There will be a suitable route.
Recently, the Ministry of Finance has released a draft Law on Personal Income Tax (replacement) and is seeking comments before submitting it to the Government and the National Assembly. According to the draft, personal income tax from real estate transfers by individuals is determined by multiplying taxable income by the tax rate of 20% for each transfer.
In which, taxable income from real estate transfer is determined by the selling price minus (-) the purchase price and reasonable expenses related to generating income from real estate transfer. In case the purchase price and expenses related to the real estate transfer are not determined, personal income tax is determined by multiplying the selling price (x) by the following tax rates: for real estate with a holding period of less than 2 years, it is 10%; for real estate with a holding period of 2 years to less than 5 years, it is 6%; for real estate with a holding period of 5 years to less than 10 years, it is 4%; for real estate with a holding period of 10 years or more, it is 2%. Particularly, real estate originating from inheritance is 2%.
According to the Ministry of Finance, for income from real estate transfer activities, the current Personal Income Tax Law stipulates that personal income tax on real estate transfer is 2% on the transfer price each time. However, recently, many opinions have suggested that it is necessary to study the regulations on personal income tax on real estate transfer activities to ensure compliance with the nature of economic transactions. The Ministry of Finance informed that, through calculations, compared to the tax rate of 2% on the transfer price currently applied, the tax rate of 20% on taxable income will regulate the tax to ensure it is at an equivalent level.
In some cases (the difference between the selling price and the purchase price is less, there is no income or loss), collecting 20% of the income will be more beneficial for individuals, regulating the tax collection according to the actual income of real estate transactions. However, collecting personal income tax according to the 20% method on income needs to have a suitable roadmap, ensuring synchronization with the process of perfecting other policies related to land, housing, or the readiness level of the database as well as the information technology infrastructure on registration and transfer of land and real estate. Thereby, it is possible to create conditions for tax authorities to have enough information and legal basis related to real estate transfer activities to collect the correct amount of tax payable.
"Treat" real estate speculation
With the above proposal, Dr. Nguyen Tri Hieu, an economic expert, commented that it will have a positive impact on the real estate market. Specifically, the tax is calculated on actual income (profit), helping people pay taxes according to their ability and benefits; promoting the market to declare the correct transaction price. At the same time, the new tax calculation method has the potential to increase revenue from highly profitable real estate transactions, supplementing resources for public investment and infrastructure development.
In addition, the proposal to reduce tax rates based on holding time will encourage investors to hold assets longer, contributing to market stability and reducing speculation. In addition, a higher tax rate for real estate held for less than 2 years (10%) will reduce short-term speculation, significantly reducing profits from speculation, forcing investors to consider carefully. When speculation decreases, the market will be less volatile, real estate prices will reflect their true value, minimizing virtual "land fever" periods. "Tax policy is always a powerful tool to regulate the market and distribute income. Successfully applying these changes will contribute significantly to the sustainable and transparent development of the Vietnamese real estate market," said Dr. Nguyen Tri Hieu.
Lawyer Huynh Van Nong, Ho Chi Minh City Bar Association, said that the proposed personal income tax based on profit is completely consistent with international practice and the true nature of the tax. However, to do this, the tax sector must build a database to be able to look up transaction history. On the other hand, determining deductible expenses is also difficult, such as the cost of purchase, renovation, brokerage, procedures, and bank loan interest. In fact, there are even many old transactions without invoices or documents to prove it.
Meanwhile, Mr. Tran Van Chau, Chairman of the Board of Directors of Cho Lon Real Estate Joint Stock Company, commented that the Ministry of Finance's tax proposal will not have a big impact on real estate businesses but will mainly affect individuals transferring. The tax rate of 20% on profits is appropriate, but to apply it, the State must complete the database and have a roadmap for application. At the same time, in cases where the purchase price and costs related to the transfer are not determined, the proposed tax rate is too high. "I propose to reduce the tax rate for real estate with a holding period of less than 2 years to 5%; holding period from 2 years to less than 5 years is 3%; from 5 years to less than 10 years is 2%. For real estate with a holding period of 10 years or more, it is 1% or no tax. Only real estate originating from inheritance will be exempt from tax," Mr. Chau proposed.
Source: https://www.sggp.org.vn/ap-thue-de-siet-dau-co-bat-dong-san-phai-co-lo-trinh-va-du-lieu-day-du-post805148.html
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