After many years of promulgation, Decree No. 209/2013/ND-CP detailing and guiding implementation of a number of articles of the Law on Value Added Tax (“VAT”) has revealed many drawbacks, it can be mentioned that the lack of clarity in regulations leads to different interpretations in the implementation process, making it difficult for enterprises to calculate and pay taxes. To remedy this situation, on 29 July 2022, the Government issued Decree No. 49/2022/ND-CP (“Decree 49”), amending and supplementing a number of articles of Decree No. 209/ 2013/ND-CP aims to ensure the legal framework on VAT in line with the reality of economic development, and to facilitate production and business activities of enterprises, especially in real estate transfer activities.

Cases in which land price permitted to be deducted for VAT calculation

1. Case of being assigned land by State for investment in infrastructure, construction of houses for sale.
2. Case of auction for land-use right.
3. Case of renting land for construction of infrastructure, houses for sale.
4. Case where business establishments are transferred the land-use right from organizations or individuals.
5. Case where business establishments receive a capital contribution with land-use right from organizations or individuals.
6. Case where real estate business establishments perform in form of building – transfer (BT) and pay by value of land-use right.

Thus, if Decree 209/2013/ND-CP uses the term "costs for compensation and ground clearance", Decree 49 has stipulates "land-use fees and compensation and ground clearance fees". In addition, for the case of renting land for construction of infrastructure, houses for sale, Decree 49 has added “water surface rent” to the list of land prices that are deductible for VAT calculation.

Another noteworthy point is, based on Decree 49, in case a business establishment receives a land-use right transfer from organizations or individuals, land price permitted to be deducted for VAT calculation is the land price at the time of transfer, which do not include the value of infrastructure, while Decree 209 includes the value of infrastructure.

In summary, Decree 49 has made breakthrough changes. These changes are suitable to the economic situation, ensuring the rights of land users in real estate transfer.

Value-added tax refund for investment projects

In the past, Decree 209 provided unclear and unspecific regulations on business establishments entitled to tax refund for investment projects. To solve this shortcoming and ensure the legal framework for VAT in line with reality, remove difficulties in production and business activities, especially in real estate transfer as mentioned in Clause 3, Article 1 Decree 49 amends and supplements regulations on conditions for business establishments' investment projects to be refunded, including:

1. Business establishments that have registered their business and registered to pay VAT by the credit method.
2. Investment projects of business establishments doing business in conditional business investment lines.
3. Business establishments are not entitled to VAT refund.

It can be seen that Decree 49 stipulates that VAT refund applied to new "investment projects" in the same or different province or city where the head office is located (except for investment projects to build houses for sale, non-forming fixed assets investment projects and some other cases that are not eligible for tax refund). In the past, VAT refund was only applied to new investment projects in provinces and cities that were different from the province or city where the head office was located. This helps enterprises be more proactive when working with State agencies.