DRAFT LAW ON LAND

LEGAL UPDATE

The Ministry of Natural Resources and Environment has introduced the draft Law on Land to replace and amended the current Law on Land 2013 (Draft Law). The Draft Law is expected to address several drawbacks and limitations that currently exist in the Law on Land 2013. It has been published for public comments and is likely to be subject to further adjustments. It is expected to be promulgated in 2023.

Taking into consideration the goals and guidelines of Resolution No. 18-NQ/TW of the Central Committee dated 16 June 2022, the Draft Law is set to develop real estate activities in the upcoming years and solve existing critical issues.

1. Land Price Bracket[1]

Under the current Law on Land 2013, the government will promulgate the land price bracket every five years for each type of land and for each region.[2] However, the Draft Law has removed this regulation and indicates that the land price will be based on the following specific principles:

• Valid land use purposes such as agriculture, national defence, manufacturing, mineral activities;

• Land use term;

• Be suitable with the common market price of the land under usual circumstances;

• Comply with the regulations, methods, and procedures for land valuation as prescribed by the law; and

• Ensure the independent, genuine and objective nature of the land valuation result between relevant authorities.

Moreover, the government will establish the land price table on an annual basis and issue such table on the 1st of January in any given year. The Draft Law also introduces two new provisions to be applied to the land price table: calculation of income tax from the land use rights transfer, and calculation of the additional land use fee for delaying in/not putting the land into use.

2.  Land Allocation, Land Lease and Change of Land Use Purpose

The Law on Land 2013 currently states that the land allocation, land lease and change of land use purpose will be decided based on the annual land use plan of the provincial authorities or on demand as indicated in the investment projects, or the application for land allocation, land lease and change of land use purpose.

The Draft Law now provides that the land allocation and land lease will be conducted mostly through the bidding of land use rights of the projects using the land. In case of not going through a bidding procedure or change of land use purpose, it will be decided based on the annual land use plan of the provincial authorities, valuation document for land use demand of the relevant authorities or approval of the investment projects using the state budget.

For more clarification, the Draft Law also specifies criteria and eligible cases for land allocation, land lease through bidding and without bidding. For example, some notable cases for land allocation and land lease without bidding are land allocation without land use fee, land use purpose of mineral activities, land allocation and land lease through land compensation or resettlement, etc.

3. Land User

The Draft Law provides for several clarifications. For example, the sublessee in an industrial zone, industrial cluster or Hi-tech zone will be also considered a land user. The definition of foreign-invested enterprises is now brought in line with the definition in the investment regulations.

Foreign-invested enterprises will be entitled to acquire land use rights when they receive the transfer of land use rights in the industrial zone, industrial cluster, export processing zone and Hi-tech zone. Furthermore, foreign-invested enterprises using land formed by share or capital contribution acquisition will have the rights and obligations corresponding with the payment form (being land use fee or land rental) with respect to such land.

Land users under annual rental payment shall be entitled to transfer the property attached to the land, and also the right to lease the land when land users have advanced the compensation and clearance amount, but have not yet fully deducted such amount from the payable land rental.

4. Land use Term of the Investment Projects

New provisions are introduced stating that all investment projects using land must first determine the progress of completion and put it into use for construction building attached to the land.

The Draft Law also regulates that when considering the land use term extension or adjustment of the investment project with an expired land use term, the following conditions must be satisfied:

• Fit the (annual) land use plan or scheme;

• The written request for adjustment must be attached to the pre-feasibility study report and it serves to justify the necessity to continue the implementation of the investment project; and

• Satisfy all the environmental conditions as prescribed in the environmental regulations.

5. Conclusion

The purpose of the Draft Law is to reflect the orientation and development of the state’s management over the exploitation, use and transaction related to the land by various land users being individuals and organisations under the Law on Investment and Law on Enterprises. The Draft Law aims to solve the land-related issues that should not be put into practice anymore, and also develop the market trend with many expedient solutions.

The Draft Law on Land is expected to improve the economic growth of Vietnam, and is also meant to attract more professional, methodical and financially capable developers to invest in Vietnam.

For more information, please contact:

Thang Nguyen / Special Counsel

thang.nguyen@acsvlegal.com  

Cuong Ta / Associate

cuong.ta@acsvlegal.com

© 2022 ACS Legal Vietnam Company Limited – All rights reserved

This legal update is not an advice and should not be treated as such.

Download pdf: Draft Law on Land

[1] This is a range between a minimum and maximum price.

[2] The regions include: the Northern Midlands and Mountains, the Red River Delta, the North Central Region, the South-Central Coast, the Central Highlands, the Southeast, and the Mekong River Delta.

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