Scenario: an investment-promotion document states: “incentivised projects receive a 50% land-rent reduction”. The sentence is both true and false: current law does contain several genuine 50% land-rent reduction cases; it is false if read as a general policy for every project labelled “incentivised”. This article lists the complete 50% reduction cases in Article 40 of Decree 103/2024/ND-CP, so enterprises can match their own case instead of relying on a clause-less promise.
The map of 50% reduction cases in Article 40
Article 40 of Decree 103/2024/ND-CP (amended and supplemented by Decree 291/2025/ND-CP) sets land-rent reductions at several levels — 80% for land building auxiliary works of railway and aviation service projects; revenue-ratio-based reduction for defence/security land combined with production labour; and a 50% group comprising the following cases. One, public service units using annually leased land to build service works: 50% reduction for the entire lease term — the most typical long-term 50% case. Two, PPP-form investment projects in incentivised sectors or located in incentivised areas: the reduction applies at the level of the public service unit case at point b, clause 1 (per point d, clause 1, Article 40). Three, land users forced to suspend operations to remedy consequences of natural disaster, fire or other force majeure: 50% reduction during the suspension — an event-based case available even to ordinary production enterprises when the event occurs. Four, the social-policy case added by Decree 291/2025/ND-CP: ethnic-minority households classified as poor or near-poor living in ethnic-minority and mountainous areas, leasing land from the State for the first time for production or business: 50% off for the whole first lease term (point dd, clause 1, Article 40). Beyond Article 40, note that land-rent reductions can also arise from separate Government policy decisions for specific economic periods (such as post-pandemic recovery support reductions) — those decisions carry their own terms and scopes and are not standing rules.
Why an ordinary FDI factory is not in the 50% group
Reading Article 40’s structure closely shows the reduction mechanism is designed by subject and situation, not by the label “incentivised project”: public subjects (service units), a special investment model with State participation (PPP), objective incident situations (disaster, fire, force majeure), and social-policy groups (poor ethnic-minority households). A 100% foreign-owned FDI factory leasing directly or sub-leasing in an industrial park falls into none of the four groups — its incentives, if any, live in the time-bound sector/area exemption of Article 39 and in corporate income tax incentives, not in Article 40. The negotiation consequence is very practical: when a locality or a park developer pitches a “50% land-rent reduction for the project”, the enterprise must ask on what basis — if it is a commercial sub-lease price reduction the developer decides within its own price framework, that is a contract commitment to be written as a price clause; if it is invoked as State policy, an Article 40 provision or a separate policy document must be citable, otherwise the promise has no legal foundation.
The process for obtaining a reduction, and common errors
Every reduction case in Article 40 must pass the determination procedure in Article 48 of Decree 103/2024/ND-CP: the land user files a request dossier with proof of its case; the competent land/finance authority determines the amount and period; the tax authority records it into the land-rent payment obligation. Three common errors forfeit the reduction: one, unilaterally paying 50% less on an assumption of eligibility without a determination decision — treated as late payment, accruing late-payment interest on the shortfall; two, for suspension cases, failing to keep contemporaneous evidence of the event and the stoppage duration (records, authority documents, suspension notices), so the reduction dossier is rejected for unproven time; three, filing the reduction dossier long after the event ends, making it hard for the authority to verify the actual suspension period. The common lesson across the whole land-incentive cluster: land-rent benefits in Vietnam always pass through a determination decision — no decision, no reduction in the tax notice.
One final point often missed in advice: both exemption and reduction are conditional statuses, not permanent rights. When the land user breaches the conditions of its determined case (wrong-purpose use, loss of qualifying status, concealing resumed operations), the competent authority adjusts or revokes the determination, and wrongly exempted or reduced land rent is retroactively collected with late-payment interest under the Law on Tax Administration 108/2025/QH15. Enterprises should put incentive-condition reviews into their annual compliance cycle instead of treating the determination decision as the end of the matter.
Frequently Asked Questions
Which cases qualify for a 50% land-rent reduction under current rules?
Under Article 40 of Decree 103/2024/ND-CP (amended and supplemented by Decree 291/2025/ND-CP), the typical 50% reduction cases are: (1) public service units leasing land on annual payment to build service works — 50% off for the whole lease term; (2) PPP-form investment projects in incentivised sectors or located in incentivised areas — reduced at the same level as the public service unit case (point d, clause 1, Article 40); (3) land users forced to suspend operations to remedy consequences of natural disaster, fire or other force majeure — 50% off during the suspension period; (4) specific social-policy cases, including ethnic-minority poor and near-poor households in ethnic-minority and mountainous areas leasing land from the State for the first time for production/business — 50% off for the whole first lease term (point dd, clause 1, Article 40, added by Decree 291/2025/ND-CP). Each case attaches to a specific subject and conditions — there is no general 50% reduction policy for all ‘incentivised projects’.
For how many years does the 50% land-rent reduction last?
There is no single number of years for all cases — the reduction period attaches to the subject’s status or the event under Article 40 of Decree 103/2024/ND-CP: public service units are reduced for the entire lease term; incentivised PPP projects are reduced for the entire lease term at the public-unit level; the disaster/fire/force-majeure suspension case is reduced only for the exact suspension period; policy ethnic-minority households are reduced for the entire first lease term. This is fundamentally different from the exemption mechanism, which runs on fixed 3/7/11/15-year tiers in Article 39.
What does the 50% reduction procedure involve, and how does it differ from exemption?
Reduction and exemption share one determination gateway in Article 48 of Decree 103/2024/ND-CP: the land user files a request with proof of its case; the land/finance authority determines the amount and period; the tax authority records it into the land-rent obligation. The difference lies in the proof: reduction is proved by subject status and events (service-unit decisions, the PPP project contract, disaster evidence and suspension duration), while exemption is proved by investment sector, area and basic-construction timing. A further practical difference: a reduction attaches to a status and must be re-confirmed when the status changes (the reduction ends when the suspension ends), whereas an exemption runs on its determined timeline.
If conditions are violated while enjoying the 50% reduction, is it clawed back?
Yes. If the land user no longer meets the conditions of its reduction case — wrong-purpose land use, loss of the qualifying status, or resuming operations without declaring the suspension over — the competent authority adjusts or revokes the issued exemption/reduction determination, and the tax authority retroactively collects the wrongly reduced land rent plus late-payment interest under the Law on Tax Administration 108/2025/QH15. Fraudulent declarations to obtain the reduction also attract administrative tax penalties. The duty to self-monitor eligibility therefore rests on the land user for the whole reduction period, not just at filing.
