How do foreign-invested projects get land and water surface rental exemptions and reductions?
Land and water surface rentals are a significant cost in an FDI project’s investment structure — especially for manufacturing projects needing large areas or projects using water surfaces (ports, logistics, aquaculture). The Land Law 2024 (31/2024/QH15) — effective 01/08/2024 — together with Decree No. 103/2024/ND-CP (effective 01/08/2024) details exemptions from and reductions of land and water surface rentals for investment projects, including many incentives directly available to foreign investors.
Legal basis
- Article 157 of the Land Law 2024 — cases of land-use fee and land rental exemption/reduction;
- Decree No. 103/2024/ND-CP — Article 39 (rental exemption), Article 40 (rental reduction); amended by Decree No. 291/2025/ND-CP and Decree No. 50/2026/ND-CP (31/01/2026);
- Decree No. 96/2026/ND-CP — lists of especially incentivized sectors and incentivized locations.
Rental exemption during basic construction
Under Clause 2, Article 39 of Decree 103/2024, investment projects are exempt from land rental during the basic construction period per the approved project — a “default” incentive easing cash-flow pressure before revenue begins.
Post-construction rental exemption — three tiers
Under Clause 3, Article 39 of Decree 103/2024, for projects eligible for investment incentives under investment legislation:
| Exemption tier | Condition |
|---|---|
| 11 years | Production/business projects in the especially incentivized sectors list |
| 15 years | Especially incentivized projects in difficult socio-economic areas |
| Entire lease term | Especially incentivized projects in especially difficult socio-economic areas |
The exemption period runs after the construction-phase exemption.
Land rental reductions (Article 40)
- 50% reduction of annual land rental for the entire lease term for PPP projects in incentivized sectors/locations;
- For lump-sum rental for the whole term: reduction = lump-sum rental × reduction rate;
- Other reduction cases are proposed by ministries/provinces and submitted by the Ministry of Finance to the Government after National Assembly Standing Committee consent.
Water surface rental: same mechanism
Water surface rental (aquaculture, inland ports, waterway logistics, etc.) follows the same exemption/reduction mechanism as land rental under Article 157 of the Land Law 2024. Investors with water-surface projects should map their sector and location against the incentive lists to determine their tier.
Key conditions and notes
- Sector + location: exemption/reduction tiers hinge on the especially-incentivized sector list and incentivized locations under investment law (Decree 96/2026) — determine correctly from the outset;
- Excluded: land for commercial housing and commercial/service land is not covered by investment-incentive exemptions;
- Procedure: land users file the exemption/reduction application with the land allocation/lease dossier; the tax authority coordinates to determine the grounds and exempted area;
- Track amendments: Decree 50/2026/ND-CP (31/01/2026) amended parts of Decree 103/2024 — check the latest text when filing.
Article quality-reviewed by the FLAW AI Legal Council. For reference only; not a substitute for legal advice on specific cases.
