More motivation to develop agriculture

Tax exemption will create opportunity to increase jobs for 60% of the labour force is concentrated in rural areas

Many benefits from tax exemption

Implementing the poverty-alleviation policy of the Party and State while also supporting farmers, encouraging agricultural development, policies on exemption and reduction of agricultural land use tax implemented since 2001 until now. According to regulations, the agricultural land use tax policy is exempt until the end of December 31, 2020 in accordance with Resolution No. 55/2010/QH12 and Resolution No. 28/2016/QH14.

A summary and assessment of the implementation of policies on exemption and reduction of agricultural land use tax over 20 years showed the total amount of agricultural land use tax exemption and reduction in 2003-2010 was about VND 3,268.5 billion/year on average. In 2011-2016, it was an average of VND 6,308.3 billion/year; in 2017-2018 and by the end of 2020, it would be an average of VND 7,438.5 billion/year.

In the future, implementation of agricultural land use tax exemption is necessary, it will not only continue to institutionalise the Party and State's viewpoints and policies on agriculture, farmers and rural areas, but also encourage organisations and individuals to invest in agriculture, contributing to restructuring the sector.

Currently, there are more than 50,000 enterprises operating in rural agriculture, with about 10,200 enterprises directly investing in developing agriculture, forestry and fishery production. The number of enterprises investing in agriculture accounts for only 8% of the total number of enterprises nationwide (of that 96% are small and micro enterprises). The development of enterprises in agricultureis still modest compared to the potential and development advantages, failing to meet development requirements of the industry in the context of international economic integration. To contribute to achieve the goal of the number of enterprises investing and operating business in the agricultural sector by 2030 reaching 80,000 - 100,000 enterprises and the growth rate of gross output of agricultural, forestry and fishery achieves at about 3% per year, the implementation of the policy of exempting agricultural land use tax for organisations using agricultural land for agricultural production is an effective support solution.

Besides that, creating jobs for farmers is a priority throughout all socio-economic development programmes of the country. Although in recent years, the trend of urbanisation is increasing, about 60% of the labour force is concentrated in rural areas, agricultural labour productivity is low, profit rate in agriculture is not high so the product surplus created by the agriculture industry is limited. In terms of economy, the implementation of exempting agricultural land use tax is an agricultural encouragement measure through tax, creating a basis for concentration of agricultural land to develop agriculture towards modernisation and application of scientific techniques, economic restructuring and the proportion of agricultural labour in rural areas.

Exempting VND 7,500 billion per year

To continue promoting the achievements of exempting agricultural land use tax, the Government proposed the National Assembly promulgate the resolution of the National Assembly on exempting agricultural land use tax to extend the duration of exempting agricultural land use tax until December 31, 2025.

Specifically: Exempting agricultural land use tax for the entire agricultural land area for research and trial production; the land area of ​​annual crop should have at least one rice crop per year; land area uses for salt production; exemption from agricultural land use tax for the entire agricultural land area allocated by the State to poor households. Besides, exempting agricultural land use tax for the entire agricultural land area allocated to households and individuals for agricultural production by the State, including inherited, donated land, receiving, transferring land use rights; households and individuals that are members of agricultural production cooperatives, farms or afforestation yards that have received stable contracting land from cooperatives, State-run farms and State afforestation yards for agricultural production in accordance with regulations of the law; agricultural households and individuals contribute their agricultural land use rights to establish agricultural production cooperatives in accordance with the Law on Cooperatives. Besides that, exempting agricultural land use tax for ​​agricultural land allocated by the State to economic organisations, political organisations, socio-political organisations, public non-business units and other units directly using land for agricultural production.

The promulgation in the form of the resolution of the National Assembly to continue implementing the exemption of agricultural land use tax for a period of five years (from January 1, 2021 to the end of December 31, 2025) is appropriate because this is only a tax exemption for a certain period of time. For the later period, it is necessary to assess overall impact of tax policies related to real estate to propose a general tax policy for real estate, ensuring it is appropriate with the social - economic situation and feasibility assurance.

The implementation of exempting agricultural land use tax by the end of 2025 will not reduce State revenue because this policy is being implemented in practice. With tax exemption of about VND 7,500 billion/year, it will continue to be a form of direct support to farmers and an important source of financial investment for the agricultural sector and rural areas to invest, expand production scale to improve productivity, product quality, contribute to economic restructuring on agriculture and rural area towards modernisation; helping farmers improve their lives, contributing to encouraging farmers to feel secure in production, sticking to agricultural production activities, encouraging investment and promoting the sustainable development of agricultural economy.