Fi­nance min­istry pro­poses new hous­ing tax

Viet Nam News - - NATIONAL -

HAØ NOÄI — The Min­istry of Fi­nance has pro­posed a tax on houses de­pend­ing on their con­struc­tion value as part of a draft law on prop­erty tax.

Under the pro­posed law, there are two op­tions: im­pos­ing tax on houses with con­struc­tion value of ei­ther more than VNÑ700 mil­lion (US$30,400) or VNÑ1 bil­lion ($43,500).

The pro­posed tax rate is 0.3 or 0.4 per cent an­nu­ally, with only the sur­plus con­struc­tion value above the pro­posed thresh­old to be taxed.

For ex­am­ple, if the thresh­old is set at VNÑ700 mil­lion, the owner of a VNÑ1.7 bil­lion ($74,000) house would have to pay tax on VNÑ1 bil­lion, equiv­a­lent to VNÑ3-4 mil­lion ($132176) per year.

The con­struc­tion value of a house is de­ter­mined by fac­tors in­clud­ing its type, scale and how many years it has been in use since con­struc­tion.

If the tax on houses worth more than VNÑ700 mil­lion is ap­plied, the fi­nance min­istry will be able to col­lect prop­erty tax of about VNÑ23.3 tril­lion ($1.01 bil­lion) to VNÑ31 tril­lion ($1.4 bil­lion) per year.

If the sec­ond op­tion is ap­proved, the tax col­lec­tion is es­ti­mated to vary from VNÑ22.7 tril­lion ($987 mil­lion) to VNÑ 30.3 tril­lion ($1.3 bil­lion).

The min­istry cur­rently favours tax­ing houses worth more than VNÑ700 mil­lion at a rate of 0.4 per cent.

Ac­cord­ing to Phaïm Ñình Thi, di­rec­tor of Min­istry of Fi­nance’s Tax Pol­icy Depart­ment, data from other coun­tries show that the low­est prop­erty tax rate stands at 0.2 per cent. How­ever, coun­tries mostly ap­ply high rates like In­done­sia’s 0.5 per cent and the 1-2 per cent in the Philip­pines.

He said tax­ing houses and trade-ser­vice con­struc­tion work will im­pact en­ter­prises’ pro­duc­tion and busi­ness. The draft is sched­uled to be sub­mit­ted to Na­tional Assem­bly for feed­back in 2020.

The fi­nance min­istry is also seek­ing to in­crease land tax.

Under the same draft law, land taxes in some cat­e­gories might rise by mul­ti­ple times com­pared with those cur­rently stated in the Law on Non-Agri­cul­tural Land Use Taxes.

For ex­am­ple, hous­ing land might get a 0.3 to 0.4 per cent tax rate, ten times higher than cur­rent min­i­mum rate of 0.03 per cent.

The draft law on prop­erty tax also pro­poses tax on per­sonal ve­hi­cles such as planes, yachts and cars worth more than VNÑ1.5 bil­lion ($65,000).

Con­tro­ver­sial

Tröông Thanh Ñöùc, Chair­man of the BASICO Law Firm, said a prop­erty tax law was nec­es­sary, how­ever, “peo­ple’s in­comes must be taken into con­sid­er­a­tion when study­ing the law en­force­ment,” he said.

Ñaëng Huøng Voõ, for­mer deputy min­is­ter of en­vi­ron­ment and nat­u­ral re­sources, agrees with the land tax hike by ten times, say­ing that hous­ing land tax of 0.4 per cent, 0.5 per cent-tax on busi­ness, trade and ser­vice land are rea­son­able. In the fu­ture, it could be in­creased to 0.7 to 1 per cent.

If land tax is high, land prices will fall, while if the tax is low, spec­u­la­tive hoard­ing might hap­pen. If the tax is high, any­one who wants to buy land must con­sider whether they can af­ford the tax or not, he said.

How­ever, he op­posed the hous­ing prop­erty tax pro­posal, adding that de­vel­oped coun­tries im­pose hous­ing tax de­pend­ing on house area (not on value).

Nguyenã Anh Tu,ù a State of­fi­cer liv­ing in Haø Noäi, told Viet­nam News Agency that a house in Haø Noäi and HCM City can not be bought for less than VNÑ700 mil­lion.

“I had to bor­row 70 per cent of the house value from the bank to af­ford the pay­ment, not to men­tion ad­di­tional fees. Now if I have to pay an an­nual prop­erty tax, I don’t know when I could pay off the debt,” he said.

Fi­nance and bank­ing spe­cial­ist Nguyeãn Trí Hieáu told the agency that im­pos­ing tax on land and houses is cru­cial to cre­ate equal­ity in own­ing prop­er­ties. How­ever, the prop­erty tax law should re­quire land tax only.

“Peo­ple al­ready pay per­sonal in­come tax. There will be over­lap­ping taxes if we re­quire peo­ple to pay tax on the money they use to buy a house,” he said.

Leâ Hoaøng Chaâu, pres­i­dent of HCM City Real Estate As­so­ci­a­tion, said if the law takes ef­fect, the real estate mar­ket will be im­pacted, slow­ing busi­ness and in­vest­ment ac­tiv­i­ties.

Dis­agree­ing with the pro­posal, HCM City Real Estate As­so­ci­a­tion pro­posed no tax on houses worth less than VNÑ1 bil­lion to sup­port low-in­come and low mid­dle-in­come peo­ple.

Chauâ also pro­posed a 0.4 per cent-tax on hous­ing land, apart­ment build­ing land and houses worth more than VNÑ1 bil­lion. — VNS

A view of high-rise build­ings around Ngoïc Khaùnh area in Haø Noäi. The Min­istry of Fi­nance has pro­posed a tax on houses de­pend­ing on their con­struc­tion value as part of a draft law on prop­erty tax. — VNS Photo Thaùi Haø

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