In the draft Law on Personal Income Tax (replacement), the Ministry of Finance proposed to regulate tax rates for income from real estate transfers based on the duration of property ownership, with the shorter the duration, the higher the tax rate, in order to prevent real estate speculation.

The current personal income tax policy does not distinguish between the duration of real estate ownership of the transferor. This, according to the Ministry of Finance, makes short-term real estate speculation, surfing, and profit-making transfers common because there are no strong sanctions. Regulating tax rates based on the duration of property ownership will prevent real estate speculation.

Speaking to VnExpress, Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association, agreed with the application of tax as a tool to prevent speculation, surfing, abandonment of assets, land waste, and instability for the healthy development of the market. However, if calculating the tax based on the holding period to eliminate the benefits from speculation and regulate the market, according to Mr. Chau, it should only be applied at a time-based basis, specifically when the market is unstable and hot. When the market is stable and sustainable, there is no need to apply this tax.

Economist Huynh Phuoc Nghia, Director of the Center for Economics, Law and Management at the UEH School of Economics, Law and State Management (Ho Chi Minh City University of Economics), suggested that instead of applying this type of tax to the entire market, the government should calculate it according to each type and each market to avoid creating a widespread impact. Applying many types of taxes at the same time can easily lead to a decrease in liquidity and high housing prices.

Mr. Nghia said that the government should consider applying taxes to real estate products serving real housing needs such as townhouses and apartments to limit speculation in these types. In addition, in localities and areas with high residential demand such as industrial parks, export processing zones, and large cities, the government can also consider taxing according to ownership time.

However, the progressive tax policy also needs to be consistent and reasonable, combined with high taxes for groups that own many real estates (3 or more properties) and abandoned houses and land...

Experts agree that Vietnam can rely on the experience of other countries to come up with a direction for using tax tools to cool down housing prices, regulate the market to develop more healthily and effectively. However, this solution needs a specific roadmap on the time of application, criteria, tax rates... to avoid causing shock to related parties.

In addition, if high taxes are imposed on real estate with short holding periods, there should also be a policy to reduce taxes for real estate transactions with long-term ownership periods, tax incentives for first-time home buyers and a policy to lower the regulatory tax rate when the market "freezes" to create fairness and encourage real estate purchases.

According to research results from Batdongsan, more than 86% of buyers in Vietnam in the past 5 years have been for speculation, surfing, and only holding the property from the time of purchase until transfer within a maximum of one year. This unit believes that the reason for the high rate of real estate speculation in Vietnam is partly due to lower real estate income tax than in the region and the lack of sanctions against land speculation and abandonment.

Meanwhile, the Ministry of Justice believes that the solution of collecting taxes based on holding time is not feasible because the state management of taxes and land in Vietnam is not synchronous.

This agency believes that the application of personal income tax policy for transfers based on holding time needs to be synchronous with the process of perfecting policies related to land, housing, and the readiness of information technology infrastructure for land and real estate registration.

As Vietnam has not yet synchronized state management between taxes and land, the Ministry of Justice believes that this proposal is not feasible and suggests that the drafting agency continue to study it.

Currently, there are 5 basic taxes for real estate in the world: ownership tax, income tax, registration tax, vacancy tax (tax applied to real estate that has not been used for a long time) and development tax (development of infrastructure, utilities, services, in an area where the real estate is located). The average home ownership tax in many countries is 0.3-20%, registration tax is 2-6% and income tax is 14-45%. Some countries are taxing vacant property from 12-20% and development tax is 1-3%.

In Vietnam, home buyers currently only have to pay 3 types of taxes: income tax (2%), ownership tax (0.03-0.2%) and registration tax (0.5%). The proportion of real estate tax in Vietnam's GDP structure is 0.03%, much lower than many countries in the region such as Indonesia 0.2%, Thailand 0.2%, Philippines 0.5%, Cambodia 0.9%, China 1.5%, Singapore 1.5%, South Korea 4%.

A recent survey by VnExpress with nearly 32,000 readers showed that nearly 70% agreed with the tax on second and abandoned real estate. The housing tax policy has been proposed many times over the past 15 years but so far remains "on paper" due to concerns about strong impacts on the market and "lack of political determination".

Phương Uyên