Land rental increases leave businesses in cold sweat

Businesses are complaining that higher land rentals imposed by HCM City authorities will push them against the wall.

The director of a gas tank production company in district 6 in HCM City sighed with relief when he was notified by tax authorities that he would have a 50 percent land rental reduction.

In 2013, the company received a notice from the HCM City Finance Department which said the land rental would be VND1.6 billion per annum for 10,000 square meters of land it leased in district 6, or 4.6 times higher than usual.

The director was shocked when informed about the sky-high amount of money he has to pay. As a last resort, he decided to lodge complaints to appropriate agencies, asking for a land rental reduction.

A new ray of hope emerged when he received a document from the district 6 taxation body on March 13.

However, he still needs to get approval from the city’s taxation body to enjoy the preferential treatment.

Nguyen Xuan Han, general director of Maseco, said the excessively high land rental imposed by the city’s authorities has caused difficulties for many businesses.

As the investment costs have increased dramatically, thus upsetting business plans, businessmen have had to break the signed contracts.

Maseco signed a contract with the city authorities on leasing 10 land plots for its production workshops and showrooms.

The sum of money Maseco was told to pay for rents in 2013-2014 was 3-4 times higher, about VND2 billion a year, than that in the years before.

It was fortunate to get the nod from city authorities to enjoy a 50 percent land rental cut one year after it lodged a complaint to appropriate agencies.

A garment company in Tan Phu District said the company was asked to pay rent of VND100 billion for 15 hectares of land it leased in 2014, while the company’s chartered capital was VND95 billion only.

The company also lodged complaints with appropriate agencies which finally decided to lower the rent to VND30 billion.

However, the sum of money was still twice as much as the sum it had to pay in previous years.

Tran Thi Le Nga, deputy head of the HCM City Taxation Agency, said that the rents businesses now pay are four to five times higher than in 2010, which will seriously affect businesses’ production costs.

However, she said that businesses which pay very high rents could ask appropriate agencies to reconsider the rental price. The final decision on each specific case will be made by the HCM City People’s Committee.

TBKTSG