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New Land Law issued Amendments will impact foreign investors

25 July 2014. New Land Law issued Amendments will impact foreign investors . PwC Legal Vietnam NewsBrief. Law on Land No. 45/2013/QH13 (“ new Land Law ”) came into effect on 1 July. Some notable points include:.

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New Land Law issued Amendments will impact foreign investors

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  1. 25 July 2014 New Land Law issuedAmendments will impact foreign investors PwC Legal Vietnam NewsBrief Law on Land No. 45/2013/QH13 (“new Land Law”) came into effect on 1 July. Some notable points include: • The new Land Law changes and adds in a number of definitions. In particular, the term “foreign invested enterprise” (“FIE”) is officially referred to as a land user (rather than being generally referred to as “foreign organisations and individuals” as previously). FIEs are now defined as comprising: 100% foreign owned enterprises, joint venture enterprises and Vietnamese enterprises in which foreign investor(s) purchase shares, or with which it merges or which it acquires. This clearer definition of FIE corrects the previous inconsistency between land laws and other laws, especially the Law on Investment, and should remove some of the confusion in implementation of land laws. • For land valuations, provincial People's Committees will no longer issue annual land price lists. Instead, the central Government will issue a land price range for each type of land every five years, and will adjust this range if market prices change by more than 20%. Based on this land price range, provincial People's Committees will issue land price lists every five years, and determine specific land prices on a case by case basis. Land pricing consultancy organisations may be involved in such issuance and adjustment of land price ranges and land price lists if so requested. • The new Land Law clarifies the cases where FIEs can be allocated and lease land. The State may allocate or lease land to FIEs via auction of land use rights, e.g. for investment in construction of residential housing for sale, lease or hire-purchase, or for investment in construction of infrastructure for transfer or lease. This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. For further information, please contact: PhanThiThuy Duong or VeeraMäenpää (PwC Legal), FutoshiFunamoto (Japanese Business), SeongRyong Cho (Korean Business), Bee Han Theng (Asian Chinese Business Services) at phone (84-8) 38230796, fax (84-8) 38251947 or contact Le Anh Tuan (PwC Legal) at phone (84-4) 39462246, fax (84-4) 39460705 in Ha Noi.

  2. 25 July 2014 PwC LegalVietnamNewsBrief • Circumstances, grounds and procedures for land withdrawal by the State and compensation are elaborated upon in the new Land Law. The authority to withdraw land is also clarified to reduce instances of arbitrary withdrawals. • On 15 May, the Government issued the following decrees to guide the implementation of the new Land Law: • Decree No. 43/2014/ND-CP detailing a number of articles of the Land Law; • Decree No. 44/2014/ND-CP on land pricing; • Decree No. 45/2014/ND-CP on collection of land use fees; • Decree No. 46/2014/ND-CP on collection of land rent and water surface rent; • Decree No. 47/2014/ND-CP on compensation, support, resettlement upon land withdrawal by the State. • Please contact us if you have any questions. • In the past, FIEs could only lease land. Effective 1 July, FIEs investing in residential housing projects for sale, or for sale in combination with leasing, can be allocated land by the State in return for land use fees. An FIE may also transfer all or part of a residential housing project together with the associated land use rights. • Developers of industrial zones (“IZ”) or export processing zones (“EPZ”) - including FIEs - which pay upfront land rent to the State on a lump sum basis for the whole lease term can sublease the land for either an annual rent or an upfront lump sum. In contrast, IZ/EPZ developers which pay land rent to the State on an annual basis may only sublease land on the same basis, i.e. for annual rental payment. • Certain cases where exemptions from or reductions of land use fees or land rent were allowed previously have been withdrawn, including land in areas entitled to investment incentives which is used for construction of commercial residential housing, and land used for the construction of public works for business purposes. This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. For further information, please contact: PhanThiThuy Duong or VeeraMäenpää (PwC Legal), FutoshiFunamoto (Japanese Business), SeongRyong Cho (Korean Business), Bee Han Theng (Asian Chinese Business Services) at phone (84-8) 38230796, fax (84-8) 38251947 or contact Le Anh Tuan (PwC Legal) at phone (84-4) 39462246, fax (84-4) 39460705 in Ha Noi.

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