Many businesses in HCM City are very displeased about demands for land rent arrears from 2006 to now.

According to the Saigon Agriculture Incorporation (Sagri), it leases land for agriculture production and is expected to pay an agricultural land tax until 2013. The problem is that the company has to pay tax for 100 percent of the land allocated, not for the land area being used. As a result, Sagri has been asked to pay tax arrears of up to tens of billions of dong.

A subsidiary of Sagri reportedly has been told to pay the tax arrears of VND90 billion, while the company’s total capital is VND60 billion only.

Under current laws, the rent of land for a rubber plantation is three times higher than the rent for other crops. Meanwhile, the rubber export prices have dropped dramatically, thus pushing businesses against the wall.

Do Huong Duong, deputy general director of the Phu Nhuan Service JSC (Maseco), complained that the land rents in 2011-2015 have increased by four times if compared with that in 2006-2011.

The overly high land rents in HCM City have put big difficulties for enterprises, pushing production costs up and weakening their products’ competitiveness.

The head of the Price Division of the HCM City Finance Department, Nguyen Quoc Chien, explained that in principle, the land rents that businesses have to pay are calculated based on the land pricing framework issued by the HCM City People’s Committee each year.

Until 2006, the land prices announced by city authorities were just equal to 30 percent of the market prices. However, later, the land prices set by city authorities were set closer to the market prices, and are higher than in the past.

The amended Land Law which took effect as of July 1, 2014 also stipulates that the land rents that businesses have to pay must be calculated in accordance with the land market prices.

However, Chien thinks that it was unreasonable to apply the new land rent policy at this moment, when the national economy is facing so many difficulties.

“The real estate market has been frozen since 2010, while the national economy still has been big difficulties,” he said. “The finance department has proposed to the city authorities to apply several measures to help businesses ease their difficulties.”

However, Chien denied the fact that the land rents have increased by four to five times as reported by businesses.

He said many enterprises did not declare land tax for 2006-2010 in the past, so they have been asked to pay tax arrears of up to tens of billions of dong and fines for payment delay.

Businesses complained that they are confused about all the numerous legal documents about land policies and land rents.

Bui Huu Nghia, general director of 30/4 Garment & Leather Export JSC, complained that he had to read 11 documents on land rents from late 2013 to early 2014. Five government decrees and two Ministry of Finance’s circulars on land rents took effect on July 1, 2014.

Source: Vietnamnet