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Report on Land Value Capture Tools Applicability (Revised)

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Report on Land Value Capture Tools Applicability (Revised) Report on land value capture tools applicability (Revised) Development of land value capture and private investment options The World Bank August 2019 Abbreviations Abbreviation Expanded Form ACCA Asian Coalition for Community Action program ACHR Asian Coalition for Housing Rights AMC Ahmedabad Municipal Corporation ARV Annual Rental Value AUDA Ahmedabad Urban Development Authority BOT Build Operate Transfer BT Build-Transfer CAGR Compounded Annual Growth Rate CAMA Computer Assisted Mass Appraisal CBD Central Business District CDF City Development Fund CEPACs Certificados de Potencial Adicional de Construção/ Certificates of Additional Construction Potential CRET Comprehensive Real Estate Tax CTUDRP Can Tho Urban Development and Resilience Project DOC Department of Construction DOF Department of Finance DOJ Department of Justice DONRE Department of Natural Resources and Environment DPI Department of Planning and Investment FAR Floor Area Ratio FSI Floor Space Index GDP Gross Domestic Product GIS Geographic Information System GoAP Government of Andhra Pradesh GTPUD Gujarat Town Planning and Urban Development Act HCMC Ho Chi Minh City HMDA Hyderabad Metropolitan Development Authority HUDA Hyderabad Urban Development Authority IAAO International Association of Assessing Officers 2 Abbreviation Expanded Form IT Information Technology ITES Information Technology Enabled Services LAC Latin America and Caribbean LAT Land Appreciation Tax LBFT Land Based Fiscal Tool LDFC Land Development Fund Center LTF Land Transfer Fees LUR Land Use Rights LRO Land Registration Office LVC Land Value Capture MCH Municipal Corporation of Hyderabad MMR Mumbai Metropolitan Region MOC Ministry of Construction MOF Ministry of Finance MONRE Ministry of Natural Resources and Environment NA Non-Agricultural NMG Nanchang Municipal Government NRTG Nanchang Railway Transit Group Co. Ltd. ODA Official Development Assistance ORR Outer Ring Road PASLP Public Announcement System of Land Price PMU Project Monitoring Unit PPC Provincial-level People’s Committee PPP Public Private Partnership PRC People’s Republic of China RICS Royal Institution of Chartered Surveyors RMB Renminbi SECO Swiss State Secretariat for Economic Affairs SPE Special Purpose Entity TDR Transfer of Development Rights TIF Tax Increment Financing TPS Town Planning Scheme 3 Abbreviation Expanded Form ULB Urban Local Body USD United States Dollars VAT Value Added Tax VND Vietnamese Dong VUUP Vietnam Urban Upgrading Project WTO World Trade Organisation Y-O-Y Year-on-year 4 Contents 1. Introduction ................................................................................................................................................. 11 1.1 Background .......................................................................................................................................... 11 1.2 About the report .................................................................................................................................... 12 2. Introduction to land-based fiscal tools and land value capture financing ............................................... 13 2.1 Introduction ........................................................................................................................................... 13 2.2 Land value capture financing ................................................................................................................ 16 3. Overview of land-based fiscal tools in Vietnam ........................................................................................ 17 3.1 Evolution of land regulations in Vietnam ................................................................................................ 17 3.2 Current regulatory framework for land-based fiscal tools (LBFT) in Vietnam .......................................... 18 3.2.1 Land use levy/ rental ................................................................................................................ 20 3.2.2 Registration charges ................................................................................................................ 22 3.2.3 Land use tax ............................................................................................................................ 23 3.2.4 Fees for planning licenses and construction permit .................................................................. 23 3.2.5 Exaction from developer in lieu of development rights .............................................................. 24 3.2.6 Income tax on real estate property ........................................................................................... 26 3.2.7 Property tax ............................................................................................................................. 27 3.3 Revenue generation from land based fiscal tools in Can Tho................................................................. 27 4. Applications of land-based fiscal tools – best practices .......................................................................... 30 4.1 Property tax .......................................................................................................................................... 30 4.1.1 Definition ................................................................................................................................. 30 4.1.2 Pre-conditions ......................................................................................................................... 30 4.1.3 Property tax in India ................................................................................................................. 31 4.1.4 Property tax in Latin American and Caribbean countries .......................................................... 32 4.1.5 Property tax in China ............................................................................................................... 34 4.1.6 Property tax in South Korea ..................................................................................................... 36 4.1.7 Learnings ................................................................................................................................ 36 4.2 Stamp duty and transfer taxes .............................................................................................................. 37 4.2.1 Definition ................................................................................................................................. 37 4.2.2 Pre-conditions ......................................................................................................................... 37 4.2.3 Stamp duty in India .................................................................................................................. 37 4.2.4 Deed tax and stamp duty in China ........................................................................................... 38 4.2.5 Stamp duty in South Korea ...................................................................................................... 39 5 4.2.6 Registration charges in Vietnam .............................................................................................. 40 4.2.7 Learnings ................................................................................................................................ 40 4.3 Betterment levies .................................................................................................................................. 40 4.3.1 Definition ................................................................................................................................. 40 4.3.2 Pre-conditions ......................................................................................................................... 40 4.3.3 Betterment levy in India ........................................................................................................... 41 4.3.4 Betterment levy in Latin America .............................................................................................. 41 4.3.5 Land appreciation tax in China ................................................................................................. 42 4.3.6 Betterment levy in Vietnam ...................................................................................................... 43 4.3.7 Learnings ................................................................................................................................ 45 4.4 Developer exactions (including development charges and impact fees) ................................................. 46 4.4.1 Definition ................................................................................................................................. 46 4.4.2 Pre-conditions ......................................................................................................................... 46 4.4.3 Developer exactions in India .................................................................................................... 46 4.4.4 Developer exactions in Latin America ...................................................................................... 48 4.4.5 Developer exactions in Vietnam ............................................................................................... 49 4.4.6 Learnings ................................................................................................................................ 54 4.5 Lease of public land .............................................................................................................................
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