Decree 103/2024/ND-CP regulating land use fees and land rents

One of the financial obligations of land users is the obligation to pay land use fees and land rent. Recently, the Government has issued new regulations on land use fees and land rent in Decree 103/2024/ND-CP to guide the new regime effective under Land Law 2024 in Vietnam. Below, Viet An Law will analyze some notable contents in Decree 103/2024/ND-CP regulating land use fees and land rents.

Basic information about Decree 103/2024/ND-CP

Effective date

• Date of issue: 30/07/2024
• Effective date: 01/08/2024

Documents replaced

• Decree 45/2014/ND-CP on land use fee collection; amended and supplemented by Decree No. 135/2016/ND-CP, Decree No. 123/2017/ND-CP;
• Decree 46/2014/ND-CP on land and water surface rent collection; amended and supplemented by Decree 135/2016/ND-CP, Decree 123/2017/ND-CP, Decree 79/2019/ND-CP.

Main contents

Decree 103/2024/ND-CP has specified the provisions of the Land Law 2024 on land use fees and land rents, specifically:

Accordingly: Land use fees are applied to entities to whom the state allocates land, while land rent is applied to entities to whom the state leases land and has obligations.

The following cases are specified:

• The State allocates land with land use fees collected
• The State leases land (including land with water surface).
• The State allows the change of land use purpose to land types subject to land use fees or land rent.
• The State recognizes land use rights, adjusts land allocation decisions, adjusts detailed planning, allows conversion of land use forms, and allows multi-purpose land use according to the provisions of law, which gives rise to obligations regarding land use fees.
• The State leases land to build underground works for business purposes that are not underground parts of above-ground works; land to build above-ground works to serve the operation, exploitation, and use of underground works.
• The State recognizes land use rights, extends land use, adjusts land use terms, adjusts land lease decisions, adjusts detailed planning, allows conversion of land use forms, and allows multi-purpose land use according to the provisions of law in cases where land rent must be paid according to regulations.

Main changes of the Land Law 2024 affecting regulations on land use fees and land rents

The Land Law 2024 has made major changes related to land finance, including land use fees and land rents. The main changes of the Land Law 2024 affecting land finance include:

• Expand the cases where the State leases land and pays annual land rent to ensure the stability and sustainability of state budget revenue from land;
• Regulate separating cases of land use rights auctions and bidding for selection of investors using land; regulations on multi-purpose land and collection of financial obligations for this type of land;
• Eliminate the Government’s land price framework; stipulate that the Land Price List is built according to area, location or built for each land plot based on the value zone, standard land plot (for areas with digital cadastral maps and land price database) for the first time to be announced and applied from January 1, 2026 and adjusted, amended and supplemented once a year (instead of 5 years as in the Land Law 2013);
• Innovate the process of determining land price: In case of applying land price in land price table to calculate land use fee and land rent, the People’s Committee at a competent level must record land price in the decision on land allocation, land lease, permission to change land use purpose, extension of land use right, adjustment of land use term, change of land use form;
• In cases of exemption from land use fees and land rent, it is not necessary to carry out procedures for determining land prices and calculating exempted land use fees and land rent. Land users exempted from land use fees and land rent do not have to carry out procedures to request exemption from land use fees and land rent;…

To specify the new regulations of the Land Law 2024, Decree 103/2024/ND-CP regulating land use fees and land rents with detailed regulations on land use fees and land rents was issued.

Regulations guiding how to calculate land use fees in some cases

Calculating land use fees when the State allocates land

Article 6 of Decree 103/2024/ND-CP specifically stipulates the formula for calculating land use fees when the State allocates land. Clause 2, Article 6 of the Decree stipulates that in cases where the State allocates land with land use fees collected to build resettlement housing, which is a multi-storey house, allocated to many users, the land use fees are allocated to each user by the provisions of the law on land use fee collection according to the Land Law 2013, Decree No. 45/2014/ND-CP and instructions in Circular No. 76/2014/TT-BTC.

• Accordingly, the allocation of land use fees in the Decree only applies to cases where multi-storey houses are attached to land directly allocated by the State to many users, then the land use fees are allocated to each user.
• Not required to apply in cases where the State allocates land with land use fees to economic organizations to carry out multi-storey housing construction projects for sale or for sale combined with lease, not applicable in cases of selling state-owned housing.

Calculating land use fees when changing land use purposes

Articles 7, 8, and 34 of Decree 103/2024/ND-CP stipulate the calculation of land use fees when changing land use purposes in the spirit of the provisions of Articles 121 and 156 of the Land Law. Specifically, when changing land use purposes, land users must pay land use fees and land rent as follows:

• Pay land use fees and land rents in one lump sum for the entire rental period equal to the difference between land use fees and land rent of the land type after the change of land use purpose and land use fees and land rent of the land type before the change of land use purpose for the remaining land use period;
• Pay annual land rent according to land type after changing land use purpose.

In addition, in practice, to implement the project, investors must receive the transfer of many different types of land (residential land, production and business land, commercial land, service land, and agricultural land), and then complete procedures to be permitted to change the land use purpose to implement the investment project according to the approved land use plan, but current law does not have regulations on land use fee collection and land rent collection in this case. Therefore, the Decree supplements regulations on handling cases of mixed land use projects in this case, specifically:

• In case the project has both the form of State land allocation with land use fee collection and the form of State land allocation without land use fee collection: the entire land fee before changing the land use purpose will be deducted from the land use fee of the project.
• In case the project has both the form of State land lease and the form of State land allocation without collecting land use fees: the entire land fee before changing the purpose of use will be deducted from the land rental amount of the project.
• In case the project has both the form of State land allocation with land use fee collection and the form of land lease and the form of State land allocation without land use fee collection: the land fee before changing the land use purpose is deducted from the land use fee and land rent payable of the project according to the principle of allocation to the land area subject to land use fee payment and land rent payment.

Calculating land use fees when granting land use right certificates

One of the notable contents of Decree 103/2024/ND-CP is the regulation on calculating land use fees when granting certificates of land use rights and ownership of assets attached to land to households and individuals.

The Land Law 2024 has provisions on granting land use certificates to households, individuals, and residential communities using land in cases where there are or are no documents on land use rights as prescribed; the origin violates land law before July 1, 2014; the origin is allocated without proper authority; accordingly, there are provisions on several cases where financial obligations regarding land must be paid when a land use certificate is granted.

Articles 9, 10, 11, and 12 of the Decree specifically stipulate the collection rate for each case of being granted a Land use right certificate under the Land Law in the direction of inheriting the provisions on land use fee collection rates according to the provisions of the law on land use fee collection under the Land Law 2013. However, there are adjustments to balance between land use cases according to land use time and land origin; the land price for calculating land use fee is the land price on the land price list according to the provisions of the Land Law.

• In particular, for households and individuals using land with houses, houses, and constructions serving life before December 18, 1980, the residential land area will be recognized as equal to 1 time the residential land recognition limit and will not have to pay land use fees when being granted a Land use right certificate for this land area.
• When a land use right certificate is granted for the land area exceeding the residential land recognition limit of the land plot with houses, houses, and works serving life, according to the provisions of Clause a, Clause 1, Article 138 of the Land Law 2024, land use fees must be paid.

New regulations on land rental prices with annual rental payment

The Land Law 2024 specifically stipulates cases where specific land prices are applied to calculate land rent, the land price list is applied to calculate land rent when the State leases land and collects annual land rent; specifically stipulates cases where the State leases land and collects land rent once for the entire lease term; leases land and collects annual rent in the remaining cases; the land price list is built according to area and location.

For areas with digital cadastral maps and land price databases, a land price list will be developed for each plot of land based on the value zone and standard plot of land. The land price list will be developed for the first time to be announced and applied from January 1, 2026, and will be adjusted, amended, and supplemented for announcement and application from January 1 of the following year.

Based on these regulations, Article 26 of Decree 103/2024/ND-CP stipulates the unit price for land rental payments annually. Accordingly:

Annual land rental price = Percentage (%) of land rental price multiplied by (x) Land price for calculating land rental fee

In which:

• The percentage (%) for calculating the annual land rental price is from 0.25% – 3% calculated by the Provincial People’s Committee for each area and route corresponding to each land use purpose after consulting the People’s Council at the same level.
• Land price for calculating land rent is the land price in the Land Price List (according to regulations in Point b, Point h, Clause 1, Article 159 of the Land Law); determined in units of VND/m2.

New regulations on land use fee exemption and reduction from August 1, 2024

Decree 103/2024/ND-CP regulating land use fees and land rents clearly states that land use fees are exempted in the cases specified in Article 18 and land use fees are reduced in the cases specified in Article 19.

To strengthen post-inspection and handling after the State allows exemption or reduction of land use fees, Clause 8, Article 17 stipulates that in cases where competent state agencies discover that land users have been exempted or reduced from land use fees but do not meet the conditions for exemption or reduction but are not subject to land recovery, they must return to the state budget the amount of land use fees that have been exempted or reduced. This new regulation has added guidance on handling cases where competent state agencies discover that land users have been exempted or reduced from land use fees but do not meet the conditions for exemption or reduction of land use fees as prescribed.

New regulations on land rent exemption and reduction from August 1, 2024

Decree 103/2024/ND-CP specifically stipulates cases of land rent exemption in Article 39; designs land rent reduction levels according to investment incentive sectors and investment incentive locations according to the provisions of the law on investment, which are similar to the current regulations in Decree 46/2014/ND-CP (amended and supplemented in Decree 135/2016/ND-CP, Decree 123/2017/ND-CP).

Article 157 of the Land Law 2024 only stipulates exemption and reduction of land use fees and land rents for cases of land use for production and business purposes in investment incentive sectors or investment incentive areas (regardless of socialized sectors as in the Land Law 2013).

Therefore, Articles 39 and 40 of the Decree only provide general regulations on preferential levels of exemption and reduction of land use fees for projects in investment incentive sectors and areas without establishing separate incentives for projects using land to build public works for business purposes (socialization).

Note the transitional regulations on the amount of money that land users must pay additionally for the period not yet calculated for land use fees and land rent.

Article 257 of the Land Law 2024 stipulates transitional provisions for cases where there has been a decision on land allocation, land lease, permission to change land use purpose, permission to change from annual land lease to one-time land lease for the entire lease term, land use extension, adjustment of land use term, adjustment of detailed planning before the effective date of this Law but the land price has not been decided.

Article 50 and Article 51 of Decree 103/2024/ND-CP guide the amount of money that land users must pay in addition to the period when land prices have not been decided for the cases specified in Article 257 of the Land Law according to 04 options:

Option 1

The amount of money that land users must pay additionally for the period not yet calculated for land use fees and land rent is calculated by:

The average deposit interest rate of 03 commercial banks in which the State owns more than 50% of the charter capital in the province or centrally-run city where the land is located for a term of 03 months is calculated on the amount of land use fee and land rent payable, determined according to the provisions of Clause 2, Article 257 of the Land Law 2024.

Option 2

The amount of money that land users must pay additionally for the period not yet calculated for land use fees and land rent is calculated by:

The average deposit interest rate of 03 commercial banks in which the State owns more than 50% of charter capital in the province or centrally-run city where the land is located for a term of 01 year is calculated on the amount of land use fee and land rent payable.

Option 3

The amount of money that land users must pay additionally for the period not yet calculated for land use fees and land rent is calculated by:

50% of the amount equivalent to late payment of land use fees according to the provisions of the law on land use fee collection, the law on tax management from time to time, calculated on the amount of land use fees and land rent payable.

Option 4

The amount of money that land users must pay additionally for the period not yet calculated for land use fees and land rent is calculated by:

The amount is equivalent to the late payment of land use fees and land rent according to the provisions of the law on land use fee collection and the law on tax management from time to time, calculated on the amount of land use fees payable.

Above are the analyses of the notable contents of Decree 103/2024/ND-CP regulating land use fees and land rents. If you have any related questions or need advice on land use fees, land rents, or other land law regulations, please contact Viet An Law Firm for the best advice and support!