefficient 0.4 - Midland urban areas (K7) 0.8

- Plain urban areas (K8) 1.0

- Coastal urban areas (K9) 1.1

Tourist resort urban areas such as Dalat, Vung Tau, Nha Trang, Sầm Sơn, Bai Cháy, etc., shall add 0.4 to each relevant coefficient as follows:

K6 = 0.4 + 0.4 = 0.8

K7 = 0.8 + 0.4 = 1.2

K8 = 1.0 + 0.4 = 1.4

K9 = 1.1 + 0.4 = 1.5

The method for determining the land tax calculation value is as follows:

Gđ = Gtbv x Kn

Where: Land value is denoted as Gđ

Average regional land value is denoted as Gtbv

K is the coefficient, n is the corresponding coefficients (n=1-9)

Applying the coefficient K to determine the land tax calculation value is very important, therefore, all necessary coefficients K for each plot must be calculated to ensure that the tax calculation value is relatively close to reality and the tax payment is fair.

b) For multi-story buildings on land owned by different owners, apply the tax-bearing coefficient according to the table below:

B - For residential land in rural areas

The basis for calculating the tax on rural residential land is the area, land category, and tax rate:

a) The area is determined based on the State land registry. In places where there is no land registry, it is based on declarations with the comments of land management officials and confirmed by the People's Committee of the commune.

b) The tax land category is determined by the same agricultural land category in the region. In cases where it is difficult to compare with equivalent agricultural land categories, the tax on residential land is calculated based on the highest agricultural tax category in the village, hamlet, ward, or commune.

c) The tax rate for rural residential land is implemented according to Article 11 of the Land Tax Law and Article 8 of Decree No. 270/HĐBT dated September 14, 1991 of the Council of Ministers. Commune People's Committees base on the land tax category approved by the County People's Committee currently being implemented in the locality to determine the residential land category for each village, hamlet, ward, or commune accordingly.

III. ON THE ORGANIZATION AND IMPLEMENTATION

1. Based on the above guidance, the Valuation Board shall submit to the Provincial People's Committee decisions on house categories, land categories, and the calculation of property tax values suitable for local conditions. At the same time, specific regulations for rural areas adjacent to national highways, provincial roads, and main traffic routes in plains and midlands that must pay property tax are established.

2. The above land and property tax tables only apply to the calculation of property taxes and are not used for other purposes. If the average tax calculation table and guiding coefficients result in a higher or lower value than the local market price, adjustments can be made to align with reality. Property tax values are adjusted every two years and announced for implementation at the beginning of the year. When market prices fluctuate by 20% or more, adjustments must be made.

Local regulations on house categories, land categories, and property tax values must be sent to the Inter-Ministry of Finance and Construction immediately after promulgation and implementation.

During implementation, localities need to promptly report any difficulties to the Inter-Ministry for research and resolution.

COMPREHENSIVE CLASSIFICATION TABLE OF VIETNAMESE URBAN AREAS (Attached to Decision No. 132/HĐBT dated May 5, 1990) Urban Type I: Urban Type II

1. Ho Chi Minh City Da Nang

2. Hanoi Haiphong Urban Type III:

5. Can Tho 12. Dalat

6. Nha Trang 13. Bien Hoa

7. Hue 14. My Tho

8. Nam Dinh 15. Thai Nguyen

9. Qui Nhon 16. Vinh

10. Vung Tau 17. Hon Gai

11. Long Xuyen 18. Phan Thiet Urban Type IV:

19. Cam Pha 44. Thu Dau Mot

20. Buon Ma Thuot 45. Ha Dong

21. Vinh Long 46. Dong Ha

22. Soc Trang 47. Quang Ngai

23. Thanh Hoa 48. Son Tay

24. Ca Mau 49. Tay Ninh

25. Bac Lieu 50. Bac Ninh

26. Viet Tri 51. Kontum

27. Phan Rang 52. Son La

28. Pleiku 53. Lang Son

29. Hoa Binh 54. Ninh Binh

30. Rach Gia 55. Cao Bang

31. Thai Binh 56. Vinh Yen

32. Yen Bai 57. Tuyen Quang

33. Tuy Hoa 58. Bim Son

34. Cao Lan 59. Kien An

35. Hai Duong 60. Hoi An

36. Chau Doc 61. Lai Chau

37. Sa Dec 62. Dong Hoi

38. Tan An 63. Quang Tri

39. Bac Giang 64. Ha Tinh

40. Uong Bi 65. Ha Giang

41. Tra Vinh 66. Lao Cai

42. Tam Ky

43. Ben Tre Urban Type V

67. Vinh An 72. Vi Thanh

68. Tam Diep 73. Go Cong

69. Phu Tho 74. Sam Son

70. Do Son 75. Song Cong

71. Ha Nam 76. Hung Yen Example for determining the tax value of real estate + Example: Mr. A's house on Street K in the city center of City M, which is a Class I city, is located right next to the road, close to the market, very convenient for business. The house stands alone with a yard, garden, and fence surrounding it, has two floors, each floor having three rooms, and a tiled auxiliary area with glass, suitable for daily use. It uses reinforced concrete blocks, has a tile roof with good soundproofing and insulation, and a glazed ceramic floor. Total house area: - Living and reception area: 50 m2 - Kitchen, toilet, bathroom: 24 m2 - Balcony, loggia: 14 m2 Total land area: 100 m2 (road frontage: 10 m2) Therefore, the following can be determined:

1. Taxable area: - House area = 50 m2 + 24 m2 + (50% x 14 m2) = 81 m2 - Land area = 100 m2

2. Tax value: - The above house belongs to Category 1, a villa, so the tax value per square meter is 1,100,000 VND/m2 - Land tax value: The plot belongs to a special category in a Class I city with an average regional price of 1,500,000 VND/m2. This plot is adjacent to a main road, so K1 = 1.5, and it is near the market, convenient for business, so K2 = 2. Therefore, the tax value per square meter of this plot will be: Gd = Gtbv x K(n) = 1,500,000 VND/m2 x 1.5 x 2 = 4,500,000 VND/m2

3. The total annual property tax that Mr. A must pay will be: 2,517,300 VND/year In which: - House tax: 81 m2 x 1,100,000 VND/m2 x 0.3% = 267,300 VND - Land tax: 100 m2 x 4,500,000 VND/m2 x 0.5% = 2,250,000 VND Example 2: The house on Street L in the city center of City F, a tourist city in the midland region belonging to a Class III city, is located in an alley for residential purposes only, not convenient for business. Built on a total land area of 150 m2. The entire house is constructed using prefabricated reinforced concrete, with a Puzolana brick floor, and a separate auxiliary area with a cement floor. The house has five floors, each with two apartments, with the following apartment areas: - For living: 24 m2 - Kitchen, toilet, bathroom: 7 m2 - Loggia, hallway: 5.4 m2

1. Taxable area: - The total land area for the house is 150 m2 - The taxable area for each apartment is: 33.7 m2 (24 m2 + 7 m2 + (50% x 5.4 m2))

2. Tax value: - Land tax value: Gtbv = 295,000 VND/m2 K3 = 0.7 (in an alley) K7 = 1.2 (tourist city in the midland region) Gd = 295,000 VND/m2 x 0.7 x 1.2 = 247,000 VND/m2 - The total tax value of the land plot is 247,000 VND/m2 x 150 m2 = 37,050,000 VND. - House tax value: The house belongs to Category 1 Level II, with a tax value of 700,000 VND/m2 + If the apartment is on the first or second floor, it is 700,000 VND/m2 + If the apartment is on the third or fourth floor, it is 665,000 VND/m2 (5% reduction) + If the apartment is on the fifth floor, it is 630,000 VND/m2 (10% reduction)

3. Determining the annual property tax payable:

a) Total house tax payable per apartment: + First and second floors = 33.7 m2 x 700,000 VND/m2 x 0.3% = 70,770 VND + Third and fourth floors = 33.7 m2 x 665,000 VND/m2 x 0.3% = 67,231.5 VND. + Fifth floor = 33.7 m2 x 630,000 VND/m2 x 0.3% = 63,693 VND.

b) Land tax payable: The total tax payable for the entire land plot is: 150 m2 x 247,000 VND/m2 x 0.5% = 185,250 VND. - Each apartment on the first floor must pay land tax:

185,250 VND x 0.7 ---------------------- = 64,837.5 VND 2 (each floor has 2 apartments) - Each apartment on the second floor must pay land tax:

185,250 VND x 0.15 ---------------------- = 13,893.7 VND 2 (each floor has 2 apartments) - Each apartment on the third floor must pay land tax:

185,250 VND x 0.07 ---------------------- = 6,483.7 VND 2 (each floor has 2 apartments) - Each apartment on the fourth floor must pay land tax:

185,250 VND x 0.05 ---------------------- = 4,631.2 VND 2 (each floor has 2 apartments) - Each apartment on the fifth floor must pay land tax:

185,250 VND x 0.03 ---------------------- = 2,778.7 VND 2 (each floor has 2 apartments)

c) The total annual property tax payable per apartment (house tax + land tax) is: + First floor: 70,770 VND + 64,837.5 = 135,607.5 + Second floor: 70,770 VND + 13,893.7 = 84,663.7 + Third floor: 67,231.5 VND + 6,483.7 = 73,715.2 + Fourth floor: 67,231.5 VND + 4,631.2 = 71,862.7 + Fifth floor: 63,693 VND + 2,787.7 = 66,471.7

c) The annual real estate tax for each apartment (property tax + land tax) is as follows: + Floor 1: 70,770 VND + 64,837.5 VND = 135,607.5 VND + Floor 2: 70,770 VND + 13,893.7 VND = 84,663.7 VND + Floor 3: 67,231.5 VND + 6,483.7 VND = 73,715.2 VND + Floor 4: 67,231.5 VND + 4,631.2 VND = 71,862.7 VND + Floor 5: 63,693 VND + 2,787.7 VND = 66,471.7 VND