Collection progress is too low
Quang Nam's domestic budget revenue in 2023 exceeded the estimate by 2.7% in the context of economic collapse (-8.25% GRDP), which was a surprise beyond the expectations of many people (including the government and management agencies). This impressive result is considered a "spectacular comeback" in local budget revenue.
However, analysis shows that budget revenue increased, but land use fee collection was not positive, as it could not collect the estimated VND 2,300 billion, but only collected more than VND 1,911.6 billion (only reaching 83.1% of the estimate).
Something unexpected happened. Quang Nam's budget revenue plan is decreasing. All major revenue items in 2024 are lower than the estimate and implementation in 2023 (set at only 20,100 billion VND instead of 20,880 billion VND as in 2023), but instead of the estimate of 2,300 billion as in the previous year, or assigned lower, land use fee collection is set at up to 2,700 billion VND. This figure increased by 17.4% of the estimate, up 35% compared to the implementation in 2023.
The estimated revenue from land use increased by 400 billion VND when the economy is still unstable, the real estate market has not shown any signs of improvement, it is really a huge amount. Many management agencies predict the risk of not achieving the collection because they do not know or do not know where to collect.
The tax authority also forecasts the difficulty in collecting budget revenue from land use, but hopes to rely on the plan to receive, circulate records, and determine the completion of land financial obligations electronically, which has been implemented since October 2023. In addition, it will calculate from the collection of money from enterprises that owe land use fees from previous years and arising projects.
The reality is much more difficult than the estimate. The tax authority announced that as of April 30, 2024, 18/18 districts, towns and cities had completed the electronic land records connection with nearly 9,900 electronic transfer receipts received from the natural resources and environment agency and the debt from land revenues had decreased by VND 104 billion. However, the budget revenue by May 31, 2024 had reached 43.3% of the estimate (more than VND 8,694 billion).
Most of the revenue and tax revenues are on schedule, but the revenue from land use fees only reached 14.2% of the estimate. The number of projects that have arisen has not been collected yet, so the amount of land use fees that enterprises owe cannot be collected, so the resources from land rent continue to be difficult.
Mr. Nguyen Van Tiep - Director of Quang Nam Tax Department said that land exploitation projects are slow to auction land use rights. Real estate is frozen. Projects cannot be transferred.
Some projects have been allocated land and leased land, but there has not been a decision approving land prices... Many businesses owe large amounts of land use fees, leading to this source of revenue not ensuring the estimated progress.
“Although the Tax Department has fully applied debt enforcement measures, it has not yet recovered outstanding land use fees and land rents. Enterprises are facing financial difficulties and have not fulfilled their financial obligations. Some projects have not had their progress extended, so they are having difficulty accessing loans from banks...” - Mr. Tiep said.
Based on which address to collect?
Land rent is considered one of the main sources of local revenue to supplement development investment. Financial agencies estimate that land revenue will increase by 10-11% each year, but this is not easy to implement.
The local financial system is not yet strong enough to create solutions to collect revenue from these areas. Not to mention, it is very difficult to check and control when the buying and selling prices and transfers on the market are below the price. All real estate transactions have not been put on the public and transparent trading floor.
Quang Nam is forced to adjust its medium-term public investment plan for 2021 - 2025 due to a shortage of revenue from land use. The VND14,290 billion in revenue from land will be very difficult to implement when it is forecasted that the remaining two years will be even more difficult.
It is expected that in 2024 and 2025, it will have to collect about 5,400 billion to reach the estimate. Mr. Nguyen Hung - Deputy Director of the Department of Planning and Investment said that it will rely on urban areas to collect land use fees (about 90%). But it will be very difficult because urban projects are slow, real estate credit is tightened, and there are overlapping laws that are difficult to resolve.
According to statistics from the tax authority, currently in Quang Nam, there are about 30 residential and urban area projects that still owe financial obligations with a total amount of more than 1,860 billion VND, with 13 enterprises owing large amounts of land use fees and land rent. The tax authority will find every way to collect this debt into the state budget.
In addition, there are 31 decisions on land allocation and land lease issued by the Provincial People's Committee to allocate and lease land for enterprises to carry out investment projects.
However, up to now, the Department of Natural Resources and Environment, the Department of Finance (land price appraisal council) and related agencies have not consulted the Provincial People's Committee to approve land prices for the Tax Department to issue notices on payment of land use fees and land rent, which has directly affected the implementation of the state budget revenue estimates.
According to the analysis of the Tax Department, it will be possible to collect nearly 1,840 billion VND from just 4 projects in 2024 such as: Cau Hung - Lai Nghi residential and service area (phase 2 and 3 with 584 billion VND); Smart City Quang Nam urban area (250 billion VND); Con Tien urban area (581 billion VND); Thanh Ha urban area (phase 2, with 423 billion VND). However, to collect land rent from these projects and many other projects, the tax authority alone is not strong enough and not easy to implement.
According to the Tax Department, in order to complete and exceed the assigned budget for 2024, the tax authority has requested the Standing Committee of the Provincial Party Committee and the Provincial People's Committee to direct departments, branches, and localities to have a plan to work with investors of each project to remove difficulties and resolve problems.
Specifically, issue decisions approving specific land prices for projects that have land allocation and land lease decisions. Issue land use right certificates for projects that have fulfilled financial obligations regarding land and completed 100% of technical infrastructure to create conditions for investors to access loans from banks to implement subsequent projects.
Mr. Tran Quoc Bao - Chairman of VN Da Thanh Group said that businesses are willing to pay money, but collecting money without issuing red books to businesses is still facing many difficulties.
The government and management agencies are trying to find ways to collect land rent resources into the state budget. Director of the Tax Department Nguyen Van Tiep said that they will group projects to flexibly apply solutions, especially projects that have completed compensation, site clearance, and infrastructure construction, and need to extend the project implementation schedule as soon as possible. Create conditions for businesses to borrow capital from banks to be able to pay taxes.
In addition, superiors need to direct departments and branches to promptly handle the land use fees and land rents that investors have paid into the temporary account of the Department of Finance in order to both pay the state budget in time and allow enterprises to fulfill their financial obligations, ensuring the rights of enterprises in carrying out related administrative procedures.
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