Real estate firms currently owe thousands of billions of VND worth of land use right fees while tax agencies are finding it difficult to recover the debts.

Investor of the stagnant Hong Kong Tower real estate project still owes over VND40.6 billion worth of land use fees

Tax agencies said from 2011 to date numerous real estate companies have been making losses and have yet to pay their land use right fees.

The Construction Engineering Joint Stock Company in Hanoi has yet to pay VND84 billion (USD4 million) for their Hong Kong Tower development.

In order to support the investor, Hanoi municipal authorities decided to extend the deadline for the firm to pay the fee within year.

However, to date the company still owed over 40.6 billion (USD1.93 million) worth of land use fees, excluding VND21 billion (USD1 million) worth of land use fees extended to May 10 this year.

Ha Do Group, the investor of the four-star Mercure hotel, currently owes over VND78.8 billion (USD3.76 million) worth of land use fees. Of the total, VND44.8 billion (USD2.13 million) were overdue debts and VND34 billion (USD1.62 million) are extended to November 26 this year.

The General Department of Taxation has compiled a black list of real estate firms with big debts of land use fees, including Phu My Development Investment JSC, Binh Chanh Construction Investment JSC, Tan Truong Limited Company and Housing and Urban Development Corporation.

A tax branch head in Hanoi said, “In 2012 the tax sector found it difficult to complete its budget revenue targets. The municipal tax department failed to collect several types of taxes. We had to urge enterprises to settle their debts.”

Economist Pham Chi Lan said that enterprises owe a lot of tax arrears but they had still continued to call on support from the government. The proposal to give land and housing as a form of payment for debts was popular with such enterprises.

In 2013, state budget revenues from land use fees were estimated at VND39 trillion (USD1.86 billion), down from last year’s figure of around VND45.145 trillion (USD2.15 billion).

In order to improve the situation, the tax agencies are scrutinising all enterprises which owe land use fees and will apply fines for firms that have deferred payment.