On 1 July 2011 the Government promulgated Decree No. 53/2011/ND-CP which provides guidance about the implementation of a number of articles of the law on tax of non-agricultural land ("Decree 53") and replaces Decree No. 94-CP dated 25 August 1994. The purpose of Decree 53 is to provide more details about the categories of non-agricultural land subject to land tax as well as not subject to land tax, clarify the tax calculation procedures and provide more certainty about tax amounts due by fixing tax rates for 5-year periods.
Pursuant to Decree 53, the types of non-agricultural land subject to land tax consist of:
- residential land;
- land for non-agricultural production and business purposes e.g. industrial zones, mining and manufacturing; and
- land used for business purposes by entities, individuals and households.
The types of non-agricultural land not subject to land tax fall broadly within the following categories:
- land used for public purposes and the public benefit;
- land used by religious institutions;
- land for rivers or other such natural or artificial water systems; and
- land with structures of special architectural interest.
For the purpose of tax calculation, the relevant part of the land is the part actually in use. Where the residential land (including mixed use residential) consists of multi-storey buildings with multiple occupants (such as apartment buildings with or without commercial complexes) each land use right holder (or the owner identified in the house purchase contract) pays a proportionate share of the total tax amount, calculated in accordance with the formula set out in Decree 53. Where a land user owns several parcels of land in the same province/city the tax calculation is based on the area of their total land ownership.
The tax is charged at an amount per square metre as determined by the provincial People’s Committee. The amounts are determined and fixed for a 5-year period which shall be applied since 1 January 2012. If during the 5-year period the land user changes, or other factors arise that, had they existed at the time of determination, would have meant the tax of a land plot was originally assessed at a different rate, the tax amount will, however, remain unchanged for the 5-year period.
If the land is assigned, leased by the State or where the land use purpose is converted from agricultural to non-agricultural land or from land for business purpose to residential land during the 5-year period, the amount of tax payable will be as determined for that type of land use at the beginning of the relevant 5-year period. This rate will continue to apply until the expiry of that 5-year period.
Decree 53 also contains provisions for the declaration and payment of tax, exemption from tax and reduction of tax.
The Decree takes effect from 1 January 2012.