The Lancaster Legacy project at 230 Nguyen Trai (District 1, Ho Chi Minh City) has yet to complete the valuation process, even though the company wants to pay the land use fee - Photo: QUANG DINH
Speaking to Tuoi Tre newspaper , Mr. Nguyen Quoc Hiep - chairman of GP.Invest and chairman of the Vietnam Construction Contractors Association - argued that this additional land fee is essentially "interest" on late payments, and that applying this interest rate is unreasonable, causing difficulties for businesses, and even pushing some businesses to the brink of bankruptcy because the amount they have to pay reaches thousands of billions of dong, even though they are not at fault.
Is the additional land fee an unreasonable charge?
Mr. NGUYEN QUOC HIEP
* In the draft amendment to Decree 103 regulating land use fees and land lease fees, the Ministry of Finance wants to maintain the additional collection rate of 5.4% per year on unpaid land fees. Why do you oppose this?
- In a recent meeting with government leaders and several real estate businesses, I was the first to raise the issue that requiring businesses to pay an additional land fee of 5.4% per year is completely unreasonable.
This additional charge should only be applied when the business is at fault for delaying payment after the State has already calculated the land fee, or when the business intentionally delays payment and benefits from this delay.
However, upon reviewing the draft amendment to Decree 103, which the Ministry of Finance is currently seeking feedback on, they still haven't incorporated the businesses' opinions and continue to propose maintaining the additional land fee of 5.4% per year. They still maintain the view that this is budget money, so even if payments are delayed, the additional amount must still be paid.
I completely disagree. If this policy remains unchanged and continues to be implemented, it will create significant pressure on businesses. For businesses that haven't paid land fees for years, the additional land fees they have to pay could amount to hundreds, even thousands of billions of dong. This places a heavy burden on businesses, and some may even struggle to balance their finances and face bankruptcy.
Why do you consider this a unreasonable charge?
- This is an additional fee, which is essentially interest charged on the unpaid amount during the period when the State has not yet completed the calculation of financial obligations. Assuming the State has completed the calculation of land use fees, and the enterprise is at fault for not paying, or if the enterprise benefits in some way during this delay, then this additional fee must be collected because it generates profit from the delayed payment.
However, according to the new law, until the land fees are fully paid, businesses are not eligible to launch projects for sale to customers, and they cannot raise capital, thus gaining no benefit.
Some have suggested a 4% tax rate, but I'll be frank: this is also completely unreasonable because, in essence, businesses don't benefit from it, so whether it's 4% or 5.4%, it's still illogical. I hope the drafting agency will see the real issue and empathize with businesses.
Having to reluctantly pay tens of billions of VND in additional fees.
Novaland 's Lakeview City project (Ho Chi Minh City) has yet to finalize the land use fee after many years, preventing residents from receiving their land ownership certificates - Photo: NGOC HIEN
* Does your company itself also have to pay this additional fee?
- That's right. Our project in Phu Tho received a land allocation decision in May 2024, but the official valuation wasn't completed until a year later, despite our repeated urging. According to regulations, the company is required to pay an additional land fee of 5.4% per year on top of the total land fee payable, meaning an extra 27 billion VND on top of the nearly 500 billion VND already paid.
Despite finding it extremely unreasonable, we had to comply, otherwise we wouldn't be allowed to sell the properties or receive land ownership certificates. In our case, we repeatedly urged them to pay, and were even willing to pay the land fees, but the government and consulting firm hadn't finalized the land price yet, not because the company refused to pay. We even suffered losses because the project's sales process was delayed for a whole year.
During the discussions, the local authorities also found the collection of additional land fees unreasonable, but they could not voice opinions contrary to legal regulations such as Decree 103.
The 5.4% "interest rate" is baseless. We are very upset but still have to pay the amount. Hopefully, when Decree 103 is amended, this additional payment requirement will be removed. We hope the money we have already paid will be deducted or refunded to the company.
Mr. Nguyen Quoc Hiep
Businesses are facing a pricing deadlock.
* The Ministry of Finance argues that the additional fee of 5.4% per year has taken into account the "responsibility sharing" factor, and that this fee is equivalent to 50% of the late payment penalty for land use fees?
- The company was completely excluded from the valuation process. If the company had a responsibility to participate in discussions or provide documents late, then sharing the responsibility would be reasonable, and the company would readily agree. However, in this case, the company is not at fault.
The valuation and advisory council is established by a state agency and sets the price, which the buyer must accept without negotiation. We have proposed that Decree 71 be amended to allow the investor to participate, present their case, and provide counter-arguments.
We desperately want to pay the land fees quickly so we can have products to sell and cash flow to return, but we can't. This situation is causing bottlenecks for both government revenue and businesses, leading to a waste of land assets.
Resolution 68 has called for a shift in mindset from "managing businesses" to "serving businesses." This new and appropriate approach is crucial for resolving difficulties and promoting the development of the private sector. To achieve this, policymakers must put themselves in the shoes of businesses to create suitable and effective regulations and procedures.
The vice president of a real estate group with projects in Ho Chi Minh City:
It could exhaust the business.
I disagree with the government's decision to add 5.4% annual interest on the total unpaid land price because the government hasn't approved the price yet, so where would the money come from? Such a large interest penalty will cripple businesses, especially those with large projects and those with lengthy waiting periods before the land price is finalized.
For example, our project in District 1, Ho Chi Minh City, has been completed, but the land use fee calculation is still pending. In February 2020, the valuation unit appointed by the Department of Natural Resources and Environment calculated the land fee to be paid at 1,519 billion VND, but the city did not approve this price. On the fourth attempt, another company valued it at 3,200 billion VND, calculating the price based on the valuation date, even though the land allocation decision was made in 2018, and adding inflation factors. The land fee should have been calculated based on the year of land allocation, not the valuation year.
Assuming the land valuation in 2025 is 3,400 billion VND and is approved, we will be charged an additional 5.4% per year, meaning the amount has already increased by 40%, equivalent to approximately 1,360 billion VND. The total land fee payable would be 4,760 billion VND. This is a staggering figure that could push the business to the brink of bankruptcy.
Most businesses used the initial valuation to raise working capital, but now land prices have skyrocketed. The appraisal unit itself has already factored in inflation, and now the government is adding an interest rate of 5.4%, essentially accounting for inflation twice.
Delays are justified because officials are afraid of taking responsibility.
The current slow pace of land valuation is due to the limited number of land valuation companies, while the valuation fees are low, only a few hundred million VND, but require a high level of responsibility. Local authorities have to hold tenders to select valuation consulting companies with low costs.
Recently, several valuation firms have been penalized. This has made both valuation firms and government agencies afraid of taking responsibility.
Previously, valuation councils made decisions and provided advice that was merely advisory in nature. But now, government agencies are very reluctant to change the figures provided by the consultants, especially to reduce them.
Meanwhile, because they are responsible for the valuation results, consulting firms often provide inflated figures to ensure safety, resulting in inaccurate valuations. All of these factors prolong the valuation process, in many cases taking 2-3 years, or even longer.
NGOC HIEN
Source: https://tuoitre.vn/lo-pha-san-vi-tien-dat-bo-sung-khung-20250609095456213.htm
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