Legal Newsletter in April 2024 (Law on Land 2024, Payment and final settlement of investment projects under Build – Transfer contracts, Corporate income tax exemption in HCMC, Online contractor selection process)

Our Newsletter #21 would lead you on the following:

LEGAL UPDATE

I. Promulgation of the Law on Land 2024

On 18 January 2024, the National Assembly passed the Law on Land 2024, which will take effect from 01 January 2025 with some notable contents as follows:

1. Land price

1. Annulling land price framework: Pursuant to Law on Land 2013, land price framework will be issued by the Government every 5 years for each type of land and each region. However, the Law on Land 2024 has annulled regulations on the land price framework from 01 January 2025.
2. Adjusting the period of issuing land price tables and developing land price tables in line with market principles:
   1. The Law on Land 2013 previously stipulated that the land price tables will be developed by a Province-level People’s Committee every 5 years and will be publicly announced on 01 January of the first year of the period.
   2. However, the Law on Land 2024 has changed in the direction that the land price tables will be public for the first time and applied from 01 January 2026. Accordingly, every year, the Province-level People’s Committee is responsible for submitting to a Province-level People’s Council a decision to adjust, amend and supplement the land price tables for publication and application from 01 January of the following year.
   3. In addition, the land price tables are developed based on the region and location. For areas with digital maps and land price databases, a land price table is constructed for each plot based on value areas and standard plots.

Thus, from 01 January 2026, land price tables will be issued annually and developed according to market principles.

2. Dispute resolution mechanisms other than Courts and People’s Committees for land-related disputes

1. Pursuant to the Law on Land 2013, the State encourages the parties of land disputes to reconcile themselves or resolve them through conciliation at the grassroots level. If the parties cannot reconcile, they can send an application to the Commune-level People’s Committee where the disputed land is located for reconciliation. Thus, the Law on Land 2013 only allows the parties to conduct reconciliation at the People’s Committee or Court (in case the parties choose the Court to resolve the dispute). However, the Law on Land 2024 has added a form of commercial reconciliation for disputes arising from land-related commercial activities.
2. In addition, pursuant to the Law on Land 2013, land disputes fall under the jurisdiction of the competent People’s Committee and the competent People’s Court. Compared to the Law on Land 2013, the Law on Land 2024 has added the authority of the Vietnam International Arbitration Commercial for disputes arising from land-related commercial activities.

3. Allowing people whose land is expropriated by the State to choose the form of compensation

The Law on Land 2013 stipulates 02 forms of compensation when land is expropriated by the State, including: (1) allocating new land with the same land use purpose with the expropriated land or (2) receiving compensation in money calculated in accordance with the specific land price of the type of expropriated land at the time of the recovery decision, if there is no land available for compensation.

The Law on Land 2024 has added the following cases of compensation:

1. If the person whose land is expropriated is compensated with land or housing but needs to be compensated in money, he or she will be compensated in money according to the registered request when formulating the compensation, support and resettlement plan.
2. If the person whose land is expropriated has a need and the locality has conditions for a land fund and housing fund, compensation will be considered in the form of land with a different land use purpose than the type of land expropriated or in housing.

Note on the form of money compensation: In contrast to the Law on Land 2013, which stipulates that the compensation amount will be calculated based on the specific land price of the type of land expropriated at the time of the land expropriated decision, the Law on Land 2024 will calculate the compensation amount based on the specific land price of the type of land being expropriated as determined by the competent People’s Committee at the time of approval of the compensation, support and resettlement plan.

4. 03 additional cases where land users can choose the method of land rental payment

Pursuant to the Law on Land 2013, land users who are leasing land from the State with annual rental payments are allowed to switch to a one-time rental payment t for the entire lease period.

The Law on Land 2024 has added cases where land users can choose the method of land rental payment as follows:

1. Land users who are leasing land by the State with annual rental payment but are being leased land by the State in the form of full one-off rental payment for the entire lease period: They have the option to switch the form of full one-off rental payment for the remaining lease period.
   • Applicable land users: Economic organizations, public non-business organizations, individuals, overseas Vietnamese, foreign-invested enterprises.
2. Land users who are leased land by the State in the form of full one-off rental payment for the entire lease period: They have the option to change to annual rental payment.
   • Applicable land users: Economic organizations, individuals, overseas Vietnamese, foreign-invested enterprises.
3. Land users who are allocated land by the State without land use levy but wish to use part or all of the allocated area for production, business, or service provision: They have the option to change to annual rental payment for that area.
   • Applicable land users: Public non-business organizations.

II. Investment projects under Build – Transfer contracts; Exemption from corporate income tax in Ho Chi Minh City

On 02 February 2024, the Government issued Decree No. 11/2024/ND-CP (“Decree 11/2024”) with some notable contents as follows:

1. Conditions for payment and final settlement of investment projects under Build – Transfer contracts

i. Subjects of Decree 11/2024

Regulations of Decree 11/2024 apply to the following subjects:

1. Parties in the Build – Transfer (“BT”) contracts, agencies, organizations and individuals related to BT project investment activities in Ho Chi Minh City; and
2. Enterprises, agencies, organizations and individuals related to innovative and creative start-up activities in Ho Chi Minh City.

ii. BT project payment conditions

To receive payment for a BT project, the BT project’s enterprise or investor (in the case of not establishing a BT project enterprise) (hereinafter referred to as “Investor”) must fully meet the following conditions:

1. Allocation of public investment for payment of BT projects shall be implemented within 6 years in group A projects, 4 years in group B projects, and 3 years in group C projects from the date on which the projects are finished.
2. BT contracts and appendices of BT contracts must include specific regulations on the proportion of equity and loan, conditions, term, and number of occasions where the Government pays BT project enterprises or Investors.
3. The Government shall make payment to the BT project enterprise or Investor after the BT project or the construction work or works within the BT project (the “Construction“) has been certified as completed by the agency that signed the BT contract in accordance with the construction law and has been audited for completion value.
4. The final payment will only be made after the value of public investment capital of the completed BT project is approved by the competent authority for investment capital settlement.

iii. Rules for settling investment capital of completed BT projects

The settlement of investment for completed BT projects must comply with the following rules:

1. Settlement reports of completed BT projects must be audited; and
2. Settlement of investment of completed BT projects shall rely on decisions of approving projects, regulations under BT contracts, settlement reports of investment capital of finished BT projects, and documents of competent individuals approving BT projects on determining the interest of loans taken by investors after the date on which audit organizations perform an audit.

2. Exemption from corporate income tax (“CIT”) for income arising from start-up activities

1. Tax-exempt subjects: Business start-up enterprises, science and technology organizations, renovation centers, and intermediate organizations assisting business start-up and renovation (hereinafter referred to as “Enterprises”).
2. Tax exemption period: 05 years starting from the date on which Enterprises generate CIT payable from start-up and renovation operations in Ho Chi Minh City during the effective period of Resolution No. 98/2023/QH15 – from 01 August 2023 onwards.

III. Law on Bidding 2023 on contractor selection

On 27 February 2024, the Government issued Decree No. 24/2024/ND-CP detailing a number of articles and measures to implement the Law on Bidding on contractor selection with a number of notable contents as follows:

1. Roadmap for online contractor selection from 27 February 2024 to 31 December 2024

1. Organizing online contractor selection for all (100%) bidding packages of investment projects applying the following forms: Domestic competitive bidding, limited bidding, shopping in the field of goods, construction, non-consulting services, consulting services with a bidding package price not exceeding 500 billion VND.
2. Organizing online contractor selection for all (100%) bidding packages included in procurement cost estimates applying the following forms: Domestic competitive bidding, limited bidding, shopping.
3. The organization of online contractor selection during the year must ensure that the total number of bidding packages reaches at least 95% of the number of bidding packages and at least 90% of the total value of bidding packages using domestic competitive bidding, limited bidding, or shopping.
4. The above roadmaps do not apply to mixed bidding packages, bidding packages applying the two-stage one-envelope procedure, two-stage two-envelope procedure, and international bidding.
5. Approval of the expression of interest request documents, prequalification documents, bidding documents, shortlist result, and contractor selection results on the Vietnam E-Procurement System (“VNEPS”) will be carried out from 01 December 2024.

2. 05 cases where the bidding is not conducted on VNEPS

1. The bidding package applies a two-stage one-envelope procedure, two-stage two-envelope procedure, and international bidding;
2. The bidding packages apply the form of direct contracting, direct procurement, self-execution, price negotiation, contractor selection in special circumstances, bidding packages with community participation, and individual consultants according to an abbreviated process;
3. Projects, procurement estimates, and bidding packages have confidential contents and the disclosure of information on the VNEPS will affect public interest or endanger order, social safety or cause harm to national defense, security, foreign affairs, and territorial borders;
4. The bidding package exceeds the technical infrastructure capacity of the VNEPS; and
5. Other bidding packages as prescribed by law.

3. Registration process to participate on the VNEPS

Step 1: Organizations and individuals enter information on the registration application on the VNEPS.

Step 2: Submit registration documents on the VNEPS

1. Registration documents for organizations:
   • The registration form specified in Step 1 has been signed and affixed (if any) by the organization’s legal representative;
   • Authorization letter (if any); and
   • Establishment decision, or enterprise registration certificate, or business household registration certificate, or cooperative registration certificate, or union of cooperatives registration certificate, or cooperative group registration certificate, or other equivalent documents if the organization does not have its information on the national enterprise registration information system.
2. Registration documents for individuals:
   • The registration form specified in Step 1 has been signed by the applicant; and
   • Copy of passport or equivalent document for individuals with foreign nationality.

The above is not official advice from BLawyers Vietnam. If you have any questions or suggestions about the above, please contact us at info@blawyersvn.com. BLawyers Vietnam would love to hear from you.

Date: 26 April 2024

Writer: BLawyers Vietnam

Legal News and Update Team

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Newsletter #21 (EN version)

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