Is a 20% property transfer tax feasible?

(NLDO) - The Ministry of Finance's report on tax calculation methods and tax rates for real estate transactions is attracting significant public attention.

During the revision of the Personal Income Tax Law, the Ministry of Finance stated that it is considering applying one of two methods for calculating tax on real estate transfers, depending on the ability to determine specific information about the transaction.

Accordingly, if the taxpayer can prove the purchase price and related costs, personal income tax will be calculated based on the actual profit, i.e., the difference between the selling price and total costs, at a tax rate of 20%. Conversely, if these factors cannot be determined, the tax will be calculated at 2% of the total transfer value.

The Ministry of Finance said it is considering applying one of two methods for calculating taxes on real estate transfers. Photo: Tan Thanh

Commenting on this proposal, Mr. Nguyen Van Duoc, General Director of Trong Tin Accounting and Tax Consulting Company Limited, believes that the method of calculating tax based on actual profit is more reasonable and feasible. According to him, this approach ensures fairness, accurately reflects the nature of personal income tax, and is consistent with current legal regulations.

Mr. Được emphasized that taxpayers can absolutely provide invoices and documents to prove the expenses incurred related to the transfer transaction, thereby helping the tax authorities accurately calculate the taxable income.

To address current shortcomings, Mr. Duoc proposed the need to quickly establish a national database on real estate transactions to ensure that the prices stated in contracts closely reflect market prices. In addition, he suggested strengthening supervision and tightening accountability for organizations providing invoices and related documents, creating conditions for transparency in costs for the public.

He also argued that the current 2% tax on the total transfer value is unreasonable, because regardless of whether the seller makes a profit or a loss, they still have to pay the same tax, leading to inequality and the risk of budget revenue loss.

From another perspective, lawyer Nguyen Duc Nghia, a member of the Ho Chi Minh City Tax Consulting and Agency Association, stated that many countries around the world only collect personal income tax when the seller makes a profit from real estate transactions. However, in Vietnam, the lack of tools to determine the actual value of transactions, as well as limitations in proving expenses, makes the 20% tax on profits not truly appropriate in the current context.

Lawyer Nghia suggested that the 2024 Land Law should be used to calculate a more reasonable tax base. In cases where the actual value cannot be determined, a land price list close to market value, issued by local People's Committees, can be used. At the same time, the assets on the land – such as houses – need to be independently appraised to provide a basis for accurate taxation.

According to him, this would be the appropriate direction to ensure transparency, fairness, and feasibility in tax administration practices.

Source: https://nld.com.vn/danh-thue-chuyen-nhuong-nha-dat-20-lieu-co-kha-thi-19625050712053733.htm