pwc new land law issued amendments will impact foreign investors the new land law changes and adds...
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New Land Law issuedAmendments will impact foreign investors
• The new Land Law changes and adds in a number of
definitions. In particular, the term “foreign invested
enterprise” (“FIE”) is officially referred to as a land
user (rather than being generally referred to as
“foreign organisations and individuals” as
previously). FIEs are now defined as comprising:
100% foreign owned enterprises, joint venture
enterprises and Vietnamese enterprises in which
foreign investor(s) purchase shares, or with which it
merges or which it acquires. This clearer definition of
FIE corrects the previous inconsistency between land
laws and other laws, especially the Law on
Investment, and should remove some of the confusion
in implementation of land laws.
Law on Land No. 45/2013/QH13 (“new Land Law”) came into effect on 1 July. Some notable points include:
PwC Legal Vietnam NewsBrief
This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. For further information, please contact: Phan Thi Thuy Duong or Veera Mäenpää (PwC Legal), Futoshi Funamoto (Japanese Business), Seong Ryong Cho (Korean Business), Bee Han Theng (Asian Chinese Business Services) at phone (84-8) 38230796, fax (84-8) 38251947 or contact Le Anh Tuan (PwC Legal) at phone (84-4) 39462246, fax (84-4) 39460705 in Ha Noi.
25 July 2014
• For land valuations, provincial People's Committees will no longer issue
annual land price lists. Instead, the central Government will issue a
land price range for each type of land every five years, and will adjust
this range if market prices change by more than 20%. Based on this
land price range, provincial People's Committees will issue land price
lists every five years, and determine specific land prices on a case by
case basis. Land pricing consultancy organisations may be involved in
such issuance and adjustment of land price ranges and land price lists if
so requested.
• The new Land Law clarifies the cases where FIEs can be allocated and
lease land. The State may allocate or lease land to FIEs via auction of
land use rights, e.g. for investment in construction of residential
housing for sale, lease or hire-purchase, or for investment in
construction of infrastructure for transfer or lease.
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• In the past, FIEs could only lease land. Effective 1
July, FIEs investing in residential housing projects for
sale, or for sale in combination with leasing, can be
allocated land by the State in return for land use
fees. An FIE may also transfer all or part of a
residential housing project together with the
associated land use rights.
• Developers of industrial zones (“IZ”) or export
processing zones (“EPZ”) - including FIEs - which
pay upfront land rent to the State on a lump sum
basis for the whole lease term can sublease the land
for either an annual rent or an upfront lump sum. In
contrast, IZ/EPZ developers which pay land rent to
the State on an annual basis may only sublease land
on the same basis, i.e. for annual rental payment.
• Certain cases where exemptions from or reductions
of land use fees or land rent were allowed previously
have been withdrawn, including land in areas entitled
to investment incentives which is used for
construction of commercial residential housing, and
land used for the construction of public works for
business purposes.
• Circumstances, grounds and procedures for land withdrawal by the State and compensation are elaborated upon in the new Land Law. The authority to withdraw land is also clarified to reduce instances of arbitrary withdrawals.
On 15 May, the Government issued the following decrees to guide the implementation of the new Land Law:
Decree No. 43/2014/ND-CP detailing a number of articles of the Land Law;
Decree No. 44/2014/ND-CP on land pricing; Decree No. 45/2014/ND-CP on collection of land use fees; Decree No. 46/2014/ND-CP on collection of land rent and water surface
rent; Decree No. 47/2014/ND-CP on compensation, support, resettlement
upon land withdrawal by the State.
Please contact us if you have any questions.
PwC LegalVietnam NewsBrief
This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. For further information, please contact: Phan Thi Thuy Duong or Veera Mäenpää (PwC Legal), Futoshi Funamoto (Japanese Business), Seong Ryong Cho (Korean Business), Bee Han Theng (Asian Chinese Business Services) at phone (84-8) 38230796, fax (84-8) 38251947 or contact Le Anh Tuan (PwC Legal) at phone (84-4) 39462246, fax (84-4) 39460705 in Ha Noi.
25 July 2014