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MINISTRY Of fiNANCE SOCIALIST REPUBLIC Of VIETNAM
No. 1417-TC/TCDN Independence-freedom-Happiness
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Hanoi, December 31, 1994
Pursuant to the Law on Land dated December 23, 1993;
Pursuant to the Decree No. 178/CP dated October 28, 1994 of Government stipulating the tasks, power and organization of the Ministry of finance;
Pursuant to the power of the Prime Minister of the Government in document No. 7283/KTDN dated December 27, 1994 of the Government
Decides
Article 1:
To promulgate in connection with this Decision the Regulation on rent prices for land, water and sea surfaces applied in different forms for foreign investment in Vietnam.
Article 2:
This Decision shall replace Decision No.210A/TC-VP dated April 1, 1990 and Circular No. 50TC/TCDN dated July 3, 1993 of the Ministry of finance.
Article 3:
This Decision shall come into effect for implementation from January 1, 1995.
The Minister of finance HO TE (Signed)
MINISTRY Of fiNANCE SOCIALIST REPUBLIC Of VIETNAM
Independence-freedom-Happiness
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Hanoi, 28 December, 1994
Any joint-venture enterprises, 100% foreign capital invested enterprises or foreign participated businesses (hereinafter abbreviated as foreign capital invested enterprises) being granted by the State of the Socialist Republic of Vietnam to rent land, wat er and sea surfaces, have to pay tax in accordance with this Regulation.
In case, it is a Contract of cooperative business on the basis of product sharing in accordance with article 75 of Decree 18/CP dated April 16, 1993 of the Government in which the renting costs of land, water and sea surfaces have been calculated in the p roduct share of the Vietnamese side, then the foreign side does not have to pay rent cost according to this Regulation. When selling the shared products, the Vietnamese side has to pay that rent cost to the state budget.
Article 2.
The rent costs of land, water and sea surfaces are annually calculated on each surface unit or the whole acreage in accordance with the contract and other legal documents of the State.
Article 3.
The rent prices of land, water and sea surfaces for each surface unit are stipulated as follows:
3.1. The rent prices of land in urban areas.
3.1.1. framework of rent prices applied to different groups of urban land:
The rent prices of land in cities, provincial capitals, towns, tourist or centralized industrial areas and busy traffic junctures, land currently cultivated for agricultural products, rural residential areas and specially used land planned by the Governme nt and People's Committees of provinces and cities under central authority to use them for the purpose of industrial production, providing services or of tourism (hereinafter referred to as urban areas) will be applied to the following framework of rent p rices:
- Group 1: from 1.70 to 13.60 US$/per square metre/a year.
- Group 2: from 1.50 to 12.00 US$/per square metre/a year.
- Group 3: from 1.125 to 9.00 US$/per square metre/a year.
- Group 4: from 0.75 to 6.00 US$/per square metre/a year.
- Group 5: from 0.375 to 3.00 US$/per square metre/a year.
(The list of cities appears in attached appendix 1)
3.1.2. The calculating of rent prices for land
Rent price for land (US$/m2/year) = Basic price fixed for each city x Co-efficient of the location x Co-efficient of the base structure x Co-efficient of professional activity In which: Basic price is the minimum price in the framework prescribed for each kind of city.
- The Co-efficient will be defined in accordance with the standards prescribed in the frameworks from 1 to 2.
Way of identifying Co-efficient:
a) Co-efficient of location
- Co-efficient 2: Applied to areas in the center of cities, the front houses on both sides of a street, the cultural, tourist and entertainment centers.
- Co-efficient 1.7: Applied to areas in the center of cities but not the front houses on both sides of a street.
- Co-efficient 1.3: Applied to areas close to the center of cities and the front houses on both sides of a street.
- Co-efficient 1.0: Applied to areas close to the center of cities but not the front houses on both sides of a street.
b) Co-efficient of base structure:
- Co-efficient 2.0 is applied to locations with the following conditions:
+ The traffic is convenient
+ The surface is even and so no need to be leveled or filled
+ Having a source of electricity supply nearby which can meet the electricity demand of the project
+ Having a source of water supply and drainage close to the fence of the construction which can be utilized.
- Co-efficient 1.7 is applied to those locations missing one of the above-mentioned conditions.
- Co-efficient 1.5 is applied to those locations missing two of the above -mentioned conditions.
- Co-efficient 1.2 is applied to those locations missing three of the above-mentioned conditions.
- Co-efficient 1.0 is applied to those locations lacking all the above - mentioned conditions.
c) Co-efficient of professional activities
- Co-efficient 1.0: is applied to the following lines of professional activities: Building bridges, roads, airports, seaports, electricity plants, facilities for supply and distribution of electricity, for water supply and drainage, the infrastructure of export processing centralized industrial zones.
- Co-efficient 1.2: is applied to the following lines of professional activities: Mining, metallurgy, manufacture, shipbuilding, automobile assembly, construction materials, electric materials, mechanical engineering, basic chemicals, fertilizer and pesti cides.
- Co-efficient 1.5 is applied to other fields of business and production including processing industry, land for building workshops of the agricultural, forestry and fishery projects.
- Co-efficient 2.0 is applied to activities belonging to tourist and service industries.
3.1.3. free land in the metropolitan area of which city, provincial capital and town is applied by minimum rent price prescribed in the framework of rent prices of metropolitan land applied to that city or town.
3.1.4. for specially used land, agricultural land residential areas in the countryside used for investment projects in the fields of industry, services, tourism etc...(Except for agricultural, forestry and fishery processing industry which uses land in th e areas for growing plants and raising animals for materials is applied to the rent price prescribed in Article 3.2 below) will be unanimously applied to the framework of rent prices for group 5 of metropolitan areas in the appendix I attached to this Reg ulation. If the land being used belonging to the mountainous areas it shall also be applied by the rent price prescribed in Article 3.2 (the rent price for land in non-metropolitan areas).
3.2. The rent prices for land in non-metropolitan areas is specifically prescribed as follows:
3.2.1. Areas of rock mountains, bare hills, in fertile soils which are not convenient for use have the rent prices from 30 to 150 US$ per hectare a year.
3.2.2. Other kinds of land have the prices from 150 to 750 US$ per hectare a year.
The specific rent price for each project will be defined on the basis of the natural conditions, the base structure of the piece of land and the purpose of activities of the project similarly to the principles for identifying the CO-efficient of the locat ion, base structure and professional activities prescribed in article 3.1 of this Regulation.
3.3. The rent prices of river, lake, gulf and sea surfaces:
3.3.1. The surfaces of river, lake, gulf have the rent prices from US$ 75 to 525 per hectare a year.
Exclusively for the structures constructed on water-surface in metropolitan areas will be applied by the rent price for land in that City or town (prescribed in article 3.1 above).
3.3.2. The rent price for sea-surface ranges from US$ 150 to 600 per square kilometer a year.
In the case that the rent area for use is not stable, the rent price ranges from US$ 1,500 to 7,500.
Article 4.
The rent prices for land, water and sea surfaces prescribed above are applied to the real acreage of the rented land, excluding the costs of compensation and clearance.
Article 5.
After each period of 5 years, if finding it necessary, the Ministry of finance will consider and adjust the rent price for land, water and sea surfaces. When it is necessary to increase the rent prices, the increase can not exceed 15 per cent of the previ ously prescribed rates.
The rent prices for land, water and sea surfaces adjusted once for every 5 year period will not be applied to the cases paid once at the beginning for the whole period of operation by the project and the cases in which the Vietnamese parties in the joint- ventures contribute their capital by the cost of land rent.
Article 6.
The principles for identifying rent prices for land.
1. Based on the guideline of this Regulation, the People's Committees of provinces and cities under the Central authority will give their written ideas on the rent prices for land for each specific project. In which the following data should be made clear : the basic rent price for each type of land, the calculating co-efficient and the total amount of money for renting each acreage unit of land in a year so that the State Committee for Investment and Cooperation has the basis to decide the official rent p rice and to write it in the license for investment or for the establishment which has the land for rent to write it in the contract on land. The Ministry of finance shall only have its ideas on them when the State Committee for Investment and Cooperation asks it to do so.
2. In case, foreign organizations and individuals which cooperate with Vietnamese economic organizations allowed to rent state land to build houses for sale, have to pay for land rent until the houses and sold to other people for use. The Vietnamese indiv iduals who buy the houses have to pay for the land use in accordance with the Laws.
3. The time for calculating the cost of land rent.
- The starting point of time for calculating the cost of land rent is the date a competent office issues the certificate on the land use right to the enterprise having foreign investment capital.
- In case, an enterprise has obtained permission to use the land but has not obtained a certificate on the land use right, the starting point of time for calculating the cost of land rent shall be the date of signing document to transfer the land to the e nterprise for use.
- In case, a Vietnamese party joins a joint-venture and it is allowed to contribute its capital by the cost of land rent, then the starting point of time for calculating the cost of land rent shall be the date on which the State Committee for Investment a nd Co-operation issues license to the joint-venture.
Article 7.
Exemption and reduction of the rent cost for land.
1. Those enterprises with foreign investment capital undertake investment in specially difficult areas or areas necessary to encourage and attract investment capitals as appendix 2 attached to this Regulation will be considered to enjoy a reduction of 50% of the rent cost.
2. The projects on building bridges, roads, air-ports, sea-ports, electricity plants (but not in form of Build-Operate-Transfer (BOT)) don't have to pay the rent costs for land during their construction.
3. The projects on searching for minerals, during the period from searching, exploring and developing the mines and wells to the starting point for industrial production have to pay only 15% of the stipulated rent rate.
4. During the period for construction of projects on industrial production, hotels, tourism, offices, residential houses... the enterprises with foreign investment capitals have to pay only 50% of the rent rate. When they begin to exploit, produce and ope rate, they have to pay 100% of the stipulated rent prices (in case, a project consists of many constructional sections independent from each other, the period for construction is calculated separately for each section).
5. The projects on growing agricultural and industrial plants, will be applied by the minimum rent prices for land within the framework prescribed for each type of land.
6. for the projects on growing forests, in the first period when the plants have not offered products, the project owners don't have to pay the rent price for land. for the projects on growing industrial plants which require long time for growth, during t he period for basic construction, the project owners don't have to pay the rent price for land, either. Exclusively for projects on planting forests, the rent price of land can be reduced to 90% of the rent rate according to each type of land defined by t he Ministry of forestry and the Ministry of finance.
7. Those enterprises with foreign investment capital can enjoy a reduction of 5% on the land rent cost if the investors pay the whole rent cost for a 5 year rent. And if the investors pay the rent cost once for a period of more than 5 years, they will enj oy an extra reduction of 1% for each exceeding year but the total reduction can not exceed 15% of the total payment for land rent cost (this stipulation will not be applied to the cases in which the Vietnamese parties contribute their capital to the joint -venture with foreign investment capitals by land rent costs).
Article 8.
Stipulations on payment of rent costs for land
- Those enterprises with foreign investment capitals have to submit photocopies of their contracts on land rent, two copies of their applications and other documents relating to the contracts on renting land, water and sea surfaces to the offices in charg e of collecting rent costs before the deadline of one month from the effective date of the contracts.
- The enterprises with foreign investment capital have to pay the rent costs for land, water and sea surfaces to State Treasury Stores stipulated by the collecting offices.
- The land rent costs will be paid on two occasions in a year, 50% of the land rent costs will be paid on each occasion. The deadlines of the two occasions are June 30th and December 31st respectively. Except for the first and last years of the project, t he land rent cost will be calculated and paid on the basis of practical use of land in each year.
In the case that the enterprises with foreign investment capital don't pay the rent cost for land, water and sea surfaces in accordance with stipulations in the contracts and the guidelines of this regulation, the office in charge of collecting rent costs shall issue notices reminding them of their payments depending on the date written in the contracts on land rent.
- The rent costs will be paid in American dollars (US$) or in Vietnamese dong (VND). If the payments are made in VND, the exchange rate announced by the State Bank at that point shall be applied.
- The total amount of money collected on renting land, water, sea surfaces from the enterprises with foreign investment capitals shall be divided to leave some for local budget in accordance with the existing regime on distribution of budget management.
Article 9.
In case, a Vietnamese party in a joint-venture or a joint-business contributes its capital by rent cost for land, water or sea surface, the value of capital contributed by each side shall be agreed by both sides in accordance with the framework of price i n this Regulation and the incorporated enterprise or the foreign party which comes into joint-business does not have to pay rent cost to the State. But the Vietnamese party has to add the capital it has contributed in form of rent cost for land, water or sea surface to the source of capital provided by the State budget (the responsibilities of the Vietnamese party to the State when it contributes capital by the rent cost for land shall be specifically stipulated by the Ministry of finance).
Article 10.
Violations on rent costs for land, water and sea surfaces according to this Regulation shall be dealt with as follows:
1. To make enumeration not in time as stipulated shall be fined by US$ 2 per day (after deadline).
2. To make incorrect enumeration to reduce the payment shall be fined as much as twice the falsely stated amount.
3. To pay the rent costs or the fines not in time shall be fined by 0.2% of the arrears.
Article 11.
Provisions for Implementation
1. All enterprises with foreign investment capital and their partners have to strictly implement all stipulations in this regulation.
2. The General Department for Taxation bears the responsibility to organize the collection of rent costs for land, water sea surfaces from the enterprises with foreign investment capital and put them into the account of State Budget at the State Treasury Stores.
3. for the enterprises with foreign investment capital who are enjoying rent rates for land, water, sea surfaces stipulated in their licenses for investment issued by the State Committee for Investment and Cooperation or in other legal documents issued be fore this Regulation comes into effect, they can follow the stipulations in those documents. This Regulation is only applied to those projects on which licenses are issued after the effective date of Decision No.1417-TC/TCDN dated December 31, 1994 of the Ministry of finance.
4. All complaints on any issues relating to the rent costs for land, water, sea surfaces should be sent to the Ministry of finance for specific guidance.
for The Ministry of finance The Minister
HO TE