Exemption and reduction of land use fees and land rent in Economic Zones

The Ministry of Finance has issued Circular 89/2017/TT-BTC guiding a number of articles of Decree 35/2017/ND-CP of the Government regulating the collection of land use fees, land rent, and water surface rent in Economic Zones and High-tech Zones.

The Circular clearly stipulates the principles for exemption and reduction of land and water surface rent. Accordingly, investment projects using land that are considered for exemption and reduction of land and water surface rent are projects that are established, appraised and approved in accordance with the provisions of law.

Nam Cam Industrial Park in Nghe An Southeast Economic Zone is gradually filling up - Photo by Sy Minh

Investment projects are exempted from or have their land and water surface rents reduced in connection with new land leases, applicable in cases where a competent state agency first leases the land area for project implementation or the lease is extended upon expiration according to regulations of the law on land.

Organizations and individuals who are leased land or water surface by the Economic Zone Management Board shall only enjoy exemption and reduction incentives after completing the procedures for exemption and reduction; specifically as follows: In case of being eligible for exemption and reduction but not completing the procedures for exemption and reduction, they must pay land rent and water surface rent according to the provisions of law. In case of delay in completing the exemption and reduction procedures, the land rent and water surface rent shall not be exempted or reduced during the delay.

In case the exemption or reduction period has expired according to the provisions of Decree No. 35/2017/ND-CP, the land rent or water surface rent will not be exempted or reduced; if the exemption or reduction period is still in effect, the exemption or reduction will only be applied for the remaining preferential period calculated from the time of submission of a complete and valid application for exemption or reduction of land rent or water surface rent.

Exemption and reduction of land use fees and land rent in some cases

The exemption and reduction of land use fees in the Economic Zone shall be implemented in accordance with the provisions of Article 7 of Decree No. 35/2017/ND-CP; The Economic Zone Management Board shall determine the amount of land use fees to be exempted or reduced in accordance with the Government's regulations on land use fee collection and record it in the Decision on exemption and reduction of land use fees according to the form issued with Circular No. 76/2014/TT-BTC.

Regarding land rent exemption during the basic construction period, the Circular clearly states that, based on the land rent exemption and reduction dossier submitted by the land lessee according to regulations, the Economic Zone Management Board shall coordinate with other relevant agencies (if necessary) to determine the basic construction period and issue a Decision on land rent exemption for each investment project, but not exceeding 03 years from the date of the land lease decision.

In case the land lessee requests not to exempt land rent during the basic construction period, the land rent exemption period according to the provisions of the investment law shall be calculated from the time of the land lease decision. In case of late submission of land rent exemption documents according to the provisions of the investment law, the land rent shall only be exempted for the remaining preferential period (if any) calculated from the time the Economic Zone Management Board receives the complete documents according to the regulations and the land rent shall not be exempted during the period of late submission of documents.

Exemption from land rent and water surface rent during the basic construction period is implemented according to the project associated with new land lease, switching from land allocation without land use fee collection to land lease; excluding cases of investment in construction, renovation and expansion of production and business facilities.

This Circular takes effect from October 6, 2017.