Exempting using agricultural land tax does not affect revenue collection

Mr. Pham Dinh Thi

Could you please provide the reason why the Ministry of Finance submitted to the Government a proposal on exempting tax of using agricultural land in five years?

Regarding the proposal for continuing exempting tax of using agricultural land in five years of the Ministry of Finance, the reasons are:

Firstly, continuing to institutionalise the Party and State's viewpoints and policies on agriculture, farmers and rural areas.

Specifically, in Conclusion No. 54-KL/TW of the Politburo dated August 7, 2019 on continuing implementation of the Resolution of the 7th plenum of the 10th Party Central Committee on agriculture, farmers and rural areas states that: agriculture, farmers and rural areas have a long-term strategic position and were the top priority task in the socio-economic development of Vietnamand offer solutions like promote the policy of land accumulation and concentration for development of large-scale and highly competitive agricultural production.

Article 142 of the Law on Land 2013 stipulates that: “The State encouraged forms of farm economy development of households and individuals in order to effectively exploit land for manufacturing development, expanding scale and improving the efficiency of using land in agriculture, forestry, aquaculture, salt works associated with services, processing and consumption of agricultural products.”

Secondly, continuing to contribute to encouraging organisation and individuals to invest in agriculture and rural areas, contributing to restructuring the agricultural sector towards efficiency, safety and sustainability.

Thirdly, continuing to contribute to improve the competitiveness of Vietnam's agricultural products in the context of international economic integration.

The continuing exempting of using agricultural land tax is an essential agricultural extension solution to contribute to raising added value and linking the value chain of agricultural products, towards sustainable agricultural development, promoting the restructuring of the agricultural sector, improving the competitiveness of Vietnam's agricultural products amid increasingly deep and intensive international integration.

Fourthly, continuing to contribute to support job creation for rural areas, raising farmers' incomes and living standards, contributing to building a new countryside.

Furthermore, continuing tax exemption of using agricultural land is an agricultural extension measure through tax, creating a basis for agricultural land concentration to develop the farm economy and the application of science and technology, which has created more jobs in rural areas, reducing labour pressure working in other localities or labour export, thereby increasing income for the rural labour force, contributing to building a new countryside.

Finally, ensuring compliance with Vietnam's international commitments and international practices. There was no discrimination in implementing tax exemption of using agricultural land, ensuring compatibility with international treaties that Vietnam is a signatory to.

As expected by the Government, who will continued to be exempted from agricultural land use tax, and who are not subject to exemption despite being allocated agricultural land?

In the draft resolution stipulating the extension of time for exempting agricultural land use tax in accordance with Resolution No. 55/2010/QH12 and Resolution No. 28/2016/QH14 until December 31, 2025.

Accordingly, continuing implementation of tax exemption of agricultural land use for agricultural production land of organisation, households and individuals, including cases of inherited, donated or transferred land use rights, land on stable contractual assignment by members of cooperatives, State-run agricultural farms, forestry farms for agricultural production and land contributed to establishment of cooperatives.

Particularly for ​​agricultural land assigned to a management organisation by the State but they do not directly use the land for agricultural production and assigned to other organisation and individuals that receive contracts under agricultural production contracts, pay 100% of agricultural land use tax before the State recovers the land. The determination of those cases was made through a contract between the organisation assigned land and other organisation and individuals.

If the resolution is passed by the National Assembly, how will this policy work?

For the State budget, the proposal to continue exempting agricultural land use tax by the end of 2025 would not reduce State revenue collection because this policy is being implemented in practice.

For farmers and agriculture, the tax exemption of about VND 7,500 billion/year would continue to be a form of direct support for agricultural production organisation and individuals, an important financial source for direct investment in agriculture and rural areas for investment, expanding production scale to improve productivity and product quality, contributing to shifting agricultural and rural economic structure towards modernisation; helping farmers improve lives, contributing to encouraging farmers to feel secure in production, engaging agricultural production activities, contributing to encouraging investment and promoting sustainable agricultural economy.

At the same time, the proposal of continuing to exempt agricultural land use tax by the end of 2025 aims to be implemented consistently the Party and State's guidelines on agriculture, farmers and rural areas; in line with the five-year Socio-Economic Development Strategy, the master plan on agricultural production development, the agricultural production cycle and ensuring the feasibility of the policy.

Thank you!