II. Land Value Increment Tax

A. Scope of Taxation

Land that has been assigned a value is subject to the land value increment tax based on the total amount of land value increment at the time of transfer of title to the land. Land transferred by succession, public land sold or donated by all levels of government according to law, and private land transferred to any level of government by gift are exempt.

B. Taxpayers

The taxpayers of the land value increment tax are:

1. The original landowner for land transferred with compensation.
2. The claimer of land title for land transferred without compensation.
3. The Dien Right assignor for a Dien Right that has been established on the land.

In the transfer of land title, if the land value increment tax due is not paid by the taxpayer within the relevant period, the new title holder of the land must pay the past-due land value increment tax. If the current value for transfer is reported solely by the title holder, the tax payable should be paid by the title holder.

C. Tax Base

The tax base of the land value increment tax is the “Total Increment Amount of Land Value”, which is calculated as follows:

Total Increment Amount of Land Value = declared current value for transfer - original decreed value or assessed current value at the previous transfer × consumer price index/100 - (land improvement cost + construction benefit fee + land rezoning fee + claimed current value of donated land).

D. Tax Rates

The land value increment tax is levied at regular progressive rates or special privileged rates. The regular progressive rates range from 20% to 40%. If the area of land for a self-use residence sold by the land owner complies with the related regulations, the special privileged tax of 10% applies.

E. Exemptions and Reductions

Reductions of and exemptions from the land value increment tax are as follows:

1. Land transferred due to inheritance.
2. Land acquired by the government.
3. A 40% reduction on land transferred for the first time after a rezoning, subject to relevant regulations.

F. Application of Lowest Tax Rate for Movement of Premises

If a small or medium-sized enterprise (SME) moves its premises to an industrial district, urban planning industrial district or industrial land zoned in accordance with the Statute for the Encouragement of Investment as a result of urban and/or regional planning, to prevent pollution, or for public safety, maintenance of the natural environment or the government’s recommendation, when the SME sells or transfers the land where it was originally located, the land value increment tax will be levied at the lowest rate.