Owners of multiple properties should pay higher taxes: parliament committee

The government needs to urgently propose higher income tax rates for people who own multiple properties to avoid land speculation, Vietnam's National Assembly (NA) Standing Committee suggested on Monday.

In a report on the draft revised Land Law presented at the legislature’s fifth extraordinary session, Chairman of the NA’s Economic Committee Vu Hong Thanh said this policy was also stated by the Party Central Committee in its Resolution 18 issued in mid-2022. However, up to now it has not been institutionalized into specific laws.

Currently, the tax rate on income from real estate transfer is 2%. Incomes from real estate transfer include the transfer of land use rights and assets attached to land, the transfer of ownership or use right of housing, land lease and water surface rent rights, and other revenues, he elaborated.

He cited that in the past, many individuals declared false prices that were lower than the actual transaction prices to avoid paying higher taxes, leading to losses of revenue for the state budget. Therefore, some opinions suggest that higher taxes should be levied on cases involving three or four properties in a short period of time.

Previously, at a seminar collecting public feedback on the draft revised Law on Land in March 2023, experts said that there should be clear regulations on those who will be subject to higher tax rates, have taxes exempted or reduced, and enjoy tax incentives. In the long term, they recommended the application of a tax on a second home or more.

Currently, Singapore is one of the countries that apply this tax, with a rate of 7% on the purchase price of the second home and 10% on the third home. This country also applies stamp duty on residential and industrial real estate, with a rate of 16% of the selling cost or valuation if it is sold within the first year, 12% in the second year, and 8% in the third year.

The government in 2017 proposed a pilot property tax on second homes in Ho Chi Minh City, but it was not approved.

In 2022, when drafting a special mechanism for HCMC, the city also reiterated this proposal. However, ministries and agencies said that the tax on second properties should not be levied in the city because it "does not ensure fairness in many cases."