Prime Minister requests clarification of proposal to tax second homes

Prime Minister Nguyen Xuan Phuc has just asked the Ministry of Finance to carefully study information reflecting on the proposal to tax second and more houses.

On August 18, the Government Office said that previously, the press reflected the content: before the proposal to tax the second house or more by the Ministry of Finance, besides the opinion supporting the construction of property tax on houses, there was an opinion that the real estate market after many years of stagnation is in dire need of policy support, so imposing additional tax when buying a second house at this time is not appropriate.

Prime Minister requests clarification of proposal to tax second homes

Previously, in early August, in a report to the Government on the topic of building a project to assess the market situation, forecast medium-term trends, propose solutions, mechanisms and policies to promote the healthy and stable development of the real estate market, the Ministry of Finance stated that people's holding, ownership and investment in real estate is on the rise. Therefore, it is necessary to issue a separate Law on Property Tax to use land more effectively.

The Ministry of Finance cited that Vietnam's current land use tax revenue accounts for only about 0.03% of GDP and about 0.15% of total state budget revenue. Meanwhile, in many countries, property tax revenue - especially land use tax - is one of the major sources of budget revenue.

In Vietnam, the real estate market is expected to develop more stably and sustainably in the coming time, when a series of new policies such as the Housing Law, the Real Estate Business Law (amended) and policies on real estate credit loans have come into effect since July 2016.

The Ministry of Finance emphasized that Vietnam's per capita income has been increasing continuously in recent years, from 1,400 USD (2013) to 2,200 USD (2016) and is forecast to increase to 3,400 USD by 2020.

Previously, the Ministry of Finance had proposed a plan to tax people's second and subsequent properties, however this proposal has not received widespread public consensus.

Deputy Minister of Finance Huynh Quang Hai said that the Ministry has assigned the Tax Policy Department to study a draft on housing tax, especially for those who have 2-3 houses or more.

However, according to Mr. Hai, in 2017 this tax cannot be applied because it takes time to build and consider carefully. In the future, it will definitely have to be collected, not only because of budget difficulties, but also because other countries have been imposing this tax for many years now.

Regarding this issue, the Ho Chi Minh City Real Estate Association (HoREA) also proposed to impose a tax on people who own multiple houses and lands (from the second property onwards) to prevent speculation and wasteful use of real estate. This approach can help increase supply to the market, creating more opportunities for people with real needs to access housing.

In case of a real estate market bubble, it is necessary to consider imposing high taxes on the transfer of houses and land immediately after purchase. Tax can be calculated in the first year of the transaction from the time of purchase, to prevent speculation and help stabilize the real estate market.

However, HoREA proposed not to impose this tax on poor households who already have a house but are living in cramped conditions (for Ho Chi Minh City, it is below the average of 10 m2).²/person) now buys a second or third house, but the total area of ​​these small apartments does not exceed 77 m².

According to VnEconomy