The Ministry of Finance has just issued a thematic report on the construction of a market assessment, forecast medium-term trends, propose solutions, mechanisms and policies to promote the strong and stable development of the real estate market.
Within the report, the Ministry evaluates that the current tax policy related to property has not yet fulfilled its role as one of the stable source of revenue for the budget, so ministry proposed to study and issue the Law on property tax for more effective land use.
The Ministry of Finance cites that revenue from current land use tax of Vietnam accounts 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 budget.
“Income from property taxes accounts for about 2 percent of GDP in OECD countries, in which the tax rate in Canada is at 4%, in the United States at 3% and the lowest rate is at 1 %, ” according to the Ministry of Finance .
Property tax revenues also account for about 0.6% of GDP in developing countries and about 0.68% in transitioning countries.
“Property tax is a direct tax that has the potential to be very close to the actual contribution of taxpayers because it applies on specific assets, especially housing and land.” stated in the report from the Ministry of Finance .
The ministry also evaluates that the tendency of property tax reform in some countries such as Canada, Australia, Malaysia … recently showed that countries tending to collect tax from high value assets, expanding the subjects of property tax.
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 policies on real estate credit loan came into force from July 2016.
The Ministry of Finance stressed that Vietnamese’s per capita income is increasing continuously in recent years, from 1,400 USD in 2013 to 2,200 USD in 2016, and is expected to increase to 3,400 USD by 2020.
“The holding, owning and investing of real estate tend to increased. To limit speculation, wasteful use of property, it is necessary to research and develop property tax law,” said by the Ministry of Finance .
According to the leaders of the Ministry of Finance, the above law construction also aims to institutionalize the policies and views of the Party and the State on tax policy on property. The representative of the Ministry of Finance cited the Resolution 19-NQ/TW, stated: “The study and promulgation of the tax on real estate, the subject to tax payment must include land, houses and other assets attached to land.”
In addition, the reform strategy of tax system for the period from 2011-2020 of the Prime Minister also stated: “to study and build regulating tax policy toward houses and assets of great value at the appropriate time.”
Earlier, the Ministry of Finance has proposed plans for collecting tax on the second real estate of the citizens, but this proposal has not received public broad consensus.
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Mr. Huynh Quang Hai, Deputy Minister of Ministry of Finance said that the Ministry has assigned the Department of Tax Policy to study draft on collecting housing tax, especially those with 2 or 3 houses or more. However, according to Mr. Hai, this tax can not apply in 2017 because it takes time to prepare, review carefully. And in the future, it is sure that this tax must be collected, not only because of difficult budgets, but also because other nations have taxed it for years.
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