Will the real estate brokerage industry be tightened up through tax policies?
(Baonghean.vn) - In recent years, office rental and real estate brokerage activities in the province have been booming, but authorities have found it very difficult to control them. Therefore, along with perfecting the legal framework, one of the requirements for the Tax Department is to urgently research and develop a tax management system corresponding to this type of business.
Managing converted residential properties for offices and warehouses.
According to a survey conducted by the Fire Prevention and Control Police Department of the Provincial Public Security in June 2021, nearly 20,000 residential houses along both sides of roads in the province have been converted to business or leased for business purposes, with nearly 1,000 houses in Vinh City alone, located near main streets, being used for business.
Currently, due to the impact of the Covid-19 pandemic, home renovation activities have become difficult.office for rentWhile the atmosphere is quieter, there are still inner-city streets where rental prices for office space and headquarters remain extremely high. Some streets with surprisingly high rental rates include Phan Boi Chau, Truong Chinh, Le Loi, Quang Trung, Tran Phu, Nguyen Thi Minh Khai, Le Hong Phong, Nguyen Van Cu, Cao Thang, and the Lenin-Xo Viet Nghe Tinh Boulevard… (in Vinh City), where even a 3-5 meter frontage can cost tens of millions of VND or more per month.
In particular, prime locations at the intersection of major streets are renovated by residents or businesses and leased to banks or insurance companies for prices ranging from 100 million to 250 million VND per month. Similarly, land along National Highway 1A in Dien Chau, Quynh Luu districts, Hoang Mai town; National Highway 48 through Thai Hoa town and Quy Hop; and National Highway 46 through Nam Dan and Thanh Chuong is always in high demand, with average rental prices of 5-7 million VND per month; if the landowner invests in building separate office spaces for rent, the price is even higher.
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| A prime office space for rent at the intersection of Soviet Nghe Tinh Avenue and Vinh - Cua Lo Avenue in Nghi Phu commune. Photo: Nguyen Hai. |
Furthermore, due to urban management requirements, many inner-city streets have recently been closed to large- грузовые vehicles during peak hours, leading to an increase in the demand for warehouse space in suburban areas. Agencies, units, and residents in the outskirts of Vinh City, such as Hung Loc, Nghi Phu, Quan Bau, Vinh Tan, Hung Chinh, Hung Loi, Hung Thinh, Hung Tay… near National Highway 1, National Highway 46, and the Vinh bypass, are investing in renovating their land into warehouses for rent if they have ample space. According to statistics, warehouses with an area of 1,000-2,000 m² are readily available.2Along both sides of the 72m wide Vinh – Cua Lo Boulevard or Lenin – Soviet Nghe Tinh Boulevard, National Highway 1A… warehouse owners can earn tens of millions of dong each month.
Tighten control over land brokerage through tax policies.
Besides office and warehouse rentals, real estate brokerage has also been quite active in recent years, generating significant revenue, but the government has yet to find a way to manage taxes on this activity. In Vietnam in general, and Nghe An in particular, real estate brokerage transactions, besides those conducted by businesses, are mostly carried out by individuals acting as intermediaries, making it very difficult to manage and collect taxes when transactions occur.
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| Infrastructure in a land auction area in Quynh Luong, Quynh Luu, normally priced at only 3 million VND per square meter, has now doubled. Photo: Nguyen Hai |
In fact, in recent years, land brokerage has become a lucrative profession for many individuals. At land auctions in various districts, some individuals representing a brokerage firm have purchased bidding documents and acquired between 1/2 and 2/3 of the land plots offered for auction in a district. After winning the auction, instead of registering the land under their own name to fulfill financial obligations and land use rights, these investors and brokers are willing to resell it to local residents with genuine needs at a profit of 70-150 million VND per plot.
From an investment perspective, the difficult business environment and low savings interest rates have led people with idle money to shift their investments to land. Currently, when transferring land, in addition to registration fees, income tax must be paid to the State. However, in many cases, the applied price does not reflect the market price, so the State cannot manage or regulate the difference and unusual income.
Based on the above situation, representatives from the Ho Chi Minh City and Hanoi Tax Departments recently proposed to the General Department of Taxation and the Ministry of Finance to conduct a pilot study on taxing the rental of residential properties for use as offices or business headquarters, under which tax would be levied if revenue exceeds 100 million VND per year; they also proposed that the Ministry of Construction issue regulations restricting individuals from participating in land and real estate brokerage activities, requiring those wishing to practice brokerage to obtain a professional certificate or establish a company or real estate brokerage firm; and provinces such as Bac Ninh and Bac Giang proposed regulations on taxing individuals who own land or property from the second apartment or plot onwards, requiring them to pay income tax upon profit from the resale.
