Amendments, Supplements and Improvements to the State-Determined Land Price Policy

In reality, the situation of land surplus, misuse, "speculation" of land, the situation of land being allocated and leased for many years but not yet put into use has caused great waste of land resources, causing negative impacts on public opinion. In the current period, the land fund that the State can allocate and lease is limited and the demand for land allocation and lease from the State by enterprises is very large. Decree No. 17/2006/ND-CP dated January 27, 2006 has provided regulations on "investment rate" calculated by the total investment capital on land divided by the total land area of the project. In fact, "investment rate" is considered a criterion on a certain capital ratio for State agencies to consider and decide on the scale of land allocation and lease for enterprises. However, if the scale of land allocation and lease is only based on the investment capital criterion, it is not enough. Currently, in order to accelerate the pace of industrialization and modernization, many localities are hasty in developing investment projects, favoring "rolling out the red carpet" for investors, ignoring or underestimating the capacity of investors. This is one of the reasons leading to the situation where 1,022 projects with 130,000 hectares of land nationwide have not been put into use (Data up to June 2006 - Ministry of Natural Resources and Environment). Therefore, to ensure that the land area is allocated and leased to the right enterprises with real needs and capabilities, and to ensure equality among enterprises, it is necessary to specify the criteria for land allocation and land lease for enterprises at each level of area scale. In reality, each province and city has its own characteristics in terms of investment attraction ability, land area and resources... therefore, the scale of land allocation and land lease for enterprises cannot be uniform nationwide. Therefore, depending on the characteristics and ability to attract investment, provinces and cities decide on the scale of land allocation and land lease for enterprises within the area based on the following criteria:

- Field, profession of operation (industry; construction, trade, services; agriculture)

- Investment capital scale (for example, scale under 10 billion; from 10 billion to 20 billion; ...)

- Labor standards (for example, using less than 100 workers, from 100 to less than 300 workers...)

- Area of operation (plains, midlands, mountains)

Maybe you are interested!

Developing a specific criteria table on the scale of land allocation and land lease in localities will limit the situation of land allocation and land lease in excess of the actual land use needs of enterprises, leading to wasteful land use.

To implement this content, the State needs to issue a unified document on the method and way of determining the scale of land allocation and lease so that on that basis, localities can develop their own criteria table on the scale of land allocation and lease suitable for their locality.

3.2.1.2. Amending, supplementing and perfecting the land price policy prescribed by the State

determined

According to current regulations; land prices are determined by the People's Committee of the province or city directly under the Central Government.

issued and announced by the Central Government on January 1 every year to serve as the basis for calculating land use tax, import tax from land use right transfer; calculating land use fees and land rent; calculating the value of land use rights when the State allocates land without collecting land use fees, registration fees, compensation when the State reclaims land; calculating compensation for those who violate land laws and cause damage to the State. This regulation leads to the current land price policy being inconsistent with the socio-economic nature of land relations between the State and land users, specifically as follows:

The above relations between the State and land users, in terms of economic and social nature, can be divided into the following types of relations:

The first type is within the scope of land transaction relations between the State and land users, including: calculating land use fees when the State allocates land, compensation when the State reclaims land. When the State allocates land to organizations and households,

According to the regulations, individuals who collect land use fees as well as when the State recovers land must compensate for the land to the person whose land is recovered; in reality, these are land use right transfer relationships between land users; the land use right transfer relationship is implemented by administrative decisions of the State. The State's collection of land use fees from people to whom the State allocates land as well as compensation for land to people whose land is recovered are both calculated according to land prices close to the actual land use right transfer price on the market under normal conditions at the time of land allocation and recovery, which is consistent with the socio-economic nature of land transfer (sale) relationships. However, the land price issued at the beginning of the year is applied for the whole year, which will not be consistent with land price developments in a year.

The second type is within the scope of obligations of land traders: paying income tax to the State from their transfer of land use rights to others. To determine income, taxpayers must declare income including the land price of the transferred land use rights. However, the land price issued by the State from January 1 is applied for the whole year and in some cases is also stable for a few years; therefore, there are many cases where land trading will not generate added value because the purchase (receive transfer) and sale (transfer) only take place within one year; therefore, there is no basis for determining income, leading to the State losing tax revenue. To determine taxable income, the land price must be determined at the time of transferring land use rights.

The third type: within the scope of land users' obligations to the State (not transferring land use rights from one person to another), including: land use tax, land tax, registration fee, determining the value of land use rights when the State allocates land without collecting land use fees; land prices applied to these cases need to be stable for a long time, at least 3 years to ensure ease of implementation, ease of understanding, ease of inspection and ultimately the effectiveness of management. If changed

Changing it once a year will increase the workload, increase costs, complicate land users, and cause instability in land input costs for businesses... The basic problem here is to set a reasonable and stable collection level for land use tax, land registration fees, land rent,... to help stabilize and improve the investment environment.

From the above analysis and practice, it is affirmed that: unifying a land price issued by the People's Committee of the province or city on January 1 every year to serve as the basis for calculating land use tax and land rent, calculating the value of land use rights when the State allocates land without collecting land use fees, registration fees, compensation when the State reclaims land; calculating compensation for those who violate land laws and cause damage to the State, is not suitable for the socio-economic nature of each relationship between the State and land users: what needs to be "moved" to avoid revenue loss cannot be "moved", what needs to be stable must be changed once a year, leading to instability, increased management costs, and low efficiency.

In fact, the land prices issued by the People's Committees of provinces and centrally run cities are not close to the actual land use right transfer price under normal conditions, and in many cases are lower than the actual land use right transfer price. Therefore, when used to calculate land use fees, the State loses revenue; when used to calculate land compensation, people whose land is recovered suffer too much disadvantage and they do not accept it, causing complaints... In many localities, support measures must be applied instead of land compensation. This situation affects the formation and development of the real estate market: many investors, people with favorable conditions... ask the State to allocate land, allocate projects... but accordingly, they wait for the opportunity to sell for profit. This reality proves that the current land price policy is not appropriate.

The price framework for land types and land rental prices is not suitable for the duration of use of each type of land and the actual formation of land prices; specifically as follows:

Firstly, some types of land have a long-term stable use period but share the same land price frame and land rental price as land with a term of use; for example, agricultural and forestry land allocated to individual households has a land use period of 20 years (if planting annual crops) and 50 years (if planting perennial crops), agricultural and forestry land allocated to economic organizations has a land use period of 50 years and can be extended but not exceeding 70 years; meanwhile, protective forests, special-use forests, agricultural land used by communities have a long-term stable use period but share the same land price list as land for planting annual crops, land for planting perennial crops, and production forests. Or also non-agricultural land, if it is built with cultural, medical, physical training, and sports facilities serving public interests not for business purposes, the land use period is long-term stable; Meanwhile, non-agricultural land is also used to build such works but for business purposes, the land use term is 50 years, maximum 70 years; therefore, the same type of land but having two separate price lists is not practical.

Second, the actual formation of land prices for each type of land depends on many factors. In the same ward or commune, the price of non-agricultural land used for production and business is often lower than residential land (if only counting house foundations), but if counting the entire large area according to the residential land planning, the average land price of the entire residential land area is only equivalent to the average land price of the land area used for non-agricultural business. On the other hand, also non-agricultural land (not residential land); the case of construction of public works without business purposes has a higher price than the case of use for business purposes, which is not appropriate; that also means that the price of land used for non-agricultural production and business is somewhat similar to the land rental price. This regulation is not consistent with the inherent content of land price, which is the monetary expression of ownership rights and benefits obtained from land according to a certain purpose of use, at a certain time.

Based on the above practices, the orientation to perfect the land price mechanism and policy is as follows:

Firstly, the State issues a price framework for land types and stabilizes it for a long period of time to calculate land use tax (land tax), collect land rent, collect land registration fees, and determine the value of land use rights when the State allocates land without collecting land use fees.

Second, land valuation is carried out at the time the State allocates land with land use fee collection, the State leases land, the State reclaims land, and calculates income tax from land use right transfer. Implementing this mechanism requires the development of valuation organizations; at the same time, improving the quality and efficiency of these organizations' operations to ensure that valuation results are transparent, objective, and neutral in accordance with the provisions of law.

Third, rearrange the land price framework appropriately. The construction of land price frameworks should be simple, ensuring that one land type has one price framework. The Government strictly regulates the principles and methods of pricing; and delegates the right to decide on specific land prices to localities.

3.2.1.3. Eliminate discrimination in land allocation and leasing to enterprises

First, distinguish between the form and origin of land use.

Enterprises receiving land use rights transfers (payments not from the state budget), enterprises allocated land by the state with money (payments not from the state budget), and enterprises invested in Vietnam by overseas Vietnamese have similar rights and obligations. However, these 3 entities have rights and obligations that are stipulated separately in 3 Articles of the Law (Article 110, Article 112, Article 119 of the 2003 Land Law), which is unreasonable and causes difficulties in practical application.

Second, distinguish between the right to choose the form of land allocation and land lease from the state.

Domestic enterprises can choose to be allocated land with payment or lease land with annual rental payment. In the case of land allocation with payment, the fee is 100% of the land price if used for a period of 70 years.

Foreign enterprises can choose to lease land and pay rent annually or once for the entire lease term. In the case of leasing land and paying rent once, they have the same rights and obligations to use the land as in the case of land allocation with payment at a very low rent (usually 0.5% of the land price per year, equivalent to 35% of the land price if used for a period of 70 years).

This difference is creating disadvantages for domestic enterprises when investing in the production and business sector. Domestic enterprises (which are allocated land and pay 100% of the land price for land use) have larger financial obligations than foreign enterprises (which lease land for 70 years and pay rent once), but the land use rights of these two entities are equivalent.

Third, distinguish the method of land rent payment for houses.

water;

Domestic enterprises when leasing land from the State can only choose the form of

The method of land lease is to pay annual rent (but not to transfer land use rights and not to mortgage or contribute capital with the value of land use rights); meanwhile, when leasing land, foreign enterprises can choose to pay the rent once for the entire lease term (have the rights and obligations to use the land as in the case of land allocation with payment: can transfer land use rights, contribute capital with the value of land use rights) or pay annual rent. Due to this difference, it is difficult for domestic enterprises to access loan capital from credit institutions because they face "obstacles" from the legal regulations themselves.

Fourth, distinguish between land use forms for different types of land;

Land used for production and business purposes, implementing infrastructure construction projects, and agricultural production can choose the form of land allocation.

or lease land from the state. In particular, alluvial land along rivers and seas can only be leased by the state with annual rent. Discrimination based on each type of land leads to complications in implementation and makes it difficult for businesses to access loans from credit institutions to expand and develop production and business (because the form of land lease with annual rent payment cannot be mortgaged or contributed as capital by the value of land use rights).

Fifth, implement equality in financial obligations in land allocation and land lease for enterprises.

According to current regulations, in case the State reclaims land from others and transfers it to an enterprise, the enterprise does not have to pay compensation, support, or resettlement; in case the enterprise advances compensation, support, or resettlement, the land compensation and support can be deducted from the land use fee and land rent payable, but the deductible amount must not exceed the land use fee and rent payable; The reality is as follows:

The land recovered by the State is land owned by public administrative agencies, land leased by organizations and individuals from the State, then the enterprise that is allocated or leased land by the State does not have to pay in advance for compensation, support or resettlement; therefore, it pays land use fees and land rent normally. In case of being exempted from land use fees and land rent, the enterprise does not have to pay land costs, if reduced, the costs will also be reduced accordingly.

The land recovered by the State is the land that the State has allocated to individual households or economic organizations with land use fees; the enterprise to which the State allocates or leases land must pay in advance for compensation, support, and resettlement; therefore, the amount of land compensation and support is deducted from the land use fees and rent payable. If the subject is exempted from land use fees and rent, there are 2 cases:

Comment