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|Owners of the second home are still exempt from property tax despite a surge in real estate projects - PHOTO: TL|
The Government has agreed with most of the adjustments proposed by the Finance Ministry, and asked the ministry to ensure transparency, said Deputy Prime Minister Vuong Dinh Hue at an earlier meeting with related ministries and departments.
The Deputy Prime Minister agreed with the Ministry of Finance’s suggestion to raise value added tax for some certain commodities from 10% to 12%. However, he asked the ministries to carefully review commodities that should be imposed 11-12% VAT.
The Government agreed to increase special consumption tax imposed on tobacco and certain autos. However, tax imposed on autos having less than nine seats should be reviewed by the Ministry of Industry and Trade.
The Deputy Prime Minister agreed with the suggestion to reduce income tax rates imposed on high-income earners, adjust natural resource tax imposed on water use and reduce corporate income tax rates for small and medium enterprises (SMEs).
The Ministry of Finance was asked to review some current regulations such as the newly issued law on support for SMEs and regulations on real estate transfers when making amendments to the tax laws.
The Ministry of Finance will pass the scheme around for public comment and send it to the Ministry of Justice for assessment in the next several days. The scheme will be submitted to the Government in September for approval.
The law amendment is aimed at reducing administrative procedures for tax payment, facilitate trade and manufacturing, and boost economic development.
Second home tax still undecided
The property tax levied on the ownership of the second home has not been decided although the tax was earlier proposed in a tax reform plan for the five-year period to 2020, said Pham Dinh Thi, director of the Tax Policy Department under the Ministry of Finance.
At a press conference on amendments and supplements to tax laws on Tuesday, Thi said that the ministry and the National Assembly have issued resolutions on domestic revenues, including the property tax.
In a report on collection of the land use and property tax and policies relating to the property tax, the ministry also proposed taxing land and landed assets. However, no regulations on tax collection methods, the base tax rate and asset evaluation methods have been issued.
Previously, the Ministry of Finance has proposed three tax options for housing. In option 1, the owner of a home measuring over 200 square meters is subject to a tax of VND1,000-4,000 per square meter per year depending on the type of house. In option 2, the tax would be collected based on the value of the house but if the value is more than VND1 billion, the tax sum would be equivalent to 0.03% of that value.
For option 3, the property tax would be levied from the second and subsequent houses with an annual rate of VND1,000-4,000 per square meter per year. But those homes with two floors or fewer would be spared.
Vietnam has no property tax as in other countries. The property-related tax policy has yet to create a stable source of revenue for the State budget since current land use tax revenue accounts for 0.03% of GDP and 0.15% of the nation’s total budget revenues. Meanwhile, the property tax is a main source of budget revenue in some other countries in the world.