Circular No. 94/2011/TT-BTC amends and supplements Circular No. 120/2005/TT-BTC dated December 30, 2005 of the Ministry of Finance guiding the implementation of Decree No. 142/2005/NĐ-CP dated November 14, 2005 of the Government on land rental fees and water surface rental fees.

CIRCULAR

Amending and supplementing Circular No. 120/2005/TT-BTC dated December 30, 2005 of the Ministry of Finance guiding the implementation

Decree No. 142/2005/NĐ-CP dated November 14, 2005 of the Government on collecting land rental fees and water surface rental fees

____________________________________

Based on the Land Law dated November 26, 2003;

Pursuant to Decree No. 142/2005/NĐ-CP dated November 14, 2005 of the Government on collecting land rental fees and water surface rental fees;

Pursuant to Decree No. 69/2009/NĐ-CP dated August 13, 2009 of the Government on additional provisions regarding land use planning, land prices, land recovery, compensation, support, and resettlement;

Pursuant to Decree No. 121/2010/NĐ-CP dated December 30, 2010 of the Government amending and supplementing certain articles of Decree No. 142/2005/NĐ-CP dated November 14, 2005 of the Government on collecting land rental fees and water surface rental fees;
Pursuant to Decree No. 118/2008/NĐ-CP dated November 27, 2008, of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

The Ministry of Finance guides the amendment and supplementation of Circular No. 120/2005/TT-BTC dated December 30, 2005 of the Ministry of Finance guiding the implementation of Decree No. 142/2005/NĐ-CP dated November 14, 2005 of the Government on collecting land rental fees and water surface rental fees (amended and supplemented by Decree No. 121/2010/NĐ-CP dated December 30, 2010 of the Government) as follows:

Article 1. Amend Section I Part B (guiding the implementation of Clause 3 Article 2 of Decree No. 121/2010/NĐ-CP) as follows:

"1. Annual land rental fee rate:

1.1. In cases where land is rented with annual payment of land rental fees, the ratio for calculating the annual land rental fee rate shall be 1.5% of the land price according to the purpose of the rented land as prescribed or decided by the provincial People's Committee pursuant to Point 1.6 of this Clause.

1.2. For land located in urban areas, commercial centers, service areas, transportation hubs, concentrated residential areas with special profitability and advantages in using land for production and business purposes, trade and services, the provincial People's Committee shall decide the ratio for calculating the land rental fee rate based on local realities, but it shall not exceed two (02) times the ratio prescribed in Point 1.1 of this Clause.

1.3. For land located in remote, mountainous, island, and economically disadvantaged areas as specified by the Government; land used for agricultural, forestry, aquaculture, salt-making purposes; land used for production and business premises of projects encouraged for investment as specified by the Government, the ratio for calculating the land rental fee rate shall be at least 0.5 times the ratio prescribed in Point 1.1 of this Clause based on local realities, decided by the provincial People's Committee.

1.4. In cases where there is a change in the purpose of land use recorded in the land lease contract during the lease period, the organization, household, or individual leasing the land shall apply to the natural resources and environment authority for adjustment of the land lease contract. Based on the lease contract, the tax authority shall reassess the land rental fee in accordance with the regulations applicable to the new purpose of land use.

1.5. The land rental fee rate for underground construction shall be implemented as follows:

a. In cases where underground construction is carried out without being attached to above-ground construction (not using the surface land area), the land rental fee rate for underground construction shall not exceed thirty percent (30%) of the land rental fee rate on the surface with the same purpose as the underground construction. The specific land rental fee rate shall be decided by the provincial People's Committee in accordance with local realities.

b. In cases where underground construction is attached to the underground part of above-ground construction and the area of underground construction exceeds the surface land area subject to land use fee or land rental fee, the land rental fee rate for the additional area shall be determined according to the provisions of subpoint a of this point.

1.6. In cases where the land price prescribed by the provincial People's Committee at the time of land leasing for calculating land rental fees under Points 1.1, 1.2, 1.3, 1.4, and 1.5 of this Clause does not accurately reflect the actual market transfer price of land use rights under normal conditions, the provincial People's Committee shall determine the specific land price based on the actual market transfer price of land use rights.

1.7. The determination of the purpose of leased land; the land price prescribed by the provincial People's Committee; the specific land price decided by the provincial People's Committee under Points 1.1, 1.2, 1.3, 1.4, and 1.5 of this Clause shall be guided as follows:

a. The purpose of leased land is determined according to the purpose recorded in the decision on land leasing. In cases where there is no decision on land leasing or the decision does not record the purpose of land use, the purpose of leased land is determined according to the land lease contract.

b. The land price prescribed by the provincial People's Committee is the land price listed in the land price table issued and announced annually by the provincial People's Committee on January 1st.

c. The specific land price decided by the provincial People's Committee is the specific land price for each plot of land according to the approved planning in cases where the land price in the land price table issued by the provincial People's Committee does not accurately reflect the actual market transfer price of land use rights under normal conditions and needs to be reassessed.

The method for determining the land price for calculating land rental fees shall be implemented in accordance with the regulations of the Government.

2. Land rental fee rate for one-time payment for the entire lease period:

In cases where land is leased with one-time payment for the entire lease period, the amount of land rental fee payable shall be calculated as the amount of land use fee payable in cases where land is granted with payment of land use fee with the same location, purpose, and duration of use.

(Example 1 in the Appendix attached to this Circular).

3. Land rental fee rate in cases of auctioning land use rights for lease.

3.1. In cases where land use rights are auctioned for lease with one-time payment for the entire lease period, the land rental fee rate is the winning bid price. The amount of land rental fee payable shall be calculated by multiplying the winning bid price (the winning land grant price) by the area of leased land (equivalent to the amount of land use fee payable in cases of auctioning land with payment of land use fee).

The starting price for auctioning land use rights for lease shall be calculated as the land grant price with payment of land use fee with the same location, purpose, and duration of use, and shall be decided by the provincial People's Committee based on the proposal of the Department of Finance but shall not be lower than the land price prescribed by the provincial People's Committee.

(Example 2 in the Appendix attached to this Circular).

3.2. In the case of auctioning the right to use leased land under the form of annual land rent payment, the unit price of land rent shall be the winning bid price. The starting price for the auction shall be the unit price of land rent calculated based on the land price determined by the Department of Finance submitting to the Provincial People's Committee for decision (but not lower than the land price in the Provincial Land Price Table issued by the Provincial People's Committee) multiplied by the percentage ratio prescribed in points 1.1, 1.2, and 1.3 of Clause 1 of this Article.

The land rental unit price in this case will remain stable for 10 years. After the stabilization period, the land price must be adjusted again to determine the land rental unit price for the subsequent stabilization period (10 years) based on the following principles:

a. In the case where the land price specified and announced by the Provincial People's Committee at the time of adjustment increases less than 20% compared to the winning bid price or compared to the land price used to determine the unit price of land rent in the immediately preceding stable period, then apply the land price table specified by the Provincial People's Committee at the time of adjusting the unit price of land rent to determine the unit price of land rent for the subsequent stable period (10 years) while ensuring that the unit price of land rent in this stable period does not exceed 30% of the winning bid price or the unit price of land rent in the immediately preceding stable period.

b. In the case where the land price specified and announced by the Provincial People's Committee at the time of adjustment increases by 20% or more compared to the winning bid price or compared to the land price used to determine the unit price of land rent in the immediately preceding stable period, the Department of Finance shall take the lead in determining the land price adjustment factor according to the provisions in subpoint b of point 4.1 (4.1.2) of Clause 4 of this Article, submitting it to the Provincial People's Committee for decision, serving as the basis for the Department of Finance (in cases involving economic organizations, overseas Vietnamese residents, foreign organizations, and individuals leasing land) and the District People's Committee (in cases involving households and individuals leasing land) to decide on adjusting the unit price of land rent for the subsequent stable period (10 years) while ensuring that the unit price of land rent in this stable period does not exceed 30% of the winning bid price or the unit price of land rent in the immediately preceding stable period.

(Example 3 attached as an appendix to this Circular).

4. Determination of specific land prices for calculating the initial unit price of land rent in the case of annual land rent payment:

4.1. For economic organizations, overseas Vietnamese residents, foreign organizations, and individuals.

Based on the land lease application file as prescribed, the Department of Finance shall coordinate with relevant agencies to examine the suitability of the land price specified by the Provincial People's Committee with the actual market land price under normal conditions to determine the land price for calculating the unit price of land rent, which shall be submitted to the Provincial People's Committee for decision as follows:

4.1.1. In the case where the land price specified by the Provincial People's Committee is close to the actual market price of land transfer rights under normal conditions at the time of determining the unit price of land rent, the land price specified and announced by the Provincial People's Committee on January 1st each year shall be applied to determine the unit price of land rent.

4.1.2. In the case where the land price specified by the Provincial People's Committee is not close to the actual market price of land transfer rights under normal conditions at the time of determining the unit price of land rent, the land price must be reassessed to be consistent with the actual market price of land transfer rights under normal conditions to calculate the unit price of land rent; specifically as follows:

a. For parcels of land with high value (based on the price stipulated in the Provincial Land Price Table): from VND 15 billion upwards for central cities; from VND 5 billion upwards for mountainous and highland provinces; from VND 10 billion upwards for other provinces, the Provincial People's Committee shall decide the land price for calculating the unit price of land rent for each specific parcel of land.

The determination of the market land price for calculating the unit price of land rent in this case shall be carried out by the Department of Finance hiring an organization with appraisal functions to assess. On the basis of the land price assessed by the appraisal organization, the Department of Finance shall take the lead in coordinating with the Department of Natural Resources and Environment, the Tax Service, and relevant agencies to review and submit to the Provincial People's Committee for decision on the land price for collecting land rent for each specific case. In cases where localities do not have the conditions to hire an appraisal organization, the Department of Finance shall report to the Provincial People's Committee for permission to coordinate with the Department of Natural Resources and Environment, the Tax Service, and relevant agencies to determine and submit to the Provincial People's Committee for decision.

The selection of the appraisal organization shall be carried out in accordance with the laws on appraisal.

Costs related to the determination of the land price for calculating land rent shall be funded from the state budget in accordance with the laws on the state budget.

b. For parcels of land with low value (lower than the levels specified in subpoint a of this point for each area), to simplify administrative procedures, the Department of Finance shall take the lead in reporting to the Provincial People's Committee for consideration and decision on applying the land price adjustment factor to determine the land price for calculating the unit price of land rent.

The land price adjustment factor shall be determined by the Department of Finance taking the lead and coordinating with the Department of Natural Resources and Environment, the Tax Service, and relevant agencies, and submitting it to the Provincial People's Committee for decision. This factor is determined as the percentage ratio between the actual market price of land transfer rights (with general applicability) under normal conditions at the time of determination and the land price specified in the Provincial Land Price Table.

4.2. For households and individuals:

Based on the land lease application file and the actual fluctuation of land prices on the market compared to the land price specified by the Provincial People's Committee, the District People's Committee shall implement as follows:

a. Deciding to apply the land price specified by the Provincial People's Committee to determine the unit price of land rent for households and individuals in the district in the case where the land price specified by the Provincial People's Committee is close to the actual market price of land transfer rights under normal conditions at the time of determining the unit price of land rent.

b. In case the land price set by the provincial People's Committee does not accurately reflect the actual market transfer price of land use rights under normal conditions at the time of determining the land rental fee unit price, then the district People's Committee shall report to the Department of Finance to determine the land price for collecting land rental fees for households and individuals according to the provisions of point 4.1 (4.1.2) of this clause.

5. Determining the specific land price to adjust the land rental fee unit price when the stabilization period ends in cases where land is leased with annual land rental payments:

Based on the land lease file, the adjustment period for the land rental fee unit price as stipulated, and the principles for adjusting the land rental fee unit price as provided for in Article 4 of this Circular, the following procedures shall be implemented:

5.1. In cases where the land price set by the provincial People's Committee is applied to adjust the land rental fee unit price for the subsequent stabilization period, the Department of Finance shall determine the land price to adjust the land rental fee unit price (for economic organizations, overseas Vietnamese, foreign organizations, and individuals) according to the authority specified in point 2.1 of Clause 2, Article 2 of this Circular; the district People's Committee shall determine the land price to adjust the land rental fee unit price (for households and individuals) according to the authority specified in point 2.2 of Clause 2, Article 2 of this Circular.

5.2. In cases where it is necessary to determine the normal market land price to adjust the land rental fee unit price for the subsequent stabilization period, regardless of whether the plot has high or low value, the land price adjustment factor as stipulated in subpoint b of point 4.1 (4.1.2) of Clause 4 of this Article shall be applied to implement the determination of the land price to adjust the land rental fee unit price."

Article 2. Amend Section III Part B (guidance for implementing Clause 4 of Article 2 of Decree No. 121/2010/NĐ-CP) as follows:

"1. Percentage for calculating the land rental fee unit price for annual land rental payments:

Based on the purpose of land leasing, profitability, location, and investment sector, the provincial People's Committee decides the percentage for calculating the land rental fee unit price according to the provisions of Article 5a of Decree No. 142/2005/NĐ-CP dated November 14, 2005 of the Government (supplemented according to the provisions of Clause 3 of Article 2 of Decree No. 121/2010/NĐ-CP) for each type of land, urban area, commune, region, street type, and location.

2. Based on the land price for collecting land rental fees and the percentage for calculating the land rental fee unit price as stipulated by the provincial People's Committee in Clause 1 of this Article:

2.1. The Director of the Department of Finance decides the land rental fee unit price for each specific project for economic organizations, overseas Vietnamese, foreign organizations, and individuals leasing land.

2.2. The Chairman of the district People's Committee decides the land rental fee unit price for each specific case for households and individuals leasing land."

Article 3. Add Section IVa after Section III Part B (guidance for implementing Clause 5 of Article 2 of Decree No. 121/2010/NĐ-CP) as follows:

"Section IVa. Deduction of compensation, clearance, and resettlement funds.

In cases where domestic organizations and individuals; overseas Vietnamese; foreign organizations and individuals are granted land leases in advance for compensation, support, resettlement, and implementation costs for clearance and resettlement according to approved plans by competent authorities, they shall be reimbursed by the state budget through a deduction from the total amount advanced according to the approved plan from the land rental fees payable.

If the amount advanced for compensation, support, resettlement, and implementation costs for clearance and resettlement according to the approved plan exceeds the land rental fees payable, only the amount of land rental fees payable can be deducted; the remaining amount shall be included in the project's investment costs. The amount deducted from the land rental fees payable cannot be included in the project's investment costs.

In cases of leasing land with annual land rental payments, the amount advanced (if any) for compensation, support, resettlement, and implementation costs for clearance and resettlement according to the approved plan by competent authorities shall be deducted from the land rental fees payable, converted into corresponding payment periods based on the land rental price at the time of determining the initial land rental fees payable, and considered as completed annual land rental payments."

(Example 4, Example 5 attached to this Circular).

Article 4. Insert Section IVb before Section V Part B (guidance on implementing Clause 6, Article 2 of Decree No. 121/2010/NĐ-CP) as follows:

"Section IVb. Principles for adjusting land rental price.

The land rental price for each project shall be stable for five years. At the end of this period, if the land price set by the provincial People's Committee increases less than 20% compared to the land price used to calculate the land rental fee at the time of determining the previous land rental price, then the land price list set by the provincial People's Committee at the time of adjusting the land rental price shall be applied to determine the land rental price for the next stability period (five years) but must ensure that it is not lower than the land rental price of the immediately preceding stability period.

In case the land price set by the provincial People's Committee increases by 20% or more compared to the land price used to calculate the land rental fee at the time of determining the previous land rental price, the Department of Finance shall take the lead in determining the land price adjustment factor according to the provisions of paragraph b point 4.1 (4.1.2) Clause 4, Article 1 of this Circular, to submit to the provincial People's Committee for decision, serving as the basis for the Department of Finance (in cases where economic organizations, overseas Vietnamese, foreign organizations, and individuals lease land) and the district People's Committee (in cases where households and individuals lease land) to decide on adjusting the land rental price for the next stability period (five years).

At the end of the stability period (five years), due to objective reasons, the land rental price has not been adjusted, then continue to apply the land rental price of the previous stability period to temporarily pay the land rental fee for that period; when the competent authority implements the adjustment of the land rental price for each adjustment, the corresponding policy and land price for collecting land rental fees shall be applied at each adjustment while recovering any unpaid land rental fees during the temporary payment period (if any)."

Article 5. Supplement Point 1a and Point 1b into Section V Part B (guidance on implementing Clause 7, Article 2 of Decree No. 121/2010/NĐ-CP) as follows:

"1a. For projects leasing land and water surfaces before January 1, 2006, paying annual land and water surface rental fees without having adjusted the land rental price according to Clause 2, Article 9 of Decree No. 142/2005/NĐ-CP, the re-determination of the land rental price shall be carried out as follows:

1.1. Investment projects with decisions to lease land, handed over for use before January 1, 2006, and paying annual land rental fees shall continue to implement the principle of adjusting the land rental price already stipulated in the Investment Certificate (Investment License), Decision on Leasing Land issued by the competent state agency to the investor, or Lease Contract signed between the competent state agency and the lessee as follows:

For investment projects where one of the three types of documents below: Investment Certificate (Investment License), Decision on Leasing Land, or Lease Contract issued (signed) according to the provisions of the Law on Foreign Investment, the Law on Investment, and related laws stipulates the land rental price, water surface rental price, and principles for adjusting the land rental price according to the regulations on land rental prices and water surface rental prices of the Ministry of Finance (Decision No. 210A-TC/VP dated April 1, 1990, Decision No. 1417TC/TCĐN dated December 30, 1994, Decision No. 179/1998/QĐ-BTC dated February 24, 1998, Decision No. 189/2000/QĐ-BTC dated November 24, 2000, Decision No. 1357TC/QĐ-TCT dated December 30, 1995) shall be:

a. Continue to implement the land rental price and water surface rental price stipulated in the Investment Certificate (Investment License), Decision on Leasing Land, or Lease Contract if they have not yet reached the five-year stability period. At the end of the five-year stability period, adjust the land rental price according to the principles for adjusting the land rental price stipulated in the Investment Certificate (Investment License), Decision on Leasing Land, or Lease Contract.

b. The procedures and formalities for adjusting the land rental price and water surface rental price shall be implemented according to the provisions of Clause 2, Article 17 of Decree No. 142/2005/NĐ-CP and the guidance provided in Point 2, Section I Part D of Circular No. 120/2005/TT-BTC.

1.2. Other cases not falling under the conditions specified in Point 1.1 above include projects currently paying annual land rental fees and water surface rental fees where the Investment Certificate (Investment License) or Decision on Leasing Land or Lease Contract issued (signed) does not stipulate the land rental price and principles for adjusting the land rental price. If within the stability period for land rental fees, adjustments are not made, at the end of the stability period, adjust the water surface rental price according to the provisions of Article 5 of Decree No. 142/2005/NĐ-CP, the land rental price according to the provisions of Article 5a of Decree No. 142/2005/NĐ-CP (supplemented according to the provisions of Clause 3, Article 2 of Decree No. 121/2010/NĐ-CP) and the guidance provided in Articles 1 and 4 of this Circular.

1b. In cases where adjustments have been made according to Clause 2, Article 9 of Decree No. 142/2005/NĐ-CP, continue to implement the adjusted level until the end of the stability period. At the end of the stability period, adjust according to the provisions of Decree No. 121/2010/NĐ-CP and the guidance provided in this Circular."

Article 6. Amend Item 1.4 Point 1 Section IV Part C (supplemented pursuant to the provisions of Section IX Circular No. 141/2007/TT-BTC dated December 30, 2007 of the Ministry of Finance) as follows:

"1.4 Investment License or Business Registration Certificate (applicable in cases prescribed in Clauses 1, 2, 3, 4, 5, 6, and 8 of Article 14 and Clauses 1, 2, 3, and 5 of Article 15 of Decree No. 142/2005/NĐ-CP)."

Article 7. Handling of existing issues

1. For land lease projects paying annual rent that are currently deducting compensation and clearance costs according to the approved plan under Decree No. 142/2005/NĐ-CP dated November 14, 2005 of the Government, continue to implement the deduction method for compensation and clearance costs as stipulated in Decree No. 142/2005/NĐ-CP (allocating deductible costs into annual land rent payable).

2. For land lease projects paying annual rent implemented through public auction of land lease rights as prescribed in Decree No. 142/2005/NĐ-CP dated November 14, 2005 of the Government with a stable unit price lease cycle of five years, upon expiration of the five-year stable period when Decree No. 121/2010/NĐ-CP dated December 30, 2010 of the Government comes into effect, continue to implement according to the principles set out in Decree No. 142/2005/NĐ-CP (with a five-year stable unit price lease cycle).

Article 8. Implementation organization

1. Provincial People's Committees shall be responsible for:

1.1. Direct financial agencies, tax agencies, state treasuries to coordinate with relevant agencies at local levels to implement the determination and collection of land rent as guided in this Circular;

1.2. Inspect and handle violations or complaints and denunciations within their legal authority;

1.3. Specify procedures for coordination among local functional agencies in the circulation of files, determination of financial obligations for land rent and water surface rent as prescribed in this Circular, in accordance with related documents and local realities; clearly defining deadlines and responsibilities of each agency, unit, and land user in declaring, determining, and collecting land rent and water surface rent.

2. This Circular takes effect from August 15, 2011.

Cases arising from March 1, 2011 shall be implemented in accordance with Decree No. 121/2010/NĐ-CP dated December 30, 2010 of the Government and the guidance provided in this Circular.

Repeal Point 3 Sections II and III of Circular No. 141/2007/TT-BTC dated December 30, 2007 of the Ministry of Finance.

During implementation, if any difficulties arise, please promptly report them to the Ministry of Finance for study and resolution by the People's Committees of provinces and centrally governed cities, organizations, and individuals./.