Vinausteel protests unfair land lease fee

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Vinausteel argues that the land lease fee is improportionately high and the additional charge is unfair

After receiving the investment certificate to build a steel rolling mill in Hong Bang district, Haiphong city from the Haiphong People’s Committee, Vinausteel was allowed to rent a land area of 55,767 square metres for 30 years from June 28, 1994 in accordance with Decision No.224/QD-DC. The annual land rental fee was $1.8 per square metre, which was then adjusted to $1.35 per sq.m.

However, this adjusted price is still higher than the leasing price applied to other enterprises at similar locations. In accordance with the Vietnamese Land Law 2003 and Article 9 of Decree No.142/ND-CP, effective from December 12, 2006, Vinausteel has the right to receive a much lower rental price equal to only 0.5 per cent of the land value. Specifically, Vinausteel’s current lease charge is 5-9 times as much as the fees paid by other enterprises renting similar locations.

Vinausteel requested related agencies to adjust its land lease fee to be compatible with Decree 142, but the agencies have yet to issue a response.

Furthermore, Vinausteel’s land lease fee rises by 15 per cent every five years, as stipulated in Notice No.277/TB/CCT of the Hong Bang Department of Tax. The land lease fee stipulated by the Haiphong People’s Committee in 2005 was VND21,500 ($0.9) per sq.m, which, after the latest adjustment after 15 years of operation, has been increased to VND45,600 ($2) per sq.m. Vinausteel said that this was wholly unfair and should be revised.

Thus, not only was Vinausteel applied a high land lease fee of $1.35 per sq.m, but it was also charged an additional $230,147 due to the adjusted price after 15 years of operation.

According to Vinausteel, this additional payment is not compatible with Decree No.46/2014/ND-CP on the collection of land and water surface rent. This decree does not explicitly cover collecting land lease fees from 15 years ago, especially when the enterprise is asking for a reduction of land lease payments.

Vinausteel complains that it has suffered a loss of tens of billions of VND due to this unreasonable fee. It submitted a document to the Government Office to consider the issue and direct the Ministry of Fiannce, the General Department of Taxation, the Haiphong People’s Committee, and other related agencies to eliminate the additional charge of $230,147 to maintain a fair business environment and ensure the legal rights of enterprises in Vietnam.