Is land lease subject to VAT reduction?

What is the VAT reduction support policy?

Reducing value added tax (VAT) is one of the State's support policies that people are particularly interested in.

The Government has issued Decree 44/2023/ND-CP, which stipulates a reduction in VAT for groups of goods and services currently subject to a tax rate of 10% to 8%, except for groups of goods and services as prescribed.

Regarding the VAT reduction level, also according to Decree 44, corresponding to the 2 VAT calculation methods, the VAT reduction level is stipulated as follows:

- Business establishments calculating VAT using the deduction method: Apply a VAT rate of 8% to groups of goods and services applying a tax rate of 10% (except for some goods and services).

- Business establishments (including business households and individual businesses) calculating VAT according to the percentage method on revenue: Get a 20% reduction in the percentage rate to calculate VAT when issuing invoices for goods and services eligible for tax reduction.

Leasing real estate is one of the real estate business activities, so VAT is not reduced. (Photo: Xuan Tien)

Is land lease subject to VAT reduction?

According to Decree 44/2023/ND-CP, land leasing activities are not eligible for VAT reduction.

Specifically, according to Article 4 of the Law on Real Estate Business, real estate business is the investment of capital to create, purchase, receive transfers, rent, hire-purchase real estate for sale, transfer, lease, sub-lease, hire-purchase for the purpose of profit.

In addition, Article 174 of the 2015 Civil Code explains that real estate is assets including: Land; Houses, construction works attached to land, including assets attached to those houses and construction works...

Thus, land leasing is identified as one of the real estate business activities.

On the other hand, Decree 44/2023/ND-CP stipulates a reduction in VAT for groups of goods and services currently applying a tax rate of 10% to 8%, except for the following groups of goods and services:

- Telecommunications, financial activities, banking, securities, insurance, real estate business, metals and prefabricated metal products, mining products (excluding coal mining), coke, refined petroleum, chemical products - Details in Appendix I of this Decree.

- Goods and services subject to special consumption tax: Cigarettes, cigars, alcohol, beer, cars with less than 24 seats, two-wheeled and three-wheeled motorbikes with a cylinder capacity of over 125 cm3, airplanes, yachts, gasoline of all kinds...

- Information technology according to the law on information technology: Sound, image, network cards and similar cards used for automatic data processing machines, smart cards, computers and computer peripherals...

Thus, land lease is not eligible for VAT reduction according to Decree 44/2023/ND-CP.

CHAU THU

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