Is it possible to contribute capital using land use rights to FDI enterprises?

Contributing capital with land use rights to FDI enterprises is an issue of concern to many investors in the business sector in Vietnam. This form of capital contribution not only helps strengthen businesses’ finances but also opens up attractive investment opportunities. Understanding that problem, through the following article Long Phan will provide legal regulations, necessary conditions, as well as benefits and risks when contributing capital with land use rights to FDI enterprises.

Cases where foreign-invested enterprises have land use rights

FDI enterprises can only receive land use rights through a number of specific cases to ensure the legality of land use in Vietnam, including:

• The state allocates land with land use fees: FDI enterprises implementing housing construction projects for sale or lease must pay land use fees to have legal use rights.
• State Land Lease: Enterprises can lease land from the State for agricultural, forestry, and non-agricultural business projects, with the option to pay rent annually or in one lump sum for the entire lease term.
• Land sublease contract in industrial parks: FDI enterprises have the right to sublease land from legal owners of industrial parks or export processing zones. The landowner can be a domestic economic organization or another FDI enterprise.
• Transfer of investment capital is the value of land use rights: FDI enterprises can transfer land use rights from domestic economic organizations with legal rights, but are limited to certain types of land such as agricultural land.

These forms ensure that FDI enterprises use land in accordance with regulations and must register or sign a contract with the State or legal landowner.

Can foreign-invested enterprises receive capital contributions in the form of land use rights?

According to Point dd, Clause 1, Article 28 of the Land Law 2024, foreign-invested enterprises are entitled to receive capital contributions in the form of land use rights. However, not all types of land use rights are allowed to be used as capital contribution to FDI enterprises.

Specific conditions include:

• Origin of land use rights: Land used as capital contribution must be land allocated by the State with land use fees collected or leased land with one-time rental payment for the entire time. Land rented annually or unlicensed is not allowed to contribute capital.
• Project type and land use purpose: FDI enterprises can only receive capital contributions in the form of land use rights in projects that are not in the agricultural or forestry sectors. Real estate projects for sale or lease may be permitted, subject to registration and agreement conditions.
• Name transfer and accounting procedures: Land use rights must be legally transferred to the FDI enterprise, requiring transfer documents and registration according to regulations. The value of land use rights needs to be fully accounted for in the enterprise’s assets.

Rights and obligations of FDI enterprises using land contributed as capital by land use rights

Capital contributions using land use rights to FDI enterprises must comply with the legal rights and obligations specified in Article 42 of the Land Law 2024. These regulations not only ensure that enterprises use land for the right purpose but also also fully fulfill related financial obligations.

Rights of FDI Enterprises

• Legal land use: Enterprises have the right to use land for the correct purpose specified in the land use rights certificate. For land serving non-agricultural business purposes, businesses can build infrastructure and carry out business activities according to projects.
• Transfer of land use rights: FDI enterprises have the right to transfer land use rights to a third party if they meet the conditions of land use term and registered use purpose.
• Leasing and subleasing land use rights: Enterprises have the right to lease or sublease land use rights and assets attached to land during the land use period, in compliance with current legal regulations.
• Mortgage of land use rights: Enterprises have the right to mortgage land use rights and assets attached to land at credit institutions licensed to operate in Vietnam.
• Contributing capital with land use rights: FDI enterprises can contribute capital with land use rights and assets attached to land according to the provisions of law.

Obligations of FDI Enterprises

• Paying land use fees and land tax: Enterprises must fulfill their financial obligations by paying land use fees and related taxes, including transfer tax and land tax.
• Ensuring correct land use purposes: Enterprises must use land for the correct registered purposes. In case of changing the purpose of land use, the enterprise must obtain permission from the competent state agency.
• Periodic reporting and monitoring of land use: Enterprises are obliged to periodically report the land use situation at the request of the land management agency. State agencies have the right to monitor land use to ensure compliance with legal regulations.
• Responsible for financial obligations: Enterprises must ensure the fulfillment of financial obligations related to land use rights, including timely payment of taxes and fees.
• Protecting the legal rights of third parties: Enterprises need to ensure that land use does not infringe on the legal rights of related parties, especially in transactions related to transfer or lease.

Long Phan’s legal consulting services on capital contribution by land use rights to FDI enterprises

Long Phan provides comprehensive consulting services on capital contribution with land use rights to FDI enterprises, helping businesses ensure legality and optimize benefits during the capital contribution process. Our services include:

• Consulting on legal regulations related to capital contribution by land use rights to FDI enterprises.
• Check and evaluate the legality of land use rights expected to be contributed as capital, ensuring that related documents and records are complete and valid.
• Support in preparing necessary documents to carry out capital contribution and receipt procedures.
• Consulting on capital contribution registration procedures to completing legal documents.
• Support customers in carrying out capital contribution procedures with land use rights and carry out procedures at competent authorities.
• Analyze and propose solutions to minimize legal risks when making capital contributions.
• Support to resolve disputes arising related to capital contribution and land use rights.

Contributing capital with land use rights to FDI enterprises requires strict compliance with legal regulations. Long Phan is ready to support customers with in-depth legal consulting services on capital contribution and land use rights, helping businesses carry out investment projects safely and effectively. For more detailed information, please contact hotline 0906735386.