There are many new items in the latest draft version compared with the draft submitted to the government in December 2022. One is the suggestion of two options to collect tax on second and subsequent homes.

Option 1: Piloting the collection of tax on homes and land that owners do not use for individual use and their families, i.e., second and subsequent homes. The NA Standing Committee will prescribe bases for calculating the tax, tax rates, the tax calculation method, and time of application.

Option 2: Allowing HCM City to increase collections related to second and subsequent properties, such as registration tax when buying second and subsequent real estate; taxing use of non-agricultural land, and imposing personal income tax on the transfer of second and subsequent properties.

The HCM City People’s Council will decide to increase tax rates on non-agricultural land for building land (no  higher than five times of the current collection) and increase the personal income tax from the transfer of second and subsequent properties (no higher than 2 times of the current collection).

Tax when buying second and subsequent land and houses will rise from 0.5 percent of transfer value to 2 percent. The maximum level for a transfer dossier will increase from VND500 million to VND1 billion.

HCM City wants to retain 100 percent of the additional receipts from the taxes on second and subsequent properties for the city’s budget to develop infrastructure until the end of the application of the resolution.

According to the HCM City People’s Committee, if the city does not have a specific mechanism on collecting tax from second and subsequent homes, it won’t be able to solve problems and ease land speculation.

There will be three challenges for HCM City. First, it needs to make adjustments to fix problems in the current taxation system. Second, it needs to be sure that taxes are imposed on the right people. Third, it needs to check databases on homes, property valuation, information about real estate within localities, and information connections with other localities.

The city said that Option 1, if chosen, will have a major influence on people. For Option 2, it will help regulate speculation of land and houses and serve as a premise for new tax policies.

Hong Khanh