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Experts urge prudence in property taxation

Cao Ban
Saturday,  Aug 12,2017,00:13 (GMT+7)
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Experts urge prudence in property taxation

Cao Ban

HCMC – Experts have called for careful consideration of a property tax law proposed by the Ministry of Finance to generate a new revenue stream for the State budget.

The proposed tax would be imposed on assets such as land and housing but experts have asked for caution.

The Ministry of Finance said Vietnam has no property tax as in other countries. The property-related tax policy has yet to create a stable source of revenue for the State budget since current land use tax revenue accounts for 0.03% of GDP and 0.15% of the nation’s total budget revenues. Elsewhere in the world, property tax is a main source of budget revenue.

Vietnam's per capita income has grown in recent years, from US$1,400 in 2013 to US$2,200 in 2016. The figure is forecast to climb to US$3,400 by 2020. Therefore, real estate ownership and investment would rise as a result.

The ministry has proposed three tax options for housing. In option 1, the owner of a home measuring over 200 square meters is subject to a tax of VND1,000-4,000 per square meter per year depending on the type of house. In option 2, the tax would be collected based on the value of the house but if the value is more than VND1 billion, the tax would be 0.03% of that value.

For option 3, the property tax would be levied from the second home onwards with an annual rate of VND1,000-4,000 per square meter per year. But those homes having less than two floors would be spared.

“This tax would lead secondary investors to set up real estate trading businesses, instead of operating as business individuals," said Le Hoang Chau, chairman of the HCMC Real Estate Association ( HoREA).

But he urged prudence in applying this tax. The tax should not be levied on social, resettlement and commercial homes worth less than VND1 billion, he said.

He called for an appropriate tax rate in the initial time. Those owning a second house or more should be taxed depending on quantity and value.

Stephen Wyatt, country head of Jones Lang LaSalle Vietnam, said it would be hard to determine a second home since people can circumvent the tax by allowing their relatives to register home ownership.

However, Vietnam might not apply this tax before 2020, Wyatt said, since there are no enough data and the application of information technology in management is still haphazard.

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