A proposal for real estate tax policy unveiled

During a recent government meeting with local authorities, Minister of Planning and Investment Nguyen Chi Dung presented a draft resolution to address difficulties in production and business, reform administrative procedures, and tighten discipline and regulations.

Proposed solutions for real estate tax 

The draft resolution focuses on stimulating domestic consumption and promoting exports, as well as boosting investment and attracting FDI. It also emphasizes accelerating public investment disbursement and administrative procedure reforms to support cash flow.

To support cash flow, minimize costs, and enhance access to capital, the Ministry of Finance has been suggested to expand the corporate bond market and strengthen the operations of individual corporate bond exchanges in July.

The Ministry of Finance is required to calculate the deadlines and methods for capital mobilization and the issuance of government bonds according to the revenue-expenditure schedule. This aims to stimulate economic growth through public investment disbursement.

In addition, a decision is proposed to reduce land and water surface lease fees by 30% in 2023. The government is also urged to study and implement policies to support energy costs (electricity, fuel, etc.).

To facilitate cash flow, reduce costs, and enhance access to capital, the State Bank of Vietnam needs to ensure liquidity and provide favorable conditions for credit institutions by reducing interest rates, simplifying loan procedures, and increasing businesses' capital accessibility.

Furthermore, concerning real estate taxes, the Ministry of Planning and Investment states the need for research and reporting to the government on these measures to regulate and sustainably develop the market and prevent real estate speculation in the medium and long term. Therefore, the government needs to assign the Ministry of Finance to conduct research, submit reports for authoritative consideration and decision-making.

Impact of tax policies 

Regarding real estate taxes, the Ministry of Planning and Investment highlights the current need for research and reporting to the government on these measures for market regulation.

According to Nguyen Van Dinh, Chairman of the Vietnam Real Estate Brokers Association, the establishment of a Real Estate Tax Law is necessary and aligns with international standards, as many countries worldwide have implemented it for a long time.

Using tax tools for market operation and regulation, especially in controlling speculative activities, hoarding, and affecting property prices, is a matter of concern for managers and businesses. To effectively monitor these activities and promote the best development, Vietnam needs a comprehensive Real Estate Tax Law.

In early February this year, some new tax policies related to real estate (taxation on property flipping, separate taxation on apartments and land) were mentioned in the plan to amend the Real Estate Tax Law and the Personal Income Tax Law, expected to be submitted to the National Assembly by the end of 2024-2025. The policies include implementing taxes on real estate speculators with a proposed tax rate of over 2%; applying separate taxation for both condominiums and land, as well as imposing high taxes on vacant properties.

According to Vo Hong Thang, Deputy Director of Research and Development (R&D) at DKRA Group, he supports the implementation of a second real estate tax but suggests providing a specific roadmap, which could extend over a period of 3-5 years and be applied in major cities such as Ho Chi Minh City, Hanoi, Da Nang, etc. Moreover, considering the current challenges in the real estate market, imposing taxes on second and subsequent properties will prolong the market's recovery period.

Mr. Thang also emphasizes the most crucial issue is the national database on land management, including information on property owners and property valuation (including land and attached assets). Only then can the ownership of second properties and the taxes to be paid be determined.

Additionally, it is necessary to calculate the tax rate reasonably to limit    speculation and ensure that real estate is not abandoned but still has exploitable potential. The real estate market is also a commodity and should not be overly intervened, which could adversely affect various industries.