DOES ADDING ANOTHER BASEMENT LEVEL TRIGGER ADDITIONAL LAND USE LEVY? A PERSPECTIVE ON UNDERGROUND SPACE REGULATIONS

1. Underground Space Must Be Considered Based on Its Intended Use and Applicable Regulatory Framework

A case in Hanoi raises an important question: the developer of a residential project on a land plot of more than 4,000 square metres, initially approved under a detailed plan for 20 above-ground floors and one basement level, intends to revise the design to include 20 above-ground floors and two basement levels to accommodate parking and technical facilities.

The project had fulfilled its land use levy obligations and obtained a Certificate of Land Use Rights in 2021. The developer therefore sought clarification on whether adding another basement level would give rise to additional financial obligations and require an additional land use levy payment.

According to the response issued by the Hanoi Tax Department and published on the Government News Portal on 12 November 2026, the competent land management authority is responsible for determining relevant information, including land location, area, land type, land use purpose, the date on which the financial obligation arises, and land price, in cases where financial obligations are incurred. The tax authority then calculates the amount payable based on the information transferred to it, in accordance with applicable regulations.

Notably, the Hanoi Tax Department stated that determining the legal basis and calculation method for any additional payment arising from the construction of an extra basement level falls outside its authority to provide clarification. Accordingly, this case does not establish that adding a basement level will necessarily trigger—or will not trigger—an additional land use levy.

From a legal perspective, Article 98 of Decree No. 102/2024/ND-CP stipulates that the use of land for underground construction requires an investment project or a project component approved by the competent authority in accordance with applicable laws and regulations. It also provides that the land type for underground construction is determined based on the intended use, irrespective of the land type at ground level.

This provision indicates that underground space must be considered in light of its intended purpose, function, and corresponding legal documentation. The method for determining financial obligations applicable to surface land cannot automatically be applied to every basement construction scenario.

2. Key Thresholds and Financial Coefficients Under Ho Chi Minh City's Underground Space Policy

On 22 September 2026, the Ho Chi Minh City People's Council issued Resolution No. 58/2026/NQ-HDND, which took effect on 1 October 2026. The Resolution sets out policies on the management, exploitation, and use of underground space, as well as the development of underground structures within the city.

Some notable provisions concerning underground space use fees include:

The maximum depth eligible for the fee exemption is 15 metres. If the underground space plan specifies a shallower limit, the depth prescribed in that plan shall apply. Even within this depth, underground space may only be used in compliance with the relevant planning requirements and land use purpose. It must not be located in areas where underground construction is prohibited or encroach upon the protection zones of existing structures.

The coefficients of 0.3 and 0.15 are depth-based calculation coefficients, not tax rates applied directly to the project's value. Under Article 13, the payable amount is determined based on several factors, including the chargeable floor area, the land rental unit price applicable to underground construction, the depth coefficient, the exemption or reduction coefficient, and the applicable charging period.

The Resolution also excludes certain areas from the floor area used as the basis for calculating the fee. These include ramps, access roads and traffic lanes used solely for vehicle entry, exit, or circulation within the structure; foundations, piles, anchors, retaining walls, load-bearing structures, support structures, and mandatory technical systems that do not create usable floor area or functional space.

For underground areas directly serving cultural activities, arts, physical education, sports, education, healthcare, social assistance, scientific research, technology, and innovation, the Resolution provides for a 50% reduction in underground space use fees for eligible floor areas. Areas that do not qualify for an exemption or reduction remain subject to the applicable financial obligations.

Notably, independent underground parking projects may allocate service floor area supporting parking operations of up to 25% of the project's total gross floor area. In addition, they may allocate a further 20% of the total floor area to other commercial and service activities to support the project's operation and exploitation. These two categories of floor area must be separately identified by function in the approved design. Their use must not alter the project's primary function as a parking facility or reduce its parking capacity as specified in the approved planning documents and project.

Another important point is the transitional provision under Article 17: structures, or portions thereof, that have been inspected and accepted and put into operation before 1 January 2027 are not subject to underground space use fees under Resolution No. 58. For structures accepted and put into operation on or after 1 January 2027, the fee is calculated from the date they commence operation and use, in accordance with the applicable regulations.

3. Emerging Trends in Underground Space Planning and Development

Three key developments are worth noting.

First, underground space is no longer merely an ancillary component of a building.

In addition to parking and technical facilities, underground space can accommodate urban infrastructure, transport connections, public walkways, and other functions in accordance with approved planning schemes and projects. Consequently, any proposal to add basement levels should be assessed in conjunction with the project's planning framework, investment approval, and construction procedures.

Second, financial obligations depend on the intended use and the relevant legal documentation.

It cannot be assumed that every additional basement level automatically gives rise to an additional land use levy. A distinction must be made between areas serving residents, technical areas, independent underground parking facilities, and commercial or service areas. Different cases may be subject to different methods of determining financial obligations under the applicable regulations.

Third, local policies may create differences in project investment efficiency.

Resolution No. 58/2026/NQ-HDND demonstrates how Ho Chi Minh City has established a more specific framework for underground space development through exemption and reduction policies, as well as depth-based fee calculation mechanisms. However, this policy applies within Ho Chi Minh City and cannot automatically be applied to projects in Hanoi or other localities.

4. Basement Levels as an Investment Component That Must Be Planned from the Outset

Adding another basement level may improve a project's ability to meet parking demand and expand its functional capacity, particularly in densely populated urban areas where land availability is limited. However, these benefits must be assessed alongside construction costs and actual operational potential.

• Planning and engineering: Additional basement levels may affect foundation design, diaphragm walls, waterproofing, drainage, ventilation, fire prevention and firefighting systems, and the safety of neighbouring structures.

• Legal compliance: Developers should review consistency with applicable planning schemes, investment approvals, land documentation, and relevant adjustment procedures.

• Financial considerations: In addition to construction costs, developers should account for financing costs, land-related financial obligations, and long-term operating expenses.

• Market considerations: Improved parking capacity may enhance product quality and residents' experience. However, increasing basement floor area does not necessarily generate a corresponding increase in revenue.

For project developers, it is essential to clearly identify areas designated for residents' parking, technical facilities, and commercial or service activities from the design stage. Defining these functions at the outset provides a basis for reviewing legal compliance, calculating financial obligations, and developing an appropriate operational strategy.

5. Legal Considerations When Revising Designs and Adding Basement Levels

Based on a review of the relevant legal framework and recent policy developments, three key points should be considered.

First, adding a basement level does not automatically mean that an additional land use levy must be paid. Financial obligations must be determined based on the intended use, area, approved documentation, and applicable regulations. Developers should not assume that no additional payment is required solely because the project previously fulfilled its land-related financial obligations.

Second, being within the 15-metre depth limit in Ho Chi Minh City does not mean that underground construction is unrestricted. The use of underground space must still comply with planning requirements, land use purposes, plot boundaries, site-specific conditions, and safety requirements. For areas exceeding the fee-exempt depth limit, the Resolution also prescribes requirements concerning site surveys, technical solutions, avoidance of overlap with existing underground structures, and protection of the lawful rights and interests of relevant parties.

Third, the respective authorities and types of financial obligations must be clearly distinguished. Under Decree No. 291/2025/ND-CP, which amends Decree No. 103/2024/ND-CP, the competent land management authority is responsible for determining information within its remit. The tax authority then relies on the relevant dossier and transferred information to calculate and notify the applicable land use levy and land rental payments in accordance with regulations. Meanwhile, underground space use fees in Ho Chi Minh City are determined under the separate mechanism established by Resolution No. 58.

These are key matters that developers should review when revising project designs, increasing basement floor area, or introducing additional underground functions.

6. Underground Space as an Emerging Factor in Real Estate Value

As urban land resources come under increasing pressure, the development of underground space can expand opportunities for providing parking facilities, technical infrastructure, transport connections, and urban services.

However, investment efficiency depends not only on the amount of space that can be developed, but also on its location, geological conditions, infrastructure connectivity, actual demand, and construction and operating costs.

For large-scale projects, Victory Group believes that underground space planning should be incorporated into the investment preparation stage, with three key factors assessed in parallel: legal feasibility, financial viability, and actual operational demand.

Underground space is more than additional construction area; it is a project component that can directly influence the value and operational efficiency of a real estate development. A thorough understanding of the applicable regulations and early-stage planning can help developers mitigate adjustment risks, control costs, and improve long-term investment performance.