Reducing land rent: Practical solution to support businesses

According to experts and businesses, this is a practical support solution because it has a quick impact, contributing to helping businesses overcome difficulties, stabilize and develop.

The decree detailing the reduction of land rent in 2024 will support businesses to overcome difficulties and restore production. In the photo: Box production at Viet Nhat Plastic Production Company Limited (Thanh Oai district). Photo: Do ​​Tam

Expected reduction of 4,000 billion VND in land rent

According to the Government 's Proposal, the subjects of application are land users who are directly leased land by the State according to the land lease decision or land lease contract or certificate of land use rights and ownership of assets attached to land of a competent state agency in the form of annual land rent payment, which is effective in 2024.

In case in 2024, the land user has not completed the legal procedures on land but by the time of submitting the application for land rent reduction according to the provisions of this Decree, the legal procedures on land have been completed (with a Land Lease Decision or Land Lease Contract or Certificate of land use rights, ownership of assets attached to land in the form of annual land rent payment), he/she is eligible for land rent reduction.

The Government proposes to reduce the land rent payable by 30% in 2024. The prescribed land rent reduction is calculated on the land rent payable in 2024. The reduction will not be applied to the outstanding land rent of years prior to 2024 and late payment fees (if any). In case the land user is receiving a land rent reduction according to regulations or/and compensation and site clearance deductions according to the provisions of the law on land rent, the prescribed land rent reduction will be calculated on the land rent payable (if any) after being reduced or/and deducted according to the provisions of the law.

It is expected that the land rent reduction will be about VND 4,000 billion (equivalent to the expected land rent reduction in 2023 with a 30% reduction nationwide), corresponding to 0.26% of total state budget revenue/year and 9% of state budget revenue from land rent per year (calculated according to 2023 data).

This is not the first time this policy has been proposed. Previously, the Government issued decrees to reduce land rents in 2020-2023. The average land rent reduction in 2020-2023 is VND 2,890 billion, and from 2021-2023 it is VND 3,734 billion/year, thereby contributing to supporting businesses, organizations, households and individuals in production and business activities.

According to the Ministry of Finance , the reduction in land rent under this policy does not significantly affect the overall state budget revenue, but will have a major impact on the recovery and development of production and business of organizations, individuals, households and enterprises; thereby increasing budget revenue from taxes to compensate for the reduction in revenue due to the reduction in land rent.

Effective solution

General Director of Trong Tin Accounting and Tax Consulting Company Limited Nguyen Van Duoc assessed that this is a very effective solution. After many years of implementation, the policy of reducing land rent has had a great impact on economic recovery and development, promoting production and business activities of enterprises and people.

"Land rent is a significant expense, considered an input cost of the enterprise, an input for production and business. Thus, when land rent is reduced, it means that input costs are reduced, thereby the enterprise can reduce the cost of goods corresponding to 30% of this land rent amount," said Mr. Nguyen Van Duoc.

Regarding the impact, when implementing land rent reduction, it means that the input costs of enterprises are reduced, causing the cost of goods to decrease accordingly. Reducing the cost of goods will stimulate people's consumption, which also helps to control inflation better. Reducing land rent also increases profits for enterprises, which is also a solution to help control inflation, stabilize the macro economy and ensure social security. Therefore, this is a very necessary policy for enterprises and people in the current period.

On the business side, Vice Chairman and General Secretary of the Hanoi Association of Small and Medium Enterprises Mac Quoc Anh said that the continued reduction of land rent in 2024 demonstrates the State's practical concern for the business community. In recent years, the policy of reducing land rent by 30% has had a positive impact, with some businesses benefiting up to billions of VND. This reduction not only helps businesses overcome difficulties but is also used effectively for goals such as paying salaries, retaining employees, investing in expanding production, innovating technology, improving product quality and increasing competitiveness in the market.

“In the context of many economic challenges, such support policies are becoming more necessary, helping businesses stabilize and develop sustainably. If this policy continues to be maintained in 2025, especially when this year's economic growth target is set at over 8%, it will create new momentum for the private enterprise sector - a major contributor to the Gross Domestic Product (GDP) and create many jobs for society,” said Mr. Mac Quoc Anh.

Some experts believe that the Decree detailing the reduction of land rent in 2024 is a policy that has a quick and effective impact on the economy. Therefore, the policy needs to be issued soon, because the first quarter of 2025 is almost over.

Source: https://hanoimoi.vn/giam-tien-thue-dat-giai-phap-thiet-thuc-ho-tro-doanh-nghiep-697237.html