In the document submitted to the Prime Minister on the proposal of Ministry of Finance on promulgating property tax law, HCM City Real Estate Association assessed that the promulgation of the Property Tax Law only really reasonable when modifying the policy and mechanism of land use fees collection at the same time in accordance with the current Land Law which are very inadequate at present.
Mr. Le Hoang Chau, Chairman of HCMC Real Estate Association, emphasized: “The property tax law will help the real estate market develop healthily, transparently and sustainably; prevent speculation and wasteful use. As a result, it will contribute to cash flow changes to production, business and services investment instead of investing in real estate; increase supply to the market, provide more opportunities for people with real housing needs; and increase state budget revenues in a stable, long-term and sustainable manner. In addition, this tax law also directs secondary investors to choose to establish real estate enterprises instead of individual business as current time.
No amendment is unreasonable
However, according to Mr. Chau, if promulgating Property Tax Law without amending the policy and mechanism on land use fee collection, it would be unreasonable.
Mr. Chau analyzed: “Land use fees account for a large proportion in the housing cost, about 10% for apartments; about above 30% for shophouses; about 50% for villas. Although this is not a tax ordinance or a fee, but it is a big revenue in the local budget, a burden for enterprises and homebuyers, and creating “begging-receiving” mechanism.
Therefore, it is necessary to change the calculating method of the current land use levies, convert to land use levies when land is allocated by the State or allowed to converse land use purposes. For long-term period, we should study to delete completely “Land use fee” concept and replace by a land use tax at a fix rate, proposes about 10% or 15% of the land price, so it is both transparent and easy to calculate and eliminate “begging-receiving” mechanism as well as restrict the large amount of land use fees for the first time to generate sustainable and long-term revenue for the State, ” said Mr. Chau.
The application of land use tax when being allocated land or permitted to converse land use purpose will have the effect of reducing the revenue from land use tax at provincial budget which is currently an important revenue source in the first years, but it will reduce burden of land use fee for enterprises and consumers, reduce housing costs; help enterprises predict the cost of land use tax when investing in the project.
To levy tax on the second house, difficult or easy?
Also discussing about collecting property tax, Mr. Nguyen Tran Nam, former Deputy Minister of Ministry of Construction commented that in the current context, it is difficult to determine who has a second or more home to impose tax. But it does not mean that we would not do.
The state has levied special consumption tax on many products, including cars. In terms of price, the average price of a house is much larger than the cost of a car. While cars may not be imposed tax but the home must be, so not levy home tax is unreasonable. Taxing from second homes or more is targeting to the rich, helping to increase the budget revenue and stabilize the real estate market.
To have the same viewpoint, Mr. Nguyen Van Dinh, Chairman of Vietnam Real Estate Brokerage Association affirmed: the taxation of property is certainly not easy. If the the law is not tight, it is easy to have a loophole to facilitate in spleen law such as: have family members to stand their name on behalf, ask another person to do so; use low value house to declare second or third house….
Therefore, to make this regulation be feasible and effective, lawmakers need to study closely, especially in relation to other laws to create consistency, avoid conflicts, overlap
Meanwhile, Mr. Stephen Wyatt, General Director of Jones Lang Le Salle in Vietnam, said that the biggest challenge in applying this law in Vietnam is to develop a system for recognizing and managing real estate buyers.
Currently, Vietnam’s real estate market is on the rise and is very attractive. There are many investors buying second homes. Property taxation can reduce the attractiveness of the secondary real estate market and will affect the transaction volume .
However, generally, the taxation on those buying more real estate in countries around the world and in Vietnam will have a positive impact on the market when a suitable tax system is applied.
It is proposed not to collect taxes of social housing
Regarding the above issues, Ho Chi Minh City Real Estate Association recommends that it is advisable to develop and finalize the national data and information system, including the national land and housing database, interconnecting with sectors, provinces, cities under the Central Government and updated in real time.
Specially, it is necessary to complete quickly, accurately the issuance of citizen identification card, determining individual identification number, to know thoroughly the persons owning house, use residential land. At the same time, it is necessary to quickly complete the issuance of “red books” for real estate, land.
~~>>Update on new information on the real estate news in Vietnam here: Vietnam real estate news
In addition, the association also proposed not to levy property taxes on social housing, grade 4 or below house in rural areas. In the immediate future, not to collect this tax for resettlement houses, commercial houses valued under VND 1 billion; not to collect this tax for poor households even if they have a house but are crowded (the criteria of Ho Chi Minh City is below the average of 10m2 /person) and they want to buy second or third houses but the total area of those small apartments do not exceed 77m2 (maximum area of social housing apartments).
In the first phase, the tax rate should be reasonable, suitable for the financial ability of residents; for persons having the second houseor more, applying accumulated tax rate depending on the quantity and value of the property; in case of the emergence of bubble real estate, the National Assembly should assign the Government to issue anti-speculative tax rates, imposing high taxes in case of transfer of houses and land immediately after buying (can calculate the time in the first year) to stabilize the real estate market quickly …
You are reading the article To propose to revise land use fee policy in the Real Estate category at https://realestatevietnam.com.vn/.
Any information sharing, feedback please email to firstname.lastname@example.org, Hotline 0909890897 (24/7).