The Ministry of Finance has submitted a draft proposal to the Government Cabinet, seeking feedback on several key points. These include the absorption and clarification of opinions from National Assembly deputies, as well as the review by the Economic and Financial Committee of the National Assembly regarding the draft Law on Personal Income Tax (amended). This is to be reported to the Standing Committee of the National Assembly.
The draft law stipulates that personal income tax is determined by the transfer price multiplied by a 2% tax rate, essentially maintaining the current regulations.
According to the review, this provision does not adequately address the need to refine tax policies related to real estate. Such refinement is essential to encourage efficient use of housing and land, thereby curbing speculation that negatively impacts the market. This issue has been highlighted in various resolutions by the Central Committee and the National Assembly in recent times.
The draft law stipulates that personal income tax is determined by the transfer price multiplied by a 2% tax rate, essentially maintaining the current regulations.
Some opinions suggest studying and adding provisions to increase taxes on real estate transfers to deter speculation. Others propose calculating tax based on profit (selling price minus purchase price and expenses) if sufficient documentation is available. A tiered tax rate system based on holding period (longer holding periods incur lower tax rates) could also be implemented to encourage long-term investment and discourage speculation.
There is also a view that a phased implementation plan is necessary to minimize the impact on the real estate market. Additionally, applying personal income tax policies to real estate transfers based on holding periods should align with the ongoing refinement of related land and housing policies, as well as the readiness of information technology infrastructure for land and real estate registration.
In response, the Ministry of Finance explains that the draft law retains the current method of calculating taxes on real estate transfers, which has been applied consistently and effectively. This method is straightforward, easy to implement, and facilitates verification.
Regarding the proposal to add a tax calculation method based on profit margins, the Ministry of Finance believes that sufficient time is needed to gather data, conduct assessments, and perform surveys to inform policy recommendations.
In practice, taxing income from real estate transfers requires a comprehensive approach, ensuring synchronization with the refinement of various related policies in land, construction, housing, and real estate business. This includes implementing holistic solutions (such as increasing supply and reducing costs) and carefully evaluating the impact, ensuring alignment with the readiness of databases and information technology infrastructure for land and real estate registration.
“Once sufficient data on land digitization and VNeID integration is available, we can gradually implement taxation based on actual income, which is the true essence of taxation,” the Ministry of Finance stated.
Currently, the Government is actively implementing measures to encourage efficient use of housing and land, curb speculation, and stabilize the real estate market. These measures include developing numerous social housing projects and establishing a National Housing Fund, drawing on international best practices.
To prevent real estate speculation, the Ministry of Finance proposes a comprehensive set of policies. These include land management and reclamation as per the Land Law, as well as market regulation through real estate business and housing laws.
The drafting agency emphasizes that tax policy is not the primary or most effective tool for achieving these goals. Therefore, it recommends maintaining the provisions as outlined in the draft law.
Previously, the Ministry of Finance withdrew its proposal to tax 20% of real estate transaction profits. Instead, it retains the current 2% personal income tax rate on real estate transfers. The drafting agency is considering a 5-year roadmap to implement the new taxation method.
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