What is special about the proposal to reduce land use fees by up to 70%?

The Ministry of Finance has just submitted a draft Decree amending and supplementing a number of articles of Decree No. 103/2024 regulating land use fees and land lease fees.

Recently, in some localities, the new land price list under the 2024 Land Law has been significantly higher than the old one, forcing people to pay land use fees many times higher when converting agricultural land to residential land. This difference has become a major burden for households with a genuine need for housing.

z6750704606049-c323aca4fb3b12c7e9777889b6c33920-1289-6277.jpg — A household in Vinh City, Nghe An province, was required to pay nearly 4.5 billion VND in taxes when converting 300m² of garden land into residential land.

For example, the case of a household in Vinh City, Nghe An province, being asked to pay nearly 4.5 billion VND when applying to change the land use purpose of 300m² of garden land to residential land has attracted significant public attention. The reason is believed to stem from the newly issued land price list, with land prices increasing sharply compared to before, leading to people having to bear very high taxes, fees, and land use costs that are difficult for them to afford.

According to reports, in some cases, when changing the land use purpose, the land use fee payable is even higher than the actual value of the land. This creates many difficulties, especially for households with garden and pond land adjacent to their houses who want to legalize their land use rights.

To alleviate the difficulties faced by the people, the Ministry of Finance has submitted two specific options to the Government:

Option 1 (inheriting the spirit of the previous Decree 45/2014/ND-CP): Add a regulation on the land use fee for cases of converting land use from garden or pond land adjacent to residential land, or land originating from garden or pond land – which is not recognized as residential land – to residential land. Specifically: calculate 30% of the difference between the price of residential land and agricultural land for the area within the allocated residential land limit; calculate 50% of the difference for the area exceeding the limit.

This option also applies to agricultural land within the same plot of land that already has a recognized house according to the 2024 Land Law.

According to the Ministry of Finance, Option 1 reduces the land use fee obligations of people when the land price for calculating fees increases significantly compared to the old law for garden and pond land adjacent to residential land plots, and agricultural land within the same residential land plot.

However, this solution does not address the issue of converting land use from purely agricultural land to residential land when the land price used for calculating fees increases significantly.

Option 2 (proposed by the Ministry of Finance to maintain the current regulations in Decree 103/2024/ND-CP): No adjustment based on percentages, and the absolute difference calculation method as per the 2024 Land Law will still be applied.

The advantage of this option is that it ensures strict compliance with the provisions of Clause 1, Article 156 of the Land Law. However, the disadvantage is that it does not address the issue of soaring costs, causing difficulties for the people, and lacks a suitable incentive mechanism for the characteristics of garden and pond land attached to houses – a common practice in residential areas.

The Ministry of Finance has sent a document requesting localities to quickly report on the implementation of land use fee calculation for cases of land conversion from agricultural land to residential land. Based on the reports, some localities have proposed applying a percentage-based fee, similar to Option 1, in order to support people amidst fluctuating land prices.