THE GOVERNMENT
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SOCIALIST REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
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No. 85-CP
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Hanoi ,December 17, 1996
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DECREE
PRESCRIBING THE IMPLEMENTATION OF THE ORDINANCE ON THE RIGHTS AND OBLIGATIONS OF THE DOMESTIC ORGANIZATIONS WITH LAND ASSIGNED OR LEASED BY THE STATE
THE GOVERNMENT
Pursuant to the Law on Organization of the Government of September 30, 1992;
Pursuant to the Land Law of July 14, 1993;
Pursuant to the Ordinance on the Rights and Obligations of the Domestic Organizations with Land Assigned or Leased by the State of October 14, 1994 and the Ordinance Amending and Supplementing a Number of Articles of the Ordinance on the Rights and Obligations of the Domestic Organizations with Land Assigned or Leased by the State of August 27, 1996;
At the proposal of the General Director of the General Land Administration,
DECREES:
Chapter I
GENERAL PROVISIONS
Article 1.- This Decree provides for the implementation of the Ordinance on the Rights and Obligations of the Domestic Organizations with Land Assigned or Leased by the State of October 14, 1994 and the Ordinance Amending and Supplementing a Number of Articles of the Ordinance on the Rights and Obligations of the Domestic Organizations with Land Assigned or Leased by the State of August 27, 1996;
With regard to the allotment of land by State enterprises for use in agricultural production, forestry and aquaculture as mentioned in Clause 1, Article 5 of the Ordinance on the Rights and Obligations of the Domestic Organizations with Land Assigned or Leased by the State of October 14, 1994, the provisions of Decree No.01-CP of January 4, 1995 of the Government on the allotment of land by State enterprises for use in agricultural production, forestry and aquaculture shall apply.
Article 2.- Land used for public purposes includes:
1. Land used for the construction of public works as defined in Point c, Clause 1, Article 1 of the Amending and Supplementing Ordinance of August 27, 1996.
2. Land used for the construction of hydro-electric power plants, transformer stations, hydro-electric reservoirs, power transmission lines, oil and gas pipelines, hydrometeorological stations, observatory stations of various kinds in service of research and public services, irrigation works, national parks, sanatoriums, physical and sport training establishments.
3. The use of land for other kinds of works serving public interests and non-profit public works in localities shall be stipulated by the People�s Committees of the provinces and cities directly under the Central Government.
4. Other special cases shall be decided by the Prime Minister.
Article 3.-
1. The area of land to be assigned to State enterprises, enterprises of political and social organizations, defense and security enterprises, collective economic organizations, stock companies, limited liability companies for agricultural production, forestry, aquaculture and salt production shall comply with the investment projects (the economic and technical feasibility studies) which have been ratified by the competent State agency.
2. The term of land assignment to organizations stipulated in Item 1 of this Article is 20 years for annual tree planting, aquaculture and salt production, and 50 years for planting perennial trees. With regard to the land assigned prior to January 1st, 1996, the term shall be counted from January 1st, 1996; if the land is assigned after January 1st, 1996, the land use term shall be counted from the date of the assignment.
3. In cases where the land is assigned to domestic economic organizations for the construction of dwelling houses to be sold to Vietnamese citizens, the land assignment term shall be stable over along time, and the land shall be recovered only in cases provided for in Articles 26 and 27 of the Land Law. If the land is assigned for infrastructure construction to lease the land use right associated with that infrastructure, the land assignment term shall be determined by the investment project already ratified by the competent State agency but must not exceed 50 years. If the land assignment term exceeds 50 years, it shall be decided by the Prime Minister but in no case shall exceed 70 years.
4. The term of land lease to domestic economic organizations shall not exceed 50 years. If this term needs to be longer than 50 years, it shall be decided by the Prime Minister but in no case shall exceed 70 years.
Article 4.-
1. The land use levy shall be paid according to the land price determined by the People�s Committees of the provinces and cities directly under the Central Government on the basis of the land price brackets promulgated by the Government.
2. In cases where the land is allowed for auction by the competent State agency, the land use levy shall be determined according to the auction result but must not be lower than the price bracket set by the State.
3. The land use levy must be remitted to the State budget according to modalities defined by the Ministry of Finance.
Article 5.-
1. The land rent shall be defined by the Ministry of Finance on the basis of the land price brackets promulgated by the State.
2. The land rent shall be paid annually; in case of payment by installment over many years or if it is paid for the whole land lease duration, a discount shall be made in accordance with the regulations of the Ministry of Finance.
3. The land rent must be remitted to the State budget and shall be accounted for in the production and business costs.
Article 6.-
1. The agency competent to assign land stipulated in Article 23 of the Land Law shall be the agency competent to lease land.
2. When the land is leased by the competent State agency, the lessee shall have to sign a contract with the Land Administration Service.
Article 7.-
1. Organizations with land assigned or leased by the State shall be granted certificates of the land use right in accordance with the provisions of law.
2. Organizations with land assigned or leased by the State shall have to abide by the provisions of law on the transfer of the land use right, pay taxes on the transfer of the land use right, pay the land use levy and the land rent, pay compensations for ground clearance, protect the environment, use the land for the right purposes and shall not harm the legitimate interests of other land users in the neighborhood.
Chapter II
RIGHTS AND OBLIGATIONS OF DOMESTIC ORGANIZATIONS WHICH ARE ASSIGNED LAND BY THE STATE WITHOUT HAVING TO PAY THE LAND USE LEVY
Article 8.-
1. Domestic organizations which are assigned land by the State without having to pay the land use levy shall have the right to use the land in accordance with the assigned purposes.
2. Economic organizations which are assigned land by the State to use for agricultural production, forestry, aquaculture and salt production are eligible for the rights stipulated in Clause 1 of this Article and also the following rights:
a/ To contribute the value of the land use right within the assignment term as their capital to joint ventures with domestic and foreign organizations and/or individuals for the continued development of production in accordance with the provisions of law.
b/ To mortgage assets attached to that land under their ownership at Vietnamese banks to borrow capital for the development of production and business in accordance with the provisions of law.
Article 9.- Domestic organizations which are assigned land by the State without having to pay the land use levy shall have the following obligations:
1. To refrain from using land for the wrong purposes.
2. To refrain from re-assigning, transferring or leasing the land use right.
3. Organizations using land for agricultural production, forestry, aquaculture and salt production shall not be allowed to leave the land uncultivated; if they are allowed by the competent State agency to use that land for other purposes, they must shift to the form of land lease or land assignment with payment of the land use levy.
4. Organizations using land as stipulated in Points a, b and c, Clause 1, Article 1 of the Amending and Supplementing Ordinance of August 27, 1996, shall not be allowed to contribute as capital to joint ventures or mortgage the value of the land use right.
5. To fulfill financial obligations on the use of land in accordance with the provisions of law.
6. To submit to the land recovery decision issued by the competent State agency.
7. To return to the State the unused land or the land used for wrong purposes.
Chapter III
RIGHTS AND OBLIGATIONS OF DOMESTIC ECONOMIC ORGANIZATIONS WHICH ARE ASSIGNED LAND BY THE STATE AND SUBJECT TO THE LAND USE LEVY
Article 10.- Domestic economic organizations which are assigned land by the State and subject to the land use levy include: State enterprises, enterprises of political and social organizations, defense and security enterprises, collective economic organizations, stock companies, limited liability companies which are allowed to build and trade in dwelling houses or to invest in infrastructure construction and business in accordance with the business licenses granted by the competent State agency.
Article 11.- Economic organizations which are assigned land by the State and subject to the land use levy shall have the right:
1. To transfer the land use right when selling dwelling houses attached to it to Vietnamese citizens.
2. To transfer the land use right attached to the infrastructures already built thereon to Vietnamese citizens for use as dwelling houses.
3. To lease the land use right attached to the infrastructures already built thereon.
4. To mortgage the value of the land use right at Vietnamese banks to borrow capital for the development of production and business.
5. To contribute the value of the land use right as their capital to joint ventures with domestic organizations and/or individuals.
6. State enterprises, enterprises of political and social organizations, defense and security enterprises shall also have the right to contribute the value of the land use right as their capital to joint ventures with foreign organizations and/or individuals in accordance with the provisions of law.
7. To benefit from the results of investment on the assigned land when transferring, leasing, mortgaging or contributing to joint ventures the value of the land use right.
Article 12.- Domestic economic organizations which are assigned land by the State and subject to the land use levy shall have the obligations:
1. To pay the land use levy in full and on schedule as provided for.
2. To strictly observe regulations on the construction of projects already ratified by the competent authority.
3. To return land to the State upon the expiry of the assignment term, including the public land associated with technical infrastructures already built thereon without compensation.
4. To submit to the State�s regulation of the price difference resulting from the State infrastructure investment in the area when transferring or leasing the land use right in accordance with the provisions of law.
5. To execute decisions on the recovery of land issued by the competent State agency in accordance with the provisions of law.
Chapter IV
RIGHTS AND OBLIGATIONS OF DOMESTIC ORGANIZATIONS WITH LAND LEASED BY THE STATE
Article 13.- Domestic economic organizations with land leased by the State shall have the right:
1. To mortgage within the land lease term the value of the land use right attached to the properties under their ownership on that land at Vietnamese banks to borrow capital for production and business development as prescribed by law. The value of the land use right mentioned in Item 1 of this Article shall be the land rent already paid by those organizations to the State.
2. State enterprises, enterprises of political and social organizations, defense and security enterprises shall, within the land lease term, be entitled to contribute the value of the land use right as their capital to joint ventures with domestic and foreign organizations and/or individuals under the investment projects already ratified by the competent State agency. The value of the land use right to be contributed to the joint venture shall be the land lease price agreed upon by the parties for the whole duration of the joint venture.
3. If the properties attached to the leased land are allowed by the competent State agency to be transferred, the properties receiving party shall be entitled to continue to rent the land in accordance with the provisions of law.
4. To sub-lease the land use right attached to the infrastructures in export processing zones or industrial parks as provided for in Chapter VI of this Decree.
5. To be given priority to re-rent the land when the lease term expires if they so request.
Article 14.- Economic organizations with land leased by the State shall have the obligations:
1. To use the land for the right purpose;
2. To pay the land rent in full and on schedule as provided for;
3. No to be allowed to re-assign or transfer the leased land use right;
4. Not to be allowed to sub-lease the land, except for cases stipulated in Clause 3, Article 11 and Clause 4, Article 13 of this Decree;
5. Not to despoil the land; to observe the provisions of law on the planning, architecture and landscape of surrounding environment of the area. If the land is leased for infrastructure construction, such infrastructures must be maintained for the whole land lease term;
6. To submit to land recovery decisions issued by the competent State agency;
7. To return land to the State upon the expiry of the land lease term. If the land is leased for investment in infrastructure construction and business, upon the completion of the investment project, the leased land and the infrastructures thereon must be returned to the State without compensation.
Chapter V
PROVISIONS ON CAPITAL CONTRIBUTION TO JOINT VENTURES, MORTGAGE OF THE LAND USE RIGHT VALUE
Article 15.- Domestic economic organizations with land assigned by the State for use for agricultural production, forestry, aquaculture and salt production shall, within the land assignment term, be entitled to contribute the land use right value as their capital to joint ventures according to the following provisions:
1. Joint venture with domestic organizations and/or individuals:
a/ If the land use purpose does not change, the joint venture is entitled to continue using such land. The land use right value to be contributed as capital to the joint venture shall be agreed upon by the parties, but must not be lower than the land price bracket promulgated by the State. The joint venture shall also have to fulfill the financial obligations provided for by the Ministry of Finance.
b/ If the land use purpose is changed, the party contributing land as capital to the joint venture shall have to shift to the form of land lease from the State. The land use right value contributed as capital to the joint venture shall be equivalent to the land rent to be paid to the State corresponding to the joint venture duration.
2. The contribution of the land use right value as capital to joint ventures with foreign organizations and/or individuals must be permitted by the competent State agencies defined in Decree No. 191-CP of December 28, 1994 of the Government. The party contributing land as capital to a joint venture shall have to shift to the form of land lease from the State, record its debt and remit the land rent to the State budget in accordance with the regulations of the Ministry of Finance.
Article 16.- Domestic economic organizations using land for agricultural production, forestry, aquaculture and salt production shall be entitled to mortgage the land use right value attached to the properties under their ownership at Vietnamese banks to borrow capital for production and business.
The conditions for mortgage shall be agreed upon by the Bank and the mortgagor but the following principles must be ensured:
1. If the borrowing organization cannot pay the debt when it is due or has been dissolved before term, the Bank shall be entitled to request the competent State agency to auction the properties on the mortgaged land for the payment of debt to the Bank and to decide the assignment of land to the properties purchaser for continued use;
2. The mortgaging organization and the Bank accepting the mortgage shall not be allowed to re-assign, transfer or lease the land use right as stipulated in Clause 2, Article 4 of the Ordinance on the Rights and Obligations of the Domestic Organizations with Land Assigned or Leased by the State of October 14, 1994;
3. The mortgage and its removal must be registered at the Land Administration Service.
Article 17.- With regard to domestic economic organizations which are assigned land by the State and subject to the land use levy, if they are allowed by the competent State agency to enter into joint venture with domestic and/or foreign organizations and/or individuals, the value of the contributions to joint ventures shall be agreed upon by the parties and made in accordance with the provisions of law.
Article 18.- Domestic economic organizations which are assigned land by the State and subject to the land use levy shall be entitled to mortgage the value of the land use right or the value of the land use right associated with the properties under their ownership at Vietnamese banks to borrow capital for production development according to the following provisions:
1. The value of the land use right to be mortgaged shall be the land use levy already paid at the land prices set by the People�s Committees of the provinces or cities directly under the Central Government on the basis of the land price brackets promulgated by the Government.
2. The value of mortgaged properties which have been invested on the mortgaged land shall be agreed upon by the mortgagor and the Bank.
3. If the borrowing party cannot pay the debt when it is due or the organization has been dissolved before term, the bank shall be entitled to request the competent State agency to auction the land use right and the properties (if any) which have been mortgaged by the borrowing organization so as to pay the debt for the Bank. The auction winner, after having paid in full the auction money, shall be assigned land by the State without having to pay the land use levy.
4. The mortgage of land and its removal must be registered at the Land Administration Service.
Article 19.- The value of the leased land use right to be contributed as capital to joint ventures with domestic or foreign organizations and/or individuals by State enterprises, enterprises of political and social organizations, security and defense enterprises shall be determined in accordance with the provisions of Clause 2, Article 13 of this Decree.
Article 20.- Economic organizations with land leased by the State shall, within the land lease term, be entitled to mortgage the value of the land use right associated with properties under their ownership at Vietnamese banks to borrow capital for production development according to the following provisions:
1. The value of the mortgaged land use right shall be decided by the Bank and must not exceed the value of the invested properties on the mortgaged land plus the land rent already paid.
2. When the debt is due or the mortgaging organization has been dissolved before term and cannot pay the debt, the Bank shall be entitled to request the competent State agency to auction the properties on the mortgaged land to pay the bank debt and to decide to lease the land to the purchaser of the properties.
Chapter VI
PROVISIONS REGARDING ORGANIZATIONS WITH LAND LEASED BY THE STATE FOR INFRASTRUCTURE CONSTRUCTION AND BUSINESS IN EXPORT PROCESSING ZONES AND/OR INDUSTRIAL PARKS
Article 21.- Organizations with land leased by the State for investment in infrastructure construction and business in export processing zones or industrial parks include: State enterprises, enterprises of political and social organizations, defense and security enterprises, collective economic organizations, stock companies, limited liability companies which have the function of investment in infrastructure construction and business and have financial capability in accordance with the provisions of law.
Article 22.- The land leased for infrastructure construction and business must be located in export processing zones or industrial parks already ratified by the competent State agency.
Article 23.- The People’s Committees of the provinces or cities directly under the Central Government shall consider and ratify the investment in infrastructure construction and business by domestic organizations prescribed in Article 21 of this Decree in export processing zones or industrial parks so that they may plan investment projects and submit them to the competent State agency for ratification.
Article 24.-
Article 25.- Organizations leasing land for infrastructure construction and business shall have to sign a leasing contract with the sub-lessee and register at the Land Administration Service under the guidance of the General Land Administration.
Article 26.- Organizations with land leased by the State for investment in infrastructure construction and business and for sub-lease in export processing zones or industrial parks shall have the right:
1. To enjoy the rights stipulated in Clauses 3 and 4, Article 13 of this Decree.
2. To benefit from investment results on the leased land when sub-leasing the land use right.
3. To mortgage the value of the land lots which have not been sub-leased during the land lease term at Vietnamese banks to borrow capital for investment in infrastructure construction.
Article 27.- Organizations with land leased by the State for infrastructure construction and business and for sub-lease in export processing zones or industrial parks shall have the obligations:
1. To fulfill the obligations stipulated in Clause 4, Article 12 and Clauses 1, 2, 3, 5, 6 and 7, Article 14 of this Decree;
2. To maintain the infrastructures during the lease term.
Article 28.- The land sub-lessee shall have to use the land for right purpose, shall not be allowed to re-assign, transfer or sub-lease the land use right. If the properties associated with the sub-leased land under the land sub-lessee’s ownership are allowed to be transferred, the properties receiving party shall have to sign a contract on the sub-lease of the land with the land leasing party.
Chapter VII
PROVISIONS REGARDING ECONOMIC ORGANIZATIONS WITH LAND ASSIGNED OR LEASED BY THE STATE PRIOR TO SEPTEMBER 9, 1996
(date when the Amending and Supplementing Ordinance took effect)
Article 29.- If domestic economic organizations with land assigned by the State prior to September 9, 1996 which are still using that land and subject to the land use levy as stipulated in Points a and b, Clause 2, Article 1 of the Amending and Supplementing Ordinance of August 27, 1996, have not paid the land use levy or have paid it with money taken from the State budget, they shall now have to pay the land use levy to the State in accordance with the regulations of the Ministry of Finance.
Article 30.- If domestic economic organizations with land leased by the State which are now subject to the land assignment by the State and the land use levy as stipulated in Points a and b, Clause 2, Article 1 of the Amending and Supplementing Ordinance of August 27, 1996, have already paid the land rent to the State with money not taken from the State budget, such money shall be accounted for in the land use levy as prescribed by the Ministry of Finance.
Article 31.- Domestic economic organizations with land assigned by the State which are now subject to the land lease as stipulated in Clause 3, Article 1 of the Amending and Supplementing Ordinance of August 27, 1996, shall have to observe the following provisions:
1. If they have not paid the land use levy or have paid it with money taken from the State budget, they shall have to pay the land rent to the State as from January 1st, 1996.
2. If they have paid the land use levy with money not taken from the State budget, such money shall be accounted for in the land rent as prescribed by the Ministry of Finance.
3. The People’s Committees of the provinces and cities directly under the Central Government shall decide the lease of land and the land lease term to organizations mentioned in Article 31 of this Decree in accordance with the provisions of law.
Article 32.- Organizations which are using land known as the residential land lawfully used by households or individuals, after being allowed by the competent State agency to use such land for the construction of offices or workshops for production or business shall not have to shift to the form of land lease but still have to pay house and land taxes in accordance with the provisions of law.
Chapter VIII
IMPLEMENTATION PROVISIONS
Article 33.- The provisions of this Decree regarding limited liability companies and stock companies shall also apply to private enterprises if they are assigned or leased land by the State.
Article 34.- The Minister of Finance, the Governor of the State Bank of Vietnam, the General Director of the General Land Administration, within the ambit of their functions and powers, shall have to provide guidance for the implementation of this Decree.
Article 35.- The Ministers, the Heads of the ministerial-level agencies, the Heads of the agencies attached to the Government, the Presidents of the People’s Committees of the provinces and cities directly under the Central Government and the Heads of the organizations using land shall have to implement this Decree.
Article 36.- This Decree shall replace Decree No.18-CP of February 13, 1995 and takes effect from the date of its signing.
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ON BEHALF OF THE GOVERNMENT
THE PRIME MINISTER
Vo Van Kiet
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