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Ministry considers housing tax

Update: April, 12/2012 - 09:45

Director of the Ministry of Finance's Department of Public Asset Management Pham Dinh Cuong spoke to the Tien Phong (Vanguard) newspaper about draft measures on land use and home ownership.

How would houses be taxed under the draft proposal to exploit financial resources from land and State assets during the 2011-20 period?

Currently, land is taxed but houses are not. The Ministry of Finance is considering a tax on people who own more than one house.

The tax requires careful consideration and discussion. I think a tax on housing should be at a low rate at first, to encourage residents to declare their real estate property. It could be VND500,000 (US$24) in tax for a 50-metre-square house per year, for instance.

In addition, estate transactions must be put under tight control to prevent speculation.

Accordingly, every real estate transaction must be conducted through an official real estate trading floor and payment must be made through credit organisations, which would not only help limit cash payment but also prevent tax evasion.

Why is the ministry considering a housing tax during a time when the real estate market is quite gloomy?

An ordinance on housing and land tax, issued in 1992 and amended two years later, regulates subjects to be taxed, including houses, residential land and construction projects.

However, currently a housing tax has not been collected. Detailed regulations on a housing tax are now being considered. The proposal on the tax would be sent to the Government for comments within this year.

Would villas that have fallen into disuse be taxed?

At first, the ministry planned to levy a tax on villas that are left unused.

However, it would take a long time to make a new tax policy and several years for it to come into force. So, a fee is proposed instead of a tax.

However, the fee collection requires careful consideration to ensure compliance with laws.

How would the fee be calculated?

It is a very difficult job to calculate the fee and ensure it is reasonable.

It is clear that villas left unused create conditions for speculation, causing a stir among the public. However, from a financial perspective the situation is not that bad as owners have had to pay a tax on the purchase of the house already.

It would be unreasonable to say that someone's villa is left unused, in case they can afford to buy a villa but not to stay in it.

Villas built without surrounding infrastructure such as hospitals, schools or left unused and in a state of dilapidation must pay the fee.

However, I think the amount of money collected from a fee on unused villas would not be huge. — VNS

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