Tapping Land Resources for Development Investment

The Ministry of Finance recently held a press conference to announce Decree No. 198/2004/ND-CP on land use taxes and Decree No. 197/2004/ND-CP on compensation, support and resettlement for local residents when the State takes back land for construction of infrastructure projects. According to Deputy Finance Minister Huynh Thi Nhan, the promulgation of these decrees aims to implement the Seventh Central Meeting Resolution, Session IX on reforming land laws, improving the investment atmosphere and tapping land resources for development investment.

New amendments of the decree No. 198 on land use taxes include expansion of taxpayers besides traditional ones who are allocated land for construction of houses and infrastructures for sale or for lease.

The decree allows investors to choose between allocated land (with taxes) or land leasing; get land use rights transfer, hire land and contribute capital into joint ventures via land use rights value.

Moreover, the households and individuals with residential land area used before October 15, 1993 are exempt from taxes on transferring land-use purposes, showing the Government’s determination to make policies virtually close to the people’s life.

Ms. Nhan said that according to Decree No.198, the term-based land use tax collection would be applied for land used for production and business, agro-forestry production, aquaculture and salt making. The decree enables enterprises to select land use methods.

Additionally, the collection of land-use taxes will be carried out via land auction or bidding on projects with land use. In so doing, the State budget will benefit from land, helping to strengthen equality in financial duties amongst the economic sectors with land allotted by the State and abolish subsidy via land.

Notably, by applying a "one-door" policy, the decree simplifies administrative procedures regarding the collection of land use tax and registration fee. Accordingly, once people are allocated land and granted with land use right certificate, they have to work only with the agency of Natural Resources and Environment to pay land use taxes.

In reference to Decree No.197, Ms. Nhan said it aims to narrow the scale of compensation, support and resettlement for local residents when the State withdraws land. It means that the State reduces land withdrawals, facilitating the self-transfer of land use rights, land leasing and capital contribution into joint ventures via land use right value, which makes developments for the real estate market.

As for production and business projects in line with the approved land use planning, investors themselves can transfer, hire land use right and receive capital contribution through land use right from economic organisations, households and individuals, skipping the land withdrawal step.

Ms. Nhan stressed that it is the State who takes responsibility for the compensation, support, resettlement and site clearance. Foreign investors in Vietnam are completely free from these expenditures. The residential land compensation fits well with the practical land use of households and individuals. As regards agricultural land inserted into residential areas, and pond and garden land adjoining residential land, in addition to the compensation in accordance with agricultural land price, landowners are also given with 20 - 50 per cent of adjoining residential land compensation rate. The regulation matches with the practical land use and guarantees people's interests once the State takes land back. People using houses and works, not counting service life or deterioration, for daily use are made up an amount of money to enable them to build new houses and works with technical standards.

Besides, under Decree No.197, it is not necessary to approve the scheme for compensation, support and resettlement but for the application of policies on compensation, support, land and asset price fixing to pay compensation, resettlement arrangement for land withdrawal projects concerning at least two districts, towns and cities or for the projects that the People's Committee at provincial level will approve plans for compensation, support and resettlement. Concurrently, a land development organisation will be set up to settle compensation and support for site clearance for land users whose land is withdrawn after planning and land use plan released without investment projects.

• Quynh Chi