JOINT CIRCULAR No. 94/TT/LB GUIDING THE IMPLEMENTATION OF Decree No. 87/CP dated August 17, 1994 OF THE GOVERNMENT ON THE FRAMEWORK OF LAND PRICES

JOINT CIRCULAR

JOINT CIRCULAR NO. 94/TT/LB OF THE MINISTRIES OF FINANCE AND CONSTRUCTION, NATIONAL LAND COMMISSION AND GOVERNMENT PRICING BOARD DATED NOVEMBER 14, 1994 GUIDELINES FOR IMPLEMENTATION OF GOVERNMENT DECREE NO. 87/CP DATED AUGUST 17, 1994 ON THE FRAMEWORK OF LAND PRICES

Pursuant to Article 8 of Government Decree No. 87/CP dated August 17, 1994; the Joint Ministries of Finance and Construction, National Land Commission, and Government Pricing Board provide guidance as follows:

I. CLASSIFICATION OF LAND, URBAN TYPES, STREET TYPES, AND LOCATION TO DETERMINE LAND PRICES.

1. Agricultural land, forestry land:

The land classification for determining land prices shall be applied according to the agricultural land tax category approved by the competent authority in accordance with the Law on Agricultural Land Tax.

2. Rural residential land: including specialized land interspersed within rural residential areas:

Rural residential land is determined based on administrative boundaries.

The land classification for determining rural residential land prices is determined based on the following factors: profitability, utility value, location, and actual land prices in the locality as follows:

Class 1: Land with favorable conditions for production, business, living, and services, located along the main roads of communes, districts, or adjacent to urban areas at the outskirts of cities, transportation hubs, and major roads: commercial zones or markets, tourist areas, industrial zones, with the highest actual land prices.

Class 2: Land with less favorable conditions for production, business, living, and services than Class 1, with average actual land prices lower than those of Class 1.

Class 3: Land with less favorable conditions for production, business, living, and services than Class 1, with average actual land prices lower than those of Class 2.

Class 4: Land with less favorable conditions for production, business, living, and services than Class 3, with average actual land prices lower than those of Class 3.

Class 5: Land in mountainous areas relatively favorable for production, business, and living, located far from main roads, in remote areas of midland and delta communes, with average actual land prices lower than those of Class 4.

Class 6: Land in high mountainous areas, border regions, islands, or remote areas of midland and delta communes, unfavorable for production, business, and living, sparsely populated, with the lowest average actual land prices among all categories and lower than those of Class 5.

3. Residential land in suburban areas, transportation hubs, and major roads, commercial zones, tourist areas, and industrial zones outside urban areas is defined as follows:

a. Scope of land:

- Suburban residential land includes communes adjacent to the inner city of provincial-level cities and towns belonging to first-tier cities, and villages (wards) adjacent to the inner city of provincial-level cities, inner towns of other cities.

- Land adjacent to transportation hubs and major roads includes: land near intersections, ferry terminals, ports, airports managed by the central government and provincial-level cities.

The People's Committee of the province or provincial-level city (referred to collectively as the Provincial People's Committee) shall specify specific criteria for suburban land.

- Commercial and tourist land includes the entire area within commercial and tourist zones, including residential land within these zones as decided by the competent state agency.

- Industrial land includes land with factories and industrial zones and associated residential areas as decided by the competent state agency.

b. Types of land:

Type 1: Communes adjacent to the inner city of first-tier cities, transportation hubs, and major roads, commercial zones, tourist areas, and industrial zones adjacent to first-tier cities.

Type 2: Villages (wards) adjacent to the inner city of second-, third-, and fourth-tier cities, transportation hubs, and major roads, commercial zones, tourist areas, and industrial zones adjacent to second-, third-, and fourth-tier cities.

Type 3: Remaining areas.

c. Determination of land classification:

The land classification for determining land prices in suburban residential areas, transportation hubs, and major roads, commercial zones, tourist areas, and industrial zones is determined based on the following factors: profitability, utility value, location, and actual land prices in each locality as follows:

Class 1: Land with favorable conditions for business, living, tourism, and services, with the highest actual land prices.

Class 2: Land with less favorable conditions for production, business, living, tourism, and services than Class 1, with average actual land prices lower than those of Class 1.

Class 3: Land with less favorable conditions for production, business, living, tourism, and services than Class 2, with average actual land prices lower than those of Class 2.

Class 4: Land with less favorable conditions for production, business, living, tourism, and services than Class 3, with average actual land prices lower than those of Class 3.

Class 5: Land with less favorable conditions for production, business, living, tourism, and services than Class 4, with average actual land prices lower than those of Class 4.

Class 6: Remaining land, with average actual land prices lower than those of Class 5.

The land classification for each area does not necessarily have to include all six classes but must be determined based on the above criteria and the local land situation, with the Provincial People's Committee specifying specific land classifications for each area.

4. Urban land: Land prices are determined for five types of cities according to current state regulations. Within each type of city, streets are divided into three to four categories, and land positions are divided into four or five different categories. Specifically as follows:

a. Classification of cities: Cities are classified into five types according to current state regulations. Towns or districts that have not been classified as cities are included in the fifth type of city to determine land prices.

b. Classification of streets in urban areas: The classification of streets in urban areas to determine land prices is mainly based on location, profitability, level of infrastructure development, convenience for living and business activities, and actual land prices. Specifically as follows:

- Type I street: A place with particularly favorable conditions for production, business, trade, tourism, and living activities, having synchronized infrastructure, and having the highest actual land price.

- Type II street: A place with favorable conditions for production, business, tourism, and living activities, having relatively synchronized infrastructure, and having a lower average actual land price than that of Type I streets.

- Type III street: A place with relatively favorable conditions for production, business, tourism, and living activities, having mainly synchronized infrastructure such as electricity supply, water supply, and drainage, and having a lower average actual land price than that of Type II streets.

- Type IV street: Other streets with the lowest average actual land price, lower than the lowest average actual land price of Type III streets.

If a street consists of multiple sections with different profitability, land prices, and infrastructure standards, each section will be classified according to the corresponding street type as specified by the Provincial People's Committee.

For cities with different sub-regions in terms of profitability and land prices, each sub-region will have its own system of street types according to the above classification method.

c. Location of land

Determining the location of land within each street is based on the profitability and actual land prices of each specific location within each street as follows:

- Position 1: Applies to residential land adjacent to streets (frontage).

- Position 2: Applies to residential land in alleys or lanes of streets with convenient living conditions (vehicles can reach directly).

- Position 3: Applies to residential land in alleys or lanes of streets with less convenient living conditions than Position 2 (vehicles cannot reach).

- Position 4: Applies to land in alleys or lanes of alleys or lanes mentioned in Positions 2 and 3, and other locations with very poor living conditions.

Within each street type, it is not necessary to classify all four land positions, but they must be classified based on specific streets, starting from Position 1 corresponding to the highest price and descending.

Based on land grade criteria, regional land type criteria, street classification criteria in urban areas, and land position criteria within each street, the Provincial People's Committee directs guidelines for implementing land grading and determining land positions to serve as the basis for determining land prices.

II. LAND PRICING AND ADJUSTING LAND PRICES

1. Basis for determining land prices.

When determining specific land prices, the Provincial People's Committee must base on:

- The framework of land prices for various types of land issued together with Decree No. 87/CP dated August 17, 1994 of the Government:

- Actual land prices in the locality formed through the transfer of land use rights:

- Land grades, urban types, street types, and land positions already determined within each street.

2. Determining land prices.

The Provincial People's Committee determines specific land prices for each type of land.

- For agricultural land and forestry land, land prices are determined for each grade of annual crop land, aquaculture land, each grade of perennial crop land, forestry land, and according to each type of commune: plain, midland, mountainous area.

- For residential land in suburban areas near cities, near transportation hubs and main roads, commercial zones, tourist areas, industrial zones, land prices are determined for each grade of land and according to three categories.

- For urban land, land prices are determined for each land position within each street associated with the land position in the city.

- For salt-making land, land prices are applied to the land price table for annual crop agricultural land or aquaculture land adjacent to it.

- For agricultural land and forestry land interspersed within urban areas that have been planned or within rural residential areas, land prices are determined according to the current land use purpose price table, which is agricultural land or forestry land prices. If there is a change in the land use purpose at that location at the time of change, the land price will be adjusted accordingly.

The Provincial People's Committee shall not delegate authority to departments or lower-level People's Committees to decide on land prices.

Local regulations on land prices shall not be lower than the minimum price and not higher than the maximum price set in the framework established by the Government. For urban land, the framework includes adjustment coefficients K. The application of adjustment coefficient K is as follows:

- For cities that are economic, cultural, and social centers of a region or locality (with many cities), cities that are simultaneously tourism and commercial centers, the maximum price of various types of land is determined at 1.2 times the framework price list of similar urban land.

- For cities not falling into the two categories above, the price of various types of land is determined within the auction framework price for each specific case but shall not be lower than the current land price of the same type, grade, and street position as specified by the Provincial People's Committee.

In places where there has been investment, including places with plans for infrastructure construction, industrial zones, commercial zones, tourist areas, service areas... causing land prices to increase compared to prices in the same region, the Provincial People's Committee shall base on actual land prices to reclassify land types, grades, streets, positions... and adjust land prices accordingly but still within the Government's framework.

In cases where the competent authority permits a change in land use purpose, the land price shall be determined according to the new land use purpose price list from the date of change in use, taking into account the specific conditions of each plot of land to determine an appropriate price.

III. SCOPE OF APPLICATION OF LAND PRICES:

The land prices stipulated by the Provincial People's Committee shall apply:

1. To calculate land transfer tax according to the provisions of the Law on Land Transfer Tax and other taxes related to land according to the provisions of the Law.

2. Collect land use fees when transferring land to domestic organizations and individuals in accordance with the provisions of Government Decree No. 89/CP dated August 17, 1994.

3. Collect rent for leased land:

a. When determining the lease price for domestic organizations and individuals, it must be based on:

- The land price stipulated by local authorities;

- Actual market land prices;

- Purpose of land use and lease term.

b. The lease price for foreign individuals or enterprises with foreign investment capital shall be governed by separate regulations of the Government.

4. Calculate the value of assets when the State transfers land to organizations and individuals for use in accordance with State regulations.

5. Compensate for losses related to land when the State recovers land for national defense, security, national interests, public interest purposes in accordance with the provisions of Government Decree No. 90/CP dated August 17, 1994; compensate for losses for those whose land is recovered for other purposes according to separate decisions of the Government.

6. Land prices apply to cases: calculating land transfer tax, collecting fees when transferring land, leasing land, calculating asset values when transferring land, compensating for land losses when the State recovers land arising from October 15, 1993 onwards if not yet resolved, now will be applied according to the types of land prices issued by the provincial People's Committee within the framework of land prices set by the Government in Government Decree No. 87/CP dated August 17, 1994, and in accordance with the guidance of this circular.

IV. IMPLEMENTATION

Based on Government Decree No. 87/CP dated August 17, 1994, and guided by this circular: the provincial People's Committee directs relevant departments such as Finance, Price Control, Construction, Land Administration to organize the implementation of land classification, street type, land location, determination of land prices, and inspection of land prices at the local level.

In necessary cases, the provincial People's Committee may establish an advisory council including relevant departments to assist the provincial People's Committee in determining land prices locally.

The Ministry of Finance, the Ministry of Construction, the General Department of Land Administration, and the National Price Control Board within their respective jurisdictions have the responsibility to guide and inspect the implementation of Government Decree No. 87/CP dated August 17, 1994, and this circular.

This circular takes effect from August 17, 1994, and replaces Circular Joint Ministerial No. 32 TT/LB dated April 1, 1993. Any difficulties encountered during implementation should be reported promptly to the Joint Ministries for timely resolution.