The Prime Minister to request to clarify the proposal of taxing the  second house

Prime Minister Nguyen Xuan Phuc has requested the Ministry of Finance to carefully review the response about proposal of taxing from second home.

On August 18, the Government’s Office said that earlier, the media reflected the content: responding the proposal to tax the second home onward of the Ministry of Finance, in addition to supporting opinions with the application of property tax on house, there also opinions that after gloomy years of property market, it is in need of policy support, so the imposition of additional taxes when buying a second home at this time is not appropriate.

Regarding this content, the Prime Minister requested the Ministry of Finance to make close review.

Earlier, in early August, in the Government report on developing market assessment plan, forecasting medium-term trends, proposing solutions, mechanisms and policies to promote real estate market to develop healthily and stably, the Ministry of Finance said that the acquisition, ownership, investment in real estate of the people are tending to increase. Therefore, it is necessary to separately issue the Law on Property Tax for more effective use of land.

The Ministry of Finance cites that current land use tax revenues of Vietnam account for only 0.03% of GDP and about 0.15% of total state budget revenues. While in many countries, property tax revenue – especially land use tax – is one of the major sources of revenue.

In Vietnam, the real estate market is expected to develop stably and sustainably in the coming time as a number of new policies such as Housing Law, Real Estate Business Law (amended) and a lot of policies on real estate credit have come into force in July 2016.

The Ministry of Finance stresses that Vietnam’s per capita income is increasing steadily in recent years, from $ 1,400 in 2013 to $ 2,200 in 2016, and is expected to increase to $ 3,400 by 2020.

Previously, the Ministry of Finance has proposed plan for taxation with the second real estate, but this proposal has not received widespread consensus from the public.

Deputy Minister of Finance Huynh Quang Hai said that the Ministry has assigned the Department of Tax Policy to study the draft on taxing on housing, especially those with 2 or 3 houses or more.

However, according to Mr. Hai, in 2017 it is unable to apply this tax because it takes time to develop and review carefully. But this tax must be applied in the future, not only due to difficult budgets, but also because other countries have been taxing for years.

Regarding this content, Ho Chi Minh City Real Estate Association (HoREA) also proposed taxation for homeowners and landlords possessing more than a house (from the second house ) to prevent speculation and  waste of real estate. This can help increase the supply to the market, provide more opportunities for people with real needs to access house.

In case of the appearance of real estate bubble potential, it must be considered to impose high taxation on houses and land transfer immediately after purchasing. It is possible to apply  tax right in the first transaction since the purchasing time to prevent speculation and stabilize the real estate market.

However, HoREA proposed that should not apply this tax for poor households even if they have a house but are crowded (the criteria in  HCMC is below 10m2/person) and they want to buy the 2^nd or 3^rd house but the total area of these small houses  does not exceed 77m2.

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