Additional land fee: Not the fault of the enterprise, but have to bear the brunt?

Enterprises believe that the project's land price has not been determined but it still has to pay additional land use fees at a rate of 5.4%, which is unreasonable.

The draft Decree amending and supplementing a number of articles of Decree No. 103 dated July 30, 2024 of the Government regulating land use fees, land rents and Decree No. 104 on Land Development Fund, which is being consulted by the Ministry of Finance , is attracting special attention from businesses.

The reason is that the draft still maintains the regulations on cases where there has been a decision on land allocation, land lease, permission to change land use purpose, change from annual land lease to one-time land lease, adjustment of detailed planning... but the land price has not been decided, then additional payment must be made for the period of time not yet calculated for land use fee, land rent at the rate of 5.4%/year calculated on the amount payable.

Unreasonable in both reason and emotion

Knowing that the additional land fee to be paid when the land use fee has not been calculated is unreasonable, the enterprise still has to pay it, because only then will the land be put into the project for exploitation and be eligible for sale.

That is the sharing of Mr. Nguyen Quoc Hiep, Chairman of GP.Invest, Chairman of Vietnam Association of Construction Contractors, with VietNamNet reporter.

He said that in addition to the land use fee of nearly 500 billion VND, the enterprise itself has paid about 27 billion VND in additional land fees for a project in Phu Tho .

However, the Chairman of GP.Invest said that this amount is not too large, because there are other businesses that have to pay much higher additional amounts, because they received the land allocation decision in 2014 and it has been more than 10 years now.

“This is unreasonable. The delay in paying land use fees is not the fault of the enterprise, but the enterprise has to bear the brunt. We have made many recommendations, but the Ministry of Finance has not yet agreed. In the localities where we do projects, they also acknowledge that this collection is unreasonable, but they cannot make recommendations because they are law enforcement agencies,” said Mr. Hiep.

Enterprises propose to remove the regulation on additional land use fees because it is unreasonable. Photo: Hoang Ha

Mr. Pham Duc Toan, General Director of EZ Real Estate Investment and Development Joint Stock Company (EZ Property), expressed: If the project has not yet had its land valued, forcing businesses to pay additional land use fees is unreasonable both emotionally and logically.

“Some localities require businesses to fulfill their obligation to pay land use fees before being granted a construction permit. Land valuation is the responsibility of the state. Fining businesses for mistakes that do not belong to them, while they have not violated anything, is an act of ‘forcing’ businesses,” Mr. Toan said frankly.

Meanwhile, the delay in calculating land use fees causes great losses to businesses. That is, the project implementation progress is prolonged, leading to increased costs due to land prices increasing every year.

He analyzed that 5.4%/year calculated on the land fee payable for the period of time not calculating land use fee is a rather large penalty. For example, if a project has a land use fee of 1,000 billion VND, if the State delays calculating land use fee for just 1 year, the enterprise will have to pay an additional 54 billion VND.

If a business is late in paying taxes, the tax industry stipulates a penalty with a fairly high interest rate of 0.03%/day, if after 90 days from the date of notice of land use fee payment, the business has not paid in full.

Mr. Toan is worried that at that time, businesses will fall into a situation of double taxation.

Sharing the same view, Mr. Vu Cuong Quyet, General Director of Dat Xanh North, said that determining land use fees is the responsibility of government agencies.

"Many projects are 'soaked' for 3-5 years before land use fees are determined, then businesses are fined 5.4%/year on the unpaid amount during the period waiting for land price calculation - this is a regulation that is disadvantageous to businesses. Because the late payment is not due to the fault of the business, but they are still fined," Mr. Quyet shared with VietNamNet reporter.

This leader said that land prices are being determined based on market prices and adjusted annually. Market prices increase every year, so the longer the government delays determining land use fees, the more businesses' costs will increase.

“The land price, along with the fine and other costs, will be included in the selling price, and the buyer will be the final party to bear these costs,” Mr. Quyet noted.

Proposal to remove additional land price regulations

Faced with the above reality, EZ Property General Director Pham Duc Toan proposed that the regulation on additional land use fees should be removed.

"In case of delay in determining land use fees, it is necessary to clearly define the responsibilities of relevant units. Fees should only be collected when the State has issued specific land prices.

Some localities are afraid of risks so they do not dare to evaluate, leading to a situation where for many years no project has been determined to have financial obligations for land. The problem lies in the mechanism; if resolved, the enforcement officers will be confident in implementing, instead of pushing the responsibility to the enterprises," said Mr. Toan.

Mr. Nguyen Quoc Hiep proposed that the Ministry of Finance reconsider the policy because it is too unreasonable.

According to him, this provision on collecting additional land fees should be removed. In case of delay in deciding on land use fee collection, the land valuation agency must take responsibility. At the same time, the transitional conditions must be amended, and any unit that has complied with the obligation to pay must be allowed to deduct it again.

Furthermore, if state agencies are late in calculating land tax, businesses must be exempt from fines - the leader of Dat Xanh North proposed.

He said that the State needs to clearly stipulate that from the time of the decision to allocate or lease land, within a maximum period of 3-9 months, or at the latest 1 year, financial obligations regarding land must be determined. If the deadline is exceeded, enterprises must be exempted from late payment penalties. This will create pressure, forcing the authorities to urgently determine land prices, avoiding the situation where projects are "soaked" for many years.

"Unblocking land pricing helps ensure abundant supply, thereby preventing real estate prices from being pushed up," Mr. Quyet suggested.

Proposal to amend the law to synchronize the exemption of land use fees for social housing projectsHoREA proposes to amend regulations to synchronize the issue of exemption of land use fees for social housing projects, public housing, resettlement housing, and rebuilding of apartment buildings...

Source: https://vietnamnet.vn/tien-dat-bo-sung-loi-khong-do-doanh-nghiep-nhung-lai-phai-chiu-tran-2409793.html