Prescribe the minimum rate of payment to the State budget instead of the amount
The Government has just issued Decree No. 115/2024 detailing a number of articles and measures to implement the Law on Bidding on selecting investors to implement projects using land. The biggest change of this decree is to clearly define the minimum rate that enterprises must pay to the State budget.
According to Lawyer Pham Thanh Tuan, previously, according to the provisions of Decree 25/2020, determining the value of payment to the State budget in addition to land use fees and land rent (formerly known as m3), localities encountered difficulties in 3 issues.
Firstly, there is no reference land fund because there are no auction results or there are too many reference land funds, making it difficult to synthesize. Secondly, it is difficult to determine the expected land use fee and land rent. Thirdly, it is difficult to coordinate between local agencies in this value appraisal work. This is one of the reasons why many localities are confused when organizing bidding for projects using land.
To overcome the above shortcomings, Article 48 of Decree 115/2024 stipulates the minimum rate of payment to the State budget (generally referred to as m value) when bidding to select investors to implement urban area projects; rural residential areas are calculated as a percentage instead of the amount as before.
The percentage is calculated based on the reference of the average increase rate after the land use rights auction (the difference between the starting price and the winning auction price) of land plots implementing projects in the locality.
The land auctioned to implement the referenced project (not using the results of individual land auctions for people to build houses) must have a successful auction result within 3 consecutive years before the date of the decision approving the project investment policy (up to 7 years in some special cases) and be similar in location (same district level or another district in the province) to the land auctioned.
Thus, the Decree has changed the way of determining the criteria for evaluating land use efficiency in the direction of applying the "minimum rate of payment to the state budget" instead of determining this value in specific money as before. The actual value of payment to the state budget (value M) will be equal to the rate of payment to the budget proposed by the investor multiplied by the actual land use fee and land rent of the project.
A real estate project in Ho Chi Minh City (Photo: Trinh Nguyen).
Expected to bring significant revenue to the locality
Real estate legal experts illustrate the determination of m value as follows:
The People's Committee of Province A has organized an auction of land use rights for 4 urban area projects. Locality A will use the auction results of these 4 projects to calculate the average increase rate after winning the auction (the ratio between the floor price and the winning auction price), the result is 10%. The rate of 10% specified in the bidding documents is the minimum rate of payment to the state budget that the investor must pay (value m).
Investors must propose a payment rate to the State budget of 10% or more. The actual payment value to the State budget will be equal to the rate proposed by the winning investor (for example, 20%) multiplied by the actual land use fee and land rent payable (for example, 200 billion VND). Land use fee and land rent are calculated according to the provisions of the law on land. Thus, the investor will pay an additional 40 billion VND to the State budget in addition to the obligation for land use fee (value M).
If the locality has never organized a project auction, there will be no reference land fund to include in the formula. Clause 6, Article 48 of the Decree also stipulates that in case there is no reference land fund for auction, the average increase rate of the budget payment value of projects that have been organized for bidding in the 5 consecutive years before the date of the investment policy decision or the document approving information of the project being organized for bidding can be used.
In case the locality has not organized the selection of investors to implement the project by auction or bidding method, so there is no reference land fund, the bidding documents do not specify the rate of payment to the state budget (m). This rate is proposed by the investor in the bidding documents. The value of payment to the state budget proposed by the investor (M) will be paid at the same time as the payment of land use fees and land rent according to the form and schedule specified in the Project Contract.
Thus, the determination of the State budget contribution rate (m) has become clear and complete, removing difficulties for many localities. The new regulation on determining the value of State budget contribution (m) is expected to bring significant revenue to localities, improving the investment environment in a transparent and attractive direction.
However, according to lawyer Pham Thanh Tuan, the above calculation can also significantly increase the project implementation cost of the enterprise from the amount of money M must pay.
Source: https://dantri.com.vn/bat-dong-san/go-nut-that-lon-cho-cac-dia-phuong-ve-dau-thau-du-an-dau-tu-khu-do-thi-20240920140938506.htm
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