Property faces a taxing issue

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In light of the Ministry of Finance’s Circular 113/2011/TT-BTC dated August 4, 2011 starting from September 19, 2011 property transfers will be taxed.

Accordingly, the tax rate will be 25 per cent of transfer incomes for individuals having legitimate land use rights, housing and apartment ownership certificates which involve with land, housing and apartment transfers.

If the transfer value is lower than the value regulated by provincial-level people’s committees for registration fees calculation or there are not lawful documents about property original prices the tax rate will be 2 per cent of the transfer value.

According to Vietnam Real Estate Association general secretary Nguyen Van Minh, sliding property transactions came from tightened credit or policy impacts besides to the Personal Income Tax Law implications.

“Taxing property transfers will put new pressures on the market,” said Minh.

Minh argued state management agencies wanted all property transactions taking place in property trading centres to ensure information transparency and effective enforcement of tax policies. On that basis, 25 per cent tax rate would truly reflect market essence.

Sacomreal deputy general director Bui Tien Thang assumed it would be more reasonable if taxpayers had the right to choose what payment options they want, 25 per cent of the profit or 2 per cent of transaction value.

“This will help prevent losses to state coffers and create a bona fide business climate to investors and businesses,” Thang said.

The director of a land and housing trading firm warned ill-performed supervision and management system would lead to people  slashing tax payments, like hiding the property’s original value to enjoy 2 per cent tax on transaction value.

According to Hoa Phat Land general director Pham Trung Ha the 25 per cent tax on transfer incomes would be high to investors as in many transactions buyers have to pay an additional amount to intermediaries so that it would be hard to define the original and transfer value differences.

Property experts propose imposing a 2 per cent tax on transaction values to bolster tax payments.