Ministry of Finance Clarifies Land Use Fee Calculation for Encroached Land Certified Before July 2004
RegHub explainer by New MarketerLast updated:
Based on:103/2024/ND-CP - Ministry of Finance
This explanation was generated by AI and checked by an automated AI review, not by a human expert. It is not legal, tax or accounting advice and may contain errors. Check the official document before you rely on it.
A resident of Hung Yen province asked the Ministry of Finance how land use fees are calculated when a Land Use Right Certificate (LURC) is issued for encroached land under Article 139 of the 2024 Land Law. The specific question: if, before applying for the LURC on the violating area, the land user had already been recognized as having land use rights, or had been allocated land (or had received a transfer of state-allocated land for which a fee was paid) at an earlier point, should that already-recognized or already-allocated area be deducted when calculating the land use fee owed on the encroached portion. In response, the Tax authority (Sub-department 9, Hung Yen Provincial Tax Department) cited Point a, Clause 3, Article 139 of the 2024 Land Law and Point a, Clause 3, Article 11 of Decree 103/2024/ND-CP: for households and individuals who used land from October 15, 1993 to before July 1, 2004 and are now issued a residential-purpose LURC, the land use fee for the area within the local residential land allocation limit is the certified area within that limit, multiplied by the residential land price on the local price table, multiplied by 30 percent. However, the Tax authority did not directly answer whether previously recognized or allocated area should be deducted. The reply states that the Tax authority only receives an information transfer slip electronically from the land management agency to determine the financial obligation and issue a payment notice; determining the plot's location, allocation limit, and legal status - including whether previously recognized or allocated area should be netted out - is outside the Tax authority's jurisdiction. The inquirer was told to contact the land management agency directly for specific guidance. For SME owners or individuals holding land with an encroachment history, or currently applying for a certificate covering a previously unauthorized portion, the practical takeaway is that the final land use fee depends on figures the land registration office determines and transfers to the Tax authority, not on an independent Tax authority calculation. Businesses should work directly with the local land management agency to clarify any area deduction before receiving a payment notice from the Tax authority.
The Question
Mr. Nguyen Minh Thanh (Hung Yen province) asked the Ministry of Finance about the land use fee calculation rule in Point a, Clause 3, Article 11 of Decree No. 103/2024/ND-CP, which applies to land area covered by a Land Use Right Certificate (LURC) within the local land allocation limit.
He noted that in practice, many land users are eligible for an LURC on an encroached or illegally occupied area under Point a, Clause 3, Article 139 of the 2024 Land Law. However, before applying for the LURC on this violating area, some land users had already been recognized as having land use rights, or had been allocated land (or had received a transfer of state land use rights for which a fee was paid) by a competent authority at an earlier point.
The question: should that previously recognized, allocated, or transferred area be deducted when calculating the land use fee payable on the encroached portion?
The Answer
According to the reply, the fee calculation falls under Point a, Clause 3, Article 11 of Decree 103/2024/ND-CP and Point a, Clause 3, Article 139 of the 2024 Land Law.
Article 139 of the 2024 Land Law governs cases where households or individuals used land in violation of land law before July 1, 2024. Under Clause 3, for households or individuals using land through encroachment or illegal occupation (not covered by Clauses 1 or 2) or using state-allocated, leased, or use-right-recognized land for the wrong purpose: if the land user has used the land stably and it is consistent with district-level land use planning, or general/sub-zone/construction/rural planning, the user may be considered for an LURC and an ownership certificate for attached assets, and must fulfill financial obligations as prescribed.
Article 11 of Decree 103/2024/ND-CP guides the fee calculation for LURCs issued in cases of land law violations before July 1, 2014, under Clauses 1, 2, and 3 of Article 139. Under Clause 3, for households or individuals who used land from October 15, 1993 to before July 1, 2004, now issued a residential-purpose LURC under Point c, Clause 2, or Point a, Clause 3 of Article 139: for the area certified within the residential land allocation limit (per Clause 2, Article 195, and Clause 2, Article 196 of the Land Law), the land use fee is calculated as:
Land use fee = Certified land area within the residential land allocation limit × Residential land price per the local price table × 30%
Who Determines the Deductible Area
The Tax authority (Sub-department 9, Hung Yen Provincial Tax Department) explained the process: the Tax authority receives the application file and an information transfer slip determining the financial obligation, sent electronically from the land management agency; this serves as the basis for calculating the financial obligation and issuing a payment notice to the taxpayer, after which the notice is transmitted back to the land management agency under the information exchange rules.
The reply states plainly that determining a plot's location, allocation limit, and legal status - which would include whether previously recognized, allocated, or transferred area should be deducted - is not within the Tax authority's jurisdiction.
As a result, Mr. Thanh's specific question was not directly answered by the Tax authority. He was advised to contact the land management agency (the local Land Registration Office or Department of Natural Resources and Environment) for specific guidance, since determining the deductible area is that agency's responsibility, not the Tax authority's.
Practical Notes
- The fee formula in Clause 3, Article 11 of Decree 103/2024/ND-CP applies only to the area within the residential land allocation limit, for households or individuals who used the land from October 15, 1993 to before July 1, 2004.
- Area figures, allocation limits, and legal status of a plot are determined by the land management agency and transmitted to the Tax authority electronically; the Tax authority only calculates the financial obligation based on the data it receives, and does not independently determine or adjust the area.
- Land users or businesses seeking clarity on deducting previously recognized, allocated, or transferred area should work directly with the land management agency before receiving a land use fee payment notice, to avoid disputes after the notice has already been issued.