Econ
Expanding property tax with caution, transparent and clarity
Despite having no official information with regard to the proposal of taxing second and additional homes, but the Ministry of Finance (MOF) is developing the Law on property tax, which includes taxes on housing and land.
According to economic experts, it is necessary to expand property tax, however, the government need to develop database on property to ensure fairness and transparency, in turn avoid putting burden of paying tax on the poor.
Not taxing second house yet
The MOF’s director of the Tax Policies Department Pham Dinh Thi said, at present, the MOF has not considered on taxing the second house. However, the MOF is assigned to study and formulate the Law on property tax. “In addition to house and land, assets in this situation also mean other things” – Thi said.
According to the MOF, the rate of revenue from the land use charge in Vietnam is much lower than many countries in the world, which is approx. 0.03% of GDP and 0.15% of the total state budget. Meanwhile, members of Organization for Economic Cooperation and Development (OECD) have the revenue from property tax of 2% GDP. Besides, this kind of amount is around 0.6% GDP for developing countries and 0.68% for transitional countries.
Agree with the idea of developing Law on property tax, representative of Hanoi real estate club said, the issuance of law on property tax is long overdue. “In principle, anything generates benefit must pay tax, whether it is housing or other properties. In 2018-2020, many exporting tariffs will be zero. Therefore, revenue from property tax will be essential” – the representative of Hanoi real estate club said.
Caution and thoughtful consideration
According to economic experts, it is necessary to formulate the Law on property tax. However, in the context of cash transaction is still common in Vietnam, database for land and housing is inadequate and obsolete, it is difficult to ensure fairness and transparent when formulating the Law on property tax.
Assoc. Prof. Dr. Dinh Trong Thinh – Finance Institute said, as citizens still use cash in purchasing real estates, it is difficult to record in the accounts and review the history of transactions. Moreover, there are cases when a property is belong to one person, but on legal document, it is not the same person, which causes difficult for administrative agencies to identify with the lack of information.
Sharing the same view, Chairwoman of Vietnam Tax Consultants’ Association, Nguyen Thi Cuc said, database on property of Vietnam is insufficient. “In order to manage efficiently, it is necessary for administrative agencies such as Ministry and Department of Natural Resources & Environment and MOF to closely cooperate with each other. In other countries, this database is managed efficiently and clearly, with detailed information on property owner, or how many and where are these properties” – Cuc shared.
Besides, experts also said, property tax should be conducted cautiously as in reality, the income of the majority is still low. If this tax is not properly conducted, it will put burden of paying tax on the poor, in turn causing inequality in fulfilling tax obligation. Recently, the Chairman of Ho Chi Minh city Real Estate Association (HoREA) Le Hoang Chau proposed not collecting property tax for social housing, low income housing in rural area, resettlement housing, and commercial house under 1 billion VND. In case of facing a real estate bubble, representative of HoREA proposed to set a high level of tax payable to house and land transferring, right after the purchase is made.
Not taxing second house yet
The MOF’s director of the Tax Policies Department Pham Dinh Thi said, at present, the MOF has not considered on taxing the second house. However, the MOF is assigned to study and formulate the Law on property tax. “In addition to house and land, assets in this situation also mean other things” – Thi said.
Vacated villas are subject to property taxation.
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Agree with the idea of developing Law on property tax, representative of Hanoi real estate club said, the issuance of law on property tax is long overdue. “In principle, anything generates benefit must pay tax, whether it is housing or other properties. In 2018-2020, many exporting tariffs will be zero. Therefore, revenue from property tax will be essential” – the representative of Hanoi real estate club said.
Caution and thoughtful consideration
According to economic experts, it is necessary to formulate the Law on property tax. However, in the context of cash transaction is still common in Vietnam, database for land and housing is inadequate and obsolete, it is difficult to ensure fairness and transparent when formulating the Law on property tax.
Assoc. Prof. Dr. Dinh Trong Thinh – Finance Institute said, as citizens still use cash in purchasing real estates, it is difficult to record in the accounts and review the history of transactions. Moreover, there are cases when a property is belong to one person, but on legal document, it is not the same person, which causes difficult for administrative agencies to identify with the lack of information.
Sharing the same view, Chairwoman of Vietnam Tax Consultants’ Association, Nguyen Thi Cuc said, database on property of Vietnam is insufficient. “In order to manage efficiently, it is necessary for administrative agencies such as Ministry and Department of Natural Resources & Environment and MOF to closely cooperate with each other. In other countries, this database is managed efficiently and clearly, with detailed information on property owner, or how many and where are these properties” – Cuc shared.
Besides, experts also said, property tax should be conducted cautiously as in reality, the income of the majority is still low. If this tax is not properly conducted, it will put burden of paying tax on the poor, in turn causing inequality in fulfilling tax obligation. Recently, the Chairman of Ho Chi Minh city Real Estate Association (HoREA) Le Hoang Chau proposed not collecting property tax for social housing, low income housing in rural area, resettlement housing, and commercial house under 1 billion VND. In case of facing a real estate bubble, representative of HoREA proposed to set a high level of tax payable to house and land transferring, right after the purchase is made.
