Will the land brokerage profession be tightened by tax policy?

Nguyen Hai DNUM_ADZBBZCACB 09:08

(Baonghean.vn) - In recent years, office leasing and real estate brokerage activities in the province have been bustling, but it is almost very difficult for the authorities to control. Therefore, along with perfecting the legal framework, one of the requirements for the Tax sector is to urgently research to build and manage taxes corresponding to this type of business.

Management of converted houses for use as offices and warehouses

According to a survey result of the Fire Police Department of the Provincial Police in June 2021, the whole province currently has nearly 20,000 houses living along both sides of the road converted to business or rented out for business, of which Vinh city has nearly 1,000 houses near the streets put into business.

Currently, due to the impact of the Covid-19 epidemic, housing renovation activities have been disrupted.office for rentquieter, but there are still inner-city streets where the rental price of housing for offices and headquarters is still as expensive as hotcakes. It is possible to name some streets where the rental price will make many people surprised. That is the rental price on Phan Boi Chau, Truong Chinh, Le Loi, Quang Trung, Tran Phu, Nguyen Thi Minh Khai, Le Hong Phong, Nguyen Van Cu, Cao Thang, Lenin - Xo Viet Nghe Tinh Avenue... (Vinh City), just 3-5m of street frontage costs tens of millions or more per month.

In particular, there are beautiful locations at the intersections of major streets that have been renovated by residents or businesses for banks or insurance companies to rent at prices ranging from 100 million to 250 million VND/month. Similarly, the land along National Highway 1A in Dien Chau, Quynh Luu districts, Hoang Mai town, National Highway 48 through Thai Hoa town, Quy Hop; National Highway 46 through Nam Dan, Thanh Chuong is always in high demand, with an average rental price of 5-7 million VND/month; if the owner uses the land to invest in building a private office for rent, the price will be higher.

Một vị trí văn phòng cho thuê đắt giá tại Đại lộ Xô Viết Nghệ Tĩnh giao nhau với Đại lộ Vinh - Cửa Lò tại xã Nghi Phú. Ảnh: Nguyễn Hải
A prime office space for rent on Xo Viet Nghe Tinh Avenue intersecting with Vinh - Cua Lo Avenue in Nghi Phu Commune. Photo: Nguyen Hai

Not only that, due to urban management requirements, recently, many inner-city streets have been banned from heavy-duty vehicles during rush hour, so the demand for renting warehouse space in the suburbs has also increased. Agencies, units and people in the suburbs of Vinh City such as Hung Loc, Nghi Phu, Quan Bau, Vinh Tan or Hung Chinh, Hung Loi, Hung Thinh, Hung Tay... near National Highway 1, National Highway 46 and Vinh bypass, if they have large land funds, have invested in renovating them into warehouses for rent. According to statistics, a warehouse with an area of ​​​​1,000 - 2,000 m2Along both sides of the 72m road of Vinh - Cua Lo Boulevard or Lenin - Xo Viet Nghe Tinh Boulevard, National Highway 1A... the warehouse owners have tens of millions of dong each month.

Even many construction and transportation companies that were previously assigned large areas of land, are now equitized or operating at a loss, but instead of returning the land to the province to reduce land rent, they keep the land or renovate and build factories into warehouses for rent.

Tighten land brokerage with tax policy

In addition to office and warehouse leasing activities, real estate brokerage activities have also been quite active in recent years, bringing in large increases in revenue, but the State has not yet had a way to manage taxes for this activity. In our country in general and Nghe An in particular, real estate brokerage transactions, besides the floor by businesses, are mostly mediated by individuals, making it very difficult to manage and collect taxes when there are transfer transactions.

Hạ tầng 1 khu đấu giá đất tại Quỳnh Lương, Quỳnh Lưu bình thường chỉ 3 triệu đồng mỗi m2 nhưng nay tăng gấp 2 lần. Ảnh: Nguyễn Hải
Infrastructure of a land auction area in Quynh Luong, Quynh Luu, normally only 3 million VND per square meter, but now it has doubled. Photo: Nguyen Hai

In fact, in recent years, land brokerage transactions have become a profession that generates income for many individuals. At land auctions and transactions in districts, there are individuals representing a trading floor who have purchased documents and bid to buy from 1/2 to 2/3 of the land lots that a district has put up for auction. After winning the auction, instead of having to be the owner to fulfill financial obligations and use the land, these investors and brokers are willing to resell to local people with real needs at a price difference of 70-150 million VND/lot.

Taking advantage of this loophole, in recent years, a series of individuals have formed groups to pool capital to auction land for speculation and profit. We all know that the starting price of land plots recently built by localities is quite close to the market price. However, when speculators participate in the auction, the land price is pushed up. In the context of difficult economic life, it is not normal for land prices in many areas to be pushed up by one and a half to double the starting price.

In terms of investment, production and business activities are difficult, savings interest rates are low, so people with idle money switch their investment channels to land. Currently, when transferring, in addition to the registration fee, income tax must be paid to the State, but in many cases, the price is not close to the market price, so the State cannot manage and regulate the difference and unusual income.

Based on the above situation, recently, representatives of the Tax Departments of Ho Chi Minh City and Hanoi have proposed that the General Department of Taxation and the Ministry of Finance conduct a pilot study on tax calculation for the rental of houses for use as offices and business headquarters, accordingly, if the revenue is over 100 million VND/year or more, tax will be charged; proposed that the Ministry of Construction issue regulations restricting individuals from participating in land and real estate brokerage activities and if they want to practice brokerage, they must have a practice certificate or establish a company or real estate trading floors; Bac Ninh and Bac Giang provinces... proposed to have regulations on tax calculation for people with land and assets from the second apartment or plot of land onwards and when transferring for profit, they must pay income tax.

In Nghe An, Nam Cam Industrial Park Infrastructure Investment Company Limited is proposing that the Provincial People's Committee review the land lease situation in Area A and C of Nam Cam Industrial Park, according to which any unit whose preferential period has expired should switch to leasing land at a new price including infrastructure investment costs instead of calculating the rental price based on the original land price as it is now (nearly 10,000 VND/m2/year) which is too low, causing losses to the state budget. If this policy is implemented, some enterprises that intentionally hoard land and keep land without implementing projects will also have to speed up the progress of implementing projects or return the land to other enterprises to lease.

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Will the land brokerage profession be tightened by tax policy?
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