HCMC real estate association proposes land use fee reform

Ho Chi Minh City Real Estate Association (Horea) has proposed HCMC authorities to abolish the current unclear and unpredictable way of calculating land use fees and issue fixed land use tax in long term to make the process transparent, eliminate ask-give mechanism and sustain the long and sustainable revenue source for the state budget.

A riverside property project in District 2, HCMC. Land use fee has been an unforeseeable factor for investors in Vietnam (Photo: SGGP)

In a document sent to the HCMC Party Standing Committee, People’s Council and People’s Committee and relevant agencies, the association proposed the tax to swing from 10-15 percent of land price list.

According to Horea, land use fee is a huge revenue source for the city budget. During the first ten months this year, the city collected VND10,529 billion (US$467.44 million) from 80 property projects. In addition, 40 projects have yet to pay the fee totaling VND1,889 billion (US$84 million).

However, complicated administrative procedure in calculating the fee has created conditions for ask-give mechanism, harbored negative issues and put a financial burden on businesses and house buyers.

Chairman of Horea Le Hoang Chau said that repairing the problem was unable to conduct immediately. Thing needed to solve first was administrative reform to make the land use fee calculating process transparent and quick.

At a meeting with Horea in June, HCMC leaders tasked the director of the Department of Natural Resources and Environment to take responsibility for improving land use fee determination. However nothing had been done so far, said Mr. Chau.

Explaining the lateness, Horea says that the Department of Finance in fact plays the main role in calculating land use fee for real estate projects in the city not the Natural Resources and Environment Department.

The later agency has been in charge of organizing online bid invitation to choose a consultant unit to determine land prices, carrying out procedures and prepare documents for the city Land Price Assessment Council and reporting to the People’s Committee.

Hence there is no foundation to task the environment department director to assume responsibility for the land use fee calculation, the association commented.

Moreover, members of the council now do not include representatives from independent consultant units or experts to ensure the land price determination unbiased and convincible, Mr. Chau stated.

There is no mechanism for land users to present their opinions about land price determination and site clearance compensation, said businesses. They have been miserable with the monopoly of consultant units in determining land prices which has resulted in shady condition and damage for the benefits of consumers, businesses and the state.

Therefore, Horea suggested the city People’s Committee to supplement independent consultant experts to the Land Assessment Council, permit businesses to give opinions at the council’s meetings to assess land price for their projects as well as meetings by the Finance Department on site clearance costs.

The land use fee should be deducted from the cost businesses spend on site clearance, it suggested.

The current online bid invitation should be reformed to choose qualified consultant units with optimal solutions to determine land prices instead of those offering the lowest prices.

By Minh Huy – Translated by Hai Mien

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