Answer
Question: We, a 100% foreign owned company, entered into a land lease contract with Hanoi People’s Committee in 2004 to lease a piece of land for implementation of our project. Under the contract, our land rental rate will be re-determined this year. Could you let us know how to re-determine land rental rate applicable to our project?
Answer:
Land rental rate of a project leasing land from the State before January 1, 2006 shall be re-determined according to Decision 57/2009/QD-UBND dated March 30, 2009 on determining land rental rates in Hanoi. In principle, the land rental rate will be re-determined on the percentage of prevailing land price applicable to land lease purposes as promulgated by Hanoi People’s Committee at the time of re-determination, particularly:
In case where the current land rental rate is in the range of 0.5% to 2% of the prevailing land price, such rate will continue being applied.
In case where the current land rental rate is less than 0.5% of the prevailing land price, the land rental rate will be re-determined as follows:
- If the land is used as premises for manufacture, construction, transportation and public facilities for business, the land rental rate will be equal to 0.5% of the prevailing land price;
- If the land is used as premises for commerce, tourism, post office, banking and other purposes, the land rental rate will be equal to 0.7% of the prevailing land price (or 0.5% if your land is in Soc Son district).
In case where the current land rental rate is higher than 2% of the prevailing land price, the land rental rate will be re-determined to equal 2% of the prevailing land price.
Despite the above, in case where you have a new investment project on construction of building works on the leased land at the time of re-determination of land rental rate, the land rental rate will be re-determined as follows:
- If the land is used as premises for manufacture, construction, transportation and public facilities for business, the land rental rate will be equal to 0.7% of the prevailing land price;
- If the land is used as premises for commerce, tourism, post office, banking and other purposes, the land rental rate will be equal to 1.2% to 1.5% of the prevailing land price (or 0.7% if your land is in Soc Son district).
In case where your decision on leasing land, land lease contract or investment certificate has regulated the principle for re-determination of the land rental rate, such principle will be applied.
It is noteworthy that, the land rental rate of your project will not be re-determined in following cases:
- You paid land rent for a period of many years, then the land rental rate will not be re-determined until expiry of that period;
- You paid land rent for the whole leasing period.
