Non-agricultural land use tax: Who will pay? What is the rate?

Non-agricultural land use tax is the compulsory payment for organizations, individuals, and households when using non-agricultural land.

1.  Who are the tax-liable objects of non-agricultural land use tax?

Pursuant to Article 1, Circular No. 153/2011/TT-BTC, the tax-liable object of non-agricultural land includes:

(1) Residential land in rural and urban areas.

(2) Non-agricultural production and business land, including

- Land for construction of industrial parks, including industrial clusters, industrial parks, export-processing zones, and other consolidated production and business zones subject to a common land use regime;

- Land for construction of production and business establishments, including industrial production, cottage industry, and handicraft businesses; service and trade establishments and other facilities serving production and business operations (including also land for construction of production and business establishments in hi-tech parks and economic zones);

- Land for mineral mining and land used as mineral processing sites, except in cases in which mineral mining activities do not affect the top soil layer or land surface;

- Land for production of construction materials or pottery, including land used as raw material and land used as construction material processing and production or pottery-making sites.

(3) Non-agricultural land specified in section (2) of this Circular, which is used by organizations, households, or individuals for commercial purposes.

Therefore, tax-liable objectives which are not the objectives of tax exemption must pay the non-agricultural land use tax.

2. Objects not liable to the non-agricultural land use tax

Circular 153/2011 also prescribes the objectives not liable to the non-agricultural land use tax.

In particular, Article 2 of this Circular prescribes that non-agricultural land used for noncommercial purposes which is not liable to tax includes:

(1) Land used for public utilities.

(2) Land used by religious bodies, including land of pagodas- churches, oratories, chancels, monasteries, religious training institutions, offices of religious organizations and other religious bodies permitted by the State.

(3) Land used as cemeteries and graveyards.

(4) Land under rivers, canals, ditches, streams and special-use water surface.

(5) Land with communal houses, temples, hermitages, clans' worship halls, including land areas for building these works and their premises;

In this case, land must meet all the conditions for the grant of land use right
certificates.

3. Who are exempted from the non-agricultural land use tax?

Pursuant to Article 9, Law on Non-Agricultural Land Use Tax 2010 and Article 10, Circular No. 153/2011/TT-BTC, cases of tax exemption are as follows:

(1) Land of investment projects in domains eligible for special investment promotion; investment projects in areas with extreme socio-economic difficulties; investment projects in domains eligible for investment promotion in areas with socio-economic difficulties; and land of enterprises with over 50% of their employees being war invalids and diseased soldiers.

(2) Land of establishments carrying out socialized educational, vocational training, health care, cultural, sports or environmental activities.

(3) Land for construction of gratitude houses, great-unity houses and nursing homes for lonely elderly people, people with disabilities or orphans, and social disease- treatment establishments.

(4) Within-quota residential land in geographical areas with extreme socioeconomic difficulties.

4. How to calculate the non-agricultural land use tax?

Pursuant to Article 5, Article 6 and Article 7, Circular No. 153/2011/TT-BTC, the non-agricultural land use tax amount payable for residential land, production and business land and non-agricultural which are used for commercial purposes shall be determined according to the following formula:

Payable amount (VND) = Arising tax amount (VND) - Exempted or reduced tax amount if any (VND)

Within that:

Arising tax amount (VND) = Taxable land area x the price of a square meter of land (VND/m2) x
Tax rate (%)

To calculate the arising tax, must know: (1) Taxable land area, (2) the price of a square meter of land (VND/m2) and Tax rate (%)

(1) Taxable land area

Actual non-agricultural land.

(2) The price of a square meter of land (VND/m2)

The price of a square meter of taxable land is the price of land based on its use purpose which is set by the provincial-level People's Committee and kept stable for a 5-year period starting on January 1, 2012

- In case of changing taxpayers or arising any elements that lead to the change of the price of a square meter of taxable land during a stabilization period, it is not required to re-determine the price of a square meter of taxable land for the remainder of the period.

- In case land is allocated or leased by the State or converted from agricultural to non-agricultural or from non-agricultural production and business to residential during a stabilization period, the price of a square meter of taxable land is the price of land based on its use purpose, which is set by the provincial level People's Committee at the time of land allocation or lease or at the time of converting the land use purpose and kept unchanged for the remainder of the period.

- For improperly used land or encroached or appropriated land, the price of a square meter of taxable land is the price of land based on its current use purpose which is set by the provincial-level People's Committee for application in the locality.

(3) Tax rate

- Residential land:

Residential land, including residential land used for commercial purposes, is subject to the partially progressive tariff as follows:

Land of apartment buildings with many users, condominiums and underground works is subject to the tax rate of 0.03%.

- Others:

Therefore, the method of non-agricultural land use tax is relatively complicated and each case has its own tax rate for the difference in dimensions and prices. However, the payable tax amount is not much for the residential land of households and individuals.

Here are the regulations of non-agricultural land use tax.