Laws of Vietnam

THE MINISTER OF FINANCE

DECIDES:

Article 1.- To issue together with this decision the regulation on the land rent bracket.

Article 2.- This decision takes effect from January 1st, 1996.

Article 1.- State enterprises, enterprises of social and political organizations, enterprises of the Defense and Security Forces, joint-stock companies, limited liability companies, private businesses and collective economic organizations, which use land for production and business purposes other than agricultural production, forestry, aquaculture and salt production (except in special cases specified by the Prime Minister) and to which the competent State agency leases land, shall have to pay the land rent in accordance with this Regulation.

Article 2.- The price bracket for 1m2 of leased land is stipulated as follows:

1. For the material production, construction and transport industries: 0.5% of the price of 1m2 land set by the People?s Committees of the provinces and the cities directly under the Central Government in accordance with Decree No.87-CP of August 17, 1994 of the Government.

2. For the trade, tourism, postal, banking and other services: 0.7% of the price of 1m2 of land set by the People?s Committees of the provinces and the cities directly under the Central Government in accordance with Decree No.87-CP of August 17, 1994 of the Government.

3. Where the land-using domestic enterprises and organizations are allowed by competent State agencies to contribute capital in the form of the value of the land-use right to joint-ventures with foreign organizations or individuals as prescribed in Decree No.191-CP of December 31, 1994 of the Government, the form of land lease under Decision No.1417-TC/TCDN of December 31, 1994 of the Ministry of Finance shall apply.

4. Where State enterprises and domestic organizations have been assigned land by a competent State agency which already collected the land-use fee and already paid the land-use fee to the State Budget in accordance with the regulations issued before January 1st, 1996, they shall not change to the land lease modalities and still have to pay the land tax in accordance with the current Ordinance on housing and land tax.

All other cases which were previously regulated by the housing and land tax legislation and now change to the land lease modalities at the rates defined in this Regulation shall no longer have to pay the housing and land tax.

Article 3.- The land rent shall be kept stable for at least 5 years.

The rent may be adjusted only when the provincial/municipal People?s Committee adjusts the price of land of which the rent has not changed for more than 5 years.

Each adjustment shall not exceed 15% of the rent under the land leasing contract and shall apply only to the remaining periods of payment.

Article 4.- Dates for calculating the land rent:

1. The organizations which are defined in Article 1 of this Regulation and are using land without paying the land-use tax to the State Budget, must now register and complete the procedure for renting land with a State agency competent to lease land and shall have to pay the rent to the State budget retroactive from January 1st, 1996.

2. Where the land had been rented before January 1st, 1996, the rent shall be paid in accordance with this price bracket at the date on which the competent State agency signed the land-leasing decision.

3. Where the land was leased after January 1st, 1996, the land rent shall be calculated at the date on which the competent State agency signed the land-leasing decision.

Article 5.- The land rent calculated on the basis of the price of land rent defined in Article 2 of this Regulation shall apply to the actual condition of the land at the time of leasing. When the land-leasing decision is changed, the land rent shall be recalculated depending on the leased area stated in the new decision.

Article 6.- Calculating the land rent.

1. For one year:

The land rent The unit price The area of

for one year = of land rent x leased land

(in VND) (VND/m2/year) (m2)

2. Land rent calculated for the first year and the last year:

The land The land rent for one year Number

first year 12 months of rent

3. If the land-renting organization engages in various production/business lines with different prices of land rent, the exact area used for each business/production line shall be the basis to calculate the land rent. If such separate land areas cannot be determined for separate business/production lines, the land rent for the main business/production line shall be apply to the total area of that land lot.

Article 7.- The land rent shall be paid to the State Treasury as follows:

- On a yearly basis: The land rent shall be paid twice a year, 50% for each time; the first time not later than the 30th of June and the second not later than the 12th of December.

Article 8.- Exemption and reduction of land rent.

1. Where the land renting organization is still proceeding with the survey and construction under the economic-technical plan approved by the competent level, it shall pay only 50% of the land rent as provided for Article 2 of this Regulation.

2. Where the organization pays the rent for several years it shall be entitled to reduction as follows:

- Each payment for every five years shall enjoy a reduction of 10% of the total amount;

- Each payment for more than five years shall enjoy a reduction of 10% for the first five years and an additional 2% for each year from the sixth year, according to the partial progressonal method but the maximum reduction shall not exceed 30% of the rent to be paid under the land renting contract.

Example: Enterprise B leases from the State a land lot for 100 million VND of rent per year. The enterprise pays eight years rent right in the first year. The reduction of the land rent shall be calculated as follows:

- Reduction for the first five years:

100 million x 5 years x 10% = 50 million VND

- Reduction for the sixth year:

100 million x 1 year x 12% = 12 million VND

- Reduction for the seventh year:

100 million x 1 year x 14% = 14 million VND

- Reduction for the eighth year:

100 million x 1 year x 16% = 16 million VND

Total reduction = 92 million VND

The total land rent to be paid for eight years is:

(100 million VND/year x 8 years) - 92 million VND = 708 million VND

The Director of the Taxation Department of the province or the city directly under the Central Government shall supervise the observance of the regulations on land-rent exemption and reduction as stipulated in this Article.

Article 9.- This Regulation takes effect from January 1st, 1996.-