JOINT CIRCULAR No. 856/LB-ĐC-TC GUIDING DOMESTIC ORGANIZATIONS IN PREPARING APPLICATIONS FOR LEASED LAND AND PAYMENT OF LEASE FEES

JOINT CIRCULAR

Joint Circular No. 856/LB/DC-TC dated July 12, 1996 of the General Department of Land Administration and the Ministry of Finance guiding domestic organizations to prepare land lease registration files and pay land lease fees

Pursuant to the Ordinance on the rights and obligations of domestic organizations granted land use rights and land leases by the State dated October 14, 1994;

Pursuant to Decree No. 18/CP dated February 13, 1995 of the Government detailing the implementation of the Ordinance on the rights and obligations of domestic organizations granted land use rights and land leases by the State;

Pursuant to Directive No. 245/TTg dated April 22, 1996 of the Prime Minister regarding the organization of urgent actions in managing and using land by domestic organizations granted land use rights and land leases by the State;

Pursuant to the opinion of the Prime Minister in Official Letter No. 7463/KTN dated December 30, 1995 of the Office of the Government;

Pursuant to Decision No. 1357/TC/QD/TCT dated December 30, 1995 of the Minister of Finance setting the framework for land lease fees for domestic organizations granted land leases by the State,

The Joint General Department of Land Administration - Ministry of Finance guides the preparation of land lease files and payment of land lease fees by domestic organizations as follows:

Part 1:

GENERAL PROVISIONS

1. Domestic organizations include: State-owned enterprises, enterprises of political and social organizations; National defense and security enterprises; Joint-stock companies, limited liability companies, private businesses, collective economic organizations currently using land for production and business purposes other than agricultural, forestry, aquaculture, and salt production must prepare land lease application files according to the guidelines set forth in this Circular.

2. Agricultural, forestry, aquaculture, and salt production enterprises must declare and register land leases for the area of land used to construct offices (headquarters), repair workshops, processing facilities, and service operations.

3. Domestic organizations currently using land that has been allocated by competent state authorities with land use fees paid, organizations that have paid land use fees in accordance with regulations into the State budget before January 1, 1995, where such funds did not originate from the State budget, temporarily do not need to go through the procedures for leasing land and paying land lease fees. Such organizations continue to pay land tax according to the current Law on House and Land Tax.

4. Situations considered as having paid land use fees into the State budget include:

a) Payment of land use fees as stipulated in Decree No. 89/CP dated August 17, 1994 of the Government;

b) Payment of compensation for losses due to conversion of agricultural land and forested land to other purposes pursuant to Decision No. 186/HDBT dated May 31, 1990 of the Council of Ministers (now the Government);

c) Payment of land use fees as stipulated in Circular No. 60 TC/TCT dated July 16, 1993 of the Ministry of Finance for the following cases: purchasing state-owned property together with receiving land use rights for the property; being allocated land for construction of residential buildings and infrastructure projects; being allocated land instead of payment for the value of construction projects and purchasing non-state-owned property together with receiving land use rights for the property;

d) Purchasing state-owned property pursuant to Decree No. 61/CP dated July 5, 1994 of the Government;

e) Organizations purchasing property together with receiving land use rights for the property which have already paid income tax according to the Ordinance on Income Tax for High-Income Individuals.

5. All cases previously subject to house and land tax now falling under the category required to lease land shall only pay land lease fees as prescribed, without needing to pay land tax.

6. Provincial People's Committees (hereinafter referred to as provincial-level People's Committees) shall conduct the identification of organizations temporarily exempt from land leasing; organizations required to transition to land leasing and issue decisions to lease land to each organization; compile detailed reports on these cases to submit to the Prime Minister for review, and send copies to the Ministry of Finance and the General Department of Land Administration for monitoring.

7. After issuing the decision to lease land, the lessee must sign a land lease contract with the Department of Land Administration; register payment of land lease fees with the local Tax Bureau.

Part II:

PROCEDURES FOR PREPARING LAND LEASE APPLICATION FILES

The land lease application file includes:

1. Application for land lease (Form No. 1)

2. Copy of land use declaration form (based on the land use survey form declared by the organization)

3. Declaration form for registering payment of land lease fees (Form No. 5)

4. Extract from the cadastral map of the land plot at the current scale (Form No. 2)

In cases where the locality does not have a cadastral map, the lessee must organize surveys to prepare technical land plot files in accordance with current regulations of the General Department of Land Administration.

These maps must be reviewed and confirmed by the Department of Land Administration.

5. Other related documents (Decisions on establishment, business registration certificates, etc.)

The land lease application file should be prepared in three copies submitted to the Department of Land Administration for forwarding to:

- Provincial People's Committee;

- Department of Finance and Price Control;

- Retained at the Department of Land Administration.

The Department of Land Administration is responsible for working with the Department of Finance and Price Control, the Tax Bureau, and relevant agencies to review the files, prepare reports on the results of the reviews, draft resolutions for land leasing, and submit them to the Chairman of the Provincial People's Committee for approval. The land lease resolution will be prepared in five copies sent to the leasing organization, the Department of Land Administration, the Department of Finance and Price Control, the local Tax Bureau, and retained at the Provincial People's Committee. Based on the Provincial People's Committee's land lease resolution, the Department of Land Administration:

- Signs the land lease contract (Form No. 4)

- Guides the lessee to register in the land registry according to current regulations.

- Prepares a certificate of land use rights for submission to the Provincial People's Committee for signature and issuance to the lessee.

- Guides and supervises the preparation and updating of land registry files at all levels of province, district, and commune in accordance with regulations.

Part 3

PAYMENT OF LAND RENT

I. OBJECTS REQUIRED TO PAY LAND LEASE FEES:

1. Domestic organizations currently using land as specified in Article 1 of the Framework for Land Lease Fees for Domestic Organizations Granted Land Leases by the State issued with Decision No. 1357/TC/QD/TCT dated December 30, 1995 of the Minister of Finance who have not yet paid land use fees, or have paid land use fees from state budget sources, or have been leased land by competent state authorities are all required to pay land lease fees according to the guidelines set forth in this Circular.

2. In cases where an organization is using land that belongs to the lawful land use rights of a household, individual who has been permitted by a competent state agency to construct offices, production facilities, or business premises, the land rent shall be temporarily exempted; however, the organization must still pay land tax according to the current Law on Land Tax.

II. DETERMINATION OF LAND RENT AND REGISTRATION FOR PAYMENT OF LAND RENT

1. Determination of annual land lease fee:

The amount of land rent = Area of land for lease (m2) x Rent price per square meter per year (VND/m2/year)

Where:

- The area subject to land rent calculation includes the entire area managed and used by the organization.

- The annual land rent rate is determined as follows:

The Rent Price per Square Meter of land is determined based on the rental pricing coefficient applied to each group of business activities as specified in Article 2 of the Central Government's Decision No. 87/CP dated August 17, 1994, and Circular No. 1357/TC/QĐ/TCT dated December 30, 1995 issued by the Minister of Finance.

The rent price does not include compensation costs or clearance expenses.

If the land for lease is permitted by a competent state agency to change its purpose of use, the land price will be determined according to the Pricing Table with the new purpose of use from the date of change, but taking into account the specific conditions of each plot of land to determine an appropriate price.

For large plots of land located deep within the site relative to the road, they may be divided into smaller plots based on their specific location to determine the rent price for each small plot or to calculate an average price for determining the rent.

When a plot of land is used for multiple business activities with different rent prices, the area used for each activity should be determined to calculate the rent. If it is not possible to determine the area used for each activity, the rent price for the main production and business activity should be applied to the entire plot of land.

For the portion of the area returned to the State, the rent price will be calculated up to the time of handover.

The land lease fee for the first year and the last year is determined as follows:

The amount of land rent for the first year of leasing = Actual number of months in the first year of leasing x Amount of land rent for one year / 12 (months)

2. The time for calculating land rent is determined according to the provisions of Article 4 of the Decision No. 1357/TC/QĐ/TCT dated December 30, 1995 issued by the Minister of Finance regarding the framework pricing for land rent for domestic organizations leased by the State.

3. Payment of land rent

Land rent is paid annually and recorded in the annual production and business cost of the organization leasing the land. If payment is made in advance for several years, it will be allocated over the number of years and recorded in the corresponding annual production and business cost.

If an organization pays land rent for the year 1996 after having already paid land tax for the year 1996, the amount of land tax paid will be deducted from the land rent according to the provisions of this Circular.

An organization that was granted land before January 1, 1995 and paid land use fees with funds from the State budget, now switching to paying land rent, shall not have previously paid land use fees deducted from the land rent payable.

Land used in a district, county, town, or city under a province shall pay land rent to the National Treasury at the district, county, town, or city level according to a regular schedule, twice a year, with each installment being 50% of the annual land rent. The first installment is due no later than June 30, and the second installment is due no later than December 15 of the same year. For the year 1996, the first installment of land rent and any previous installments (if applicable) are due no later than September 30, 1996.

Land rent is deposited into the National Treasury according to the relevant Chapter, Type, Item, and Category, and Item 21 of the current Budget Manual. The Treasury Office will process the receipt of money according to current regulations.

Organizations leasing land are obligated to pay the full amount of land rent on time into the National Treasury and follow the guidance of the direct tax collection authority.

Reductions in land rent are implemented according to the provisions of Article 8 of the Decision No. 1357/TC/QĐ/TCT dated December 30, 1995 issued by the Minister of Finance regarding the framework pricing for land rent for domestic organizations leased by the State.

During the initial construction phase approved by a competent authority, an organization leasing land only needs to pay 50% of the annual land rent and record it in the construction cost.

Part 4:

SANCTIONS AND REWARDS

1. If an organization leasing land fails to properly declare and pay land rent according to the guidelines in this Circular, the Director of the Tax Revenue Inspection Department may, based on investigation materials and land usage records provided by the People's Committee of the commune, ward, town, or district, make decisions on the contents stipulated in Part II, Form No. 5 of this Circular, report to the Provincial Department of Finance and Prices, the Tax Bureau, and notify the organization to fulfill the obligation to pay land rent.

If the payment of land rent or penalty is not made on time, in addition to paying the full amount of rent and penalty as prescribed, a daily late fee of 0.2% of the overdue amount must also be paid.

If an organization leasing land continues to delay or refuse to declare and pay land rent, the tax authority has the right to request the bank to deduct the amount from the organization's bank account to pay the land rent and any penalties (if applicable) into the National Treasury; simultaneously, the organization may be suspended from using the land or have the land lease decision revoked.

2. Complaints:

- Complaints and resolution of complaints related to land shall be carried out according to the current laws.

- Leasing organizations have the right to file complaints about issues related to land rent with the local Tax Bureau where the leased land is located. If dissatisfied with the Tax Bureau's resolution, they can appeal to the General Tax Administration; if still dissatisfied with the General Tax Administration's resolution, they can appeal to the Ministry of Finance.

The decision of the Minister of Finance is final.

- The agency receiving the complaint shall be responsible for resolving it within thirty days from the date of receipt. If there is no resolution beyond this period, the person authorized to resolve the complaint shall bear responsibility for the consequences caused by the delay in processing.

3. Organizations or individuals who take advantage of their positions or powers to embezzle, misappropriate, or cause the loss of land rental fees must compensate the State for the full amount embezzled, misappropriated, or lost, and depending on the level of violation, they may be subject to disciplinary action or criminal liability as provided by law.

4. Tax authorities and land management agencies, if they determine and collect the wrong amount of land rental fees, must return the entire amount of loss suffered by the organization leasing the land, no later than thirty days from the date of discovery.

5. Individuals who discover violations as stipulated in this Circular shall be rewarded according to the general regulations of the State.

Part 5:

IMPLEMENTATION

1. Provincial People's Committees directly under the central government are responsible for directing the Department of Land Administration, the Department of Finance and Prices, the Capital Management and State Asset Management Bureau at enterprises, the Tax Service, District, County, City, and Town People's Committees under the province; organizations currently using land within their jurisdiction to fully implement all contents guided by this Circular.

2. The State Capital Management and Asset Management Bureau at Enterprises has the responsibility to direct the Capital Management and State Asset Management Bureaus at enterprises to cooperate with the Department of Finance and Prices (Property Management Division) to urge, guide, and inspect units within the local area to declare and register according to the provisions of this Circular.

3. The General Department of Taxation is responsible for directing Tax Bureaus and Local Tax Offices:

- Verify and check the data, calculate the indicators in the declaration form for land use registration (Form No. 5); and then immediately send the declaration form for land rental fee payment of the leasing organization to the Department of Finance and Prices for review;

- Collect annual land rental fees;

- Implement exemptions and reductions in land rental fees as stipulated in Article 4 of the Framework Pricing Regulation for Land Leasing issued together with Decision No. 1357/TC/QĐ/TCT dated December 30, 1995 of the Minister of Finance.

4. The Department of Land Administration is responsible for sending the declaration form for land rental fee payment (four copies) to the Tax Branch within fifteen days from the date of receipt of the declaration form for land rental fee payment of the leasing organization; the Tax Branch shall verify and calculate all indicators in the declaration form and prepare a summary table of land rental fee registration to report to the Tax Service and the Department of Finance and Prices of the locality.

5. For administrative and service agencies and military units that use part of the land area for business purposes, they must declare according to Form No. 5 for that portion of the area, pay the land rental fee, and await further processing.

6. Organizations that have not yet completed the land lease application file must go to the Tax Branch to receive guidance on filling out the declaration form for land rental fee payment. The Tax Branch will temporarily collect the land rental fee and notify the Department of Land Administration in full for monitoring.

This Circular takes effect from the date of signature. During implementation, if any difficulties arise, please reflect them to the Ministry of Finance, the General Department of Land Administration for study and resolution.