In a recent report to the National Assembly, the Ministry of Finance proposed a new personal income tax (PIT) scheme for real estate transfers: a 20% tax on the profit (selling price minus purchase price and legitimate expenses), in addition to the current 2% tax on the total transfer price. The goal is to increase fairness and transparency in tax management while curbing speculation and price manipulation. However, many are concerned about whether this policy will effectively target speculators or inadvertently drive up housing prices, negatively impacting genuine buyers.
Should anti-speculation taxes be imposed?
According to Ms. Nguyen Phuong Lien, a lawyer at SENLAW Law Firm, the 20% tax rate is close to international practice and accurately reflects the principle of taxing actual income, helping to increase budget revenue and limit tax evasion. However, a major challenge is the implementation capacity, as many real estate transactions currently lack complete data on purchase prices, especially for properties bought and sold long ago, inherited or gifted properties, or properties purchased with informal agreements. The valuation and information management systems are not yet synchronously connected, making it difficult to determine profits and easily leading to disputes.
Options for taxing personal income on real estate transactions remain controversial from many sides.
Furthermore, if reasonable costs such as loan interest, renovation costs, and inflation are not fully accounted for, sellers may raise prices to compensate for taxes, inadvertently driving up house prices.
Many experts agree that a profit-based tax is reasonable and fair, accurately reflecting the nature of income rather than revenue. However, implementation requires detailed guidance on deductible expenses, including interest payments, legal fees, repairs, and inflation for long-term real estate ownership. Lawyer Lien emphasized that the real estate market is currently sluggish. If the new tax is applied without synchronized legal infrastructure and data, liquidity could decrease, and house prices could be inflated as sellers incorporate tax costs into the selling price. This would make it even more difficult for genuine buyers to access housing.
Several intermediate solutions are being proposed, such as: flexibly applying the two options depending on the ability to prove the original cost of the transaction; exempting or applying preferential taxes for social housing and affordable housing; and gradually transitioning from a lump-sum tax to a profit-based tax according to a specific roadmap. However, the major challenge is how to compel people to honestly declare their expenses while preventing fraudulent declarations to reduce tax obligations without effective verification tools and a comprehensive legal framework.
Consider the two options.
Ms. Ngoc Mai (Binh Tan District, Ho Chi Minh City), who owns multiple properties, said that with stable finances and a need for rental investment, she chose the 2% tax option because it's quick and doesn't require detailed declaration. Meanwhile, as a real estate investor, Mr. Bui Thanh Long (District 7, Ho Chi Minh City) chose the 20% tax option because he can calculate actual profits and losses.
Mr. Tran Khanh Quang, Director of Viet An Hoa Real Estate Company, commented that the current 2% tax rate is somewhat "uniform." He argued that while there's no objection when the market is booming and sellers make significant profits, the 2% tax is still levied when the market declines, which is very unreasonable. This is especially true for high-value properties, where the losses are even more apparent. He gave an example: someone buys a property worth 100 billion VND but only sells it for 105 billion VND after a year—just enough to pay off debt or recoup capital—yet still has to pay the 2% tax (2.1 billion VND), not to mention interest, notary fees, brokerage fees, etc., resulting in a loss. If a 20% tax were applied to profits, in this case, the seller would almost not have to pay any tax. According to Mr. Quang, allowing people the right to choose between the two options is reasonable and flexible, depending on each specific case.
Mr. Nguyen Tan Phong, Director of the Legal Consulting Center (Vietnam E-commerce Association), agrees with the direction of taxing based on profit to reflect actual income. However, for feasibility and fairness, both options should be maintained simultaneously. The 20% option should be applied when people have complete documentation proving expenses; the 2% option should be applied when the cost basis cannot be determined. This helps limit risks for transactions involving long-term owned assets, gifts, inheritances, etc. "Taxation is not only an obligation, but also a sign of fairness. For the policy to be effective, there needs to be specific and unified guidance nationwide, avoiding the situation where each locality applies it differently, causing difficulties for people," Mr. Phong emphasized.
Lawyer Nguyen Phuong Lien also believes that the proposal to impose a 20% tax is appropriate in principle. However, careful consideration is needed given the lack of synchronization and transparency in the data system regarding prices and costs. The State needs to promptly issue a clear legal framework and complete the database for effective implementation.
Vietnam encourages US businesses to expand investment in high technology.On the morning of June 26th, at the Government Headquarters, Deputy Prime Minister Ho Quoc Dung received Mr. Jeff Place, Supply Chain Director of Coherent Group (USA). During the meeting, the Deputy Prime Minister affirmed that Vietnam encourages US businesses to expand investment, especially in high-tech, innovation, and semiconductor industries. Dr. Tran Quang Thang, Director of the Institute of Economics and Management, Ho Chi Minh City: Progressive taxation or taxation based on area.
Applying a second property tax under these two options could have several impacts on the market, including: If the tax rate is too high, second property owners may be less motivated to invest, especially in rental or long-term investments. Investors may shift to other assets such as gold or stocks instead of real estate. If the tax is levied on the transfer price (2%), this could cause house prices to rise as sellers adjust their selling prices to offset the tax. If the tax is based on profit (20%), house prices may not be directly affected, but investors may be more cautious before buying or selling. Owners may hold onto properties longer to avoid the tax instead of buying and selling frequently. There is a possibility of tax evasion such as transactions through intermediary companies or adjusting profits to reduce the amount of tax payable.
In my opinion, several other tax options could be considered to ensure fairness and promote sustainable development of the real estate market, such as: progressive taxation based on the number of properties owned; taxation based on area or property value; taxation on short-term real estate transactions; and taxation based on benefits arising from infrastructure.
Source: https://nld.com.vn/dau-dau-tinh-toan-thue-bat-dong-san-196250602211918051.htm
