Key regulations to determine land use fees

Determining land use fees is becoming an art onto itself. Valuers appointed by the departments of Natural resources and Environment need to command extensive statutory knowledge in the area to be able to wade through this overgrowm forest of interconnected regulations.

The Ho Chi Minh City People’s Committee has issued a draft of regulations on the price of land within the city. However, when carrying out a valuation for land use fees on behalf of real estate developer, the valuer needs to follow Circular No.36/2014/TT-BTNMT issued by the Ministry of Natural Resources and Environment, outlining the details of land valuation methodology – which brings up significant questions as to the validity of local authorities regulations.

The current process of determining the fees for real estate projects (regardless of location) must comply with Decree No.45/2014/ND-CP on the collection of land use fees. In case the land is located within a city and being granted by the local people’s committees, and the value exceeds VND30 billion ($1.32 million) (as referenced from a relevant published land price index), the land use fee will be determined by market and land value assessment – but then that remains subject to the approval by the granting authorities.

Land use is calculated by using valuation approaches, such as direct comparison, depreciation, income approach, and residual methodology – all of which is stated in the government decree on land prices.

Both the land use fees and the land’s market value assessment need to be approved by both the departments of Natural Resources Environment and the departments of Finance. Securing two approvals from two ministerial departments carries its own difficulties: only to start the procedures, applicants need to submit a valuation certificate and enlist a qualified valuation company to represent their claim.

Pieces of Legislation governing the evaluation of land use fees:

• Land law 2013

• Decree No.43/2014/ND-CP on the implemantation of certain clauses of the Land Law

• Decree No.44/2014/ND-CP on land value

• Decree No.45/2014/ND-CP on the collection of land use fees

• Decree No.47/2014/ND-CP on compensation, support, and resettlement from compulsory acquisitions

• Decree No.104/2014/NC-CP on the land price index

Published on Báo Đầu Tư, Special Edition - Toàn Cảnh Bất Động Sản

RENEE KHA

Managing Director,

Fortis Bridge