MOF intends to impose an asset tax on houses

Ignoring strong protests from both economists and the public, MOF submitted to the government a plan to raise the environmental protection tax on petrol from VND3,000 per liter to the ceiling level of VND4,000 per liter. 

The government has agreed to the proposal, instructing MOF to send a document to the National Assembly’s Standing Committee on the plan.

If the proposal gets approval and the decision takes effect on July 1 as expected, the state budget would have VND57 trillion more a year from the tax.

On April 13, MOF announced the intention to impose an asset tax on houses. Instead of taxing second and subsequent houses, the ministry wants to tax 0.3-0.4 percent on the first houses as well.

Other increases in taxes are also being projected. These include the draft law on amending some articles of the tax laws, now open for ministries’ opinions.

Under the plan, six tax laws would be amended, including VAT, Special Consumption Tax (luxury tax), Corporate Income Tax, Natural Resources Tax, Import-Export Tax and Personal Income Tax (PIT).

MOF wants to,raise three major taxes – VAT, luxury tax and PIT. Buy it faces opposition.

MOF proposed raising the VAT rate from 10 percent to 12 percent, commencing from January 1, 2019 and to 14 percent in the next two years. 

Later, in the face of the protest, the ministry proposed the 11 percent VAT rate for 2019 and 12 percent for 2020.

As for luxury tax, MOF wants to apply the tax rate of 10 percent on sweetened soft drinks, except dairy; the rate of 75 percent instead of 70 percent on tobacco and 33 percent instead of 15 percent on pick-ups. With the adjustments, the state budget would have VND5.005 trillion more a year.

Emphasizing that taxes and fees in Vietnam are very high, at 32 percent of GDP, much higher than the 18-20 percent of GDP recommended by the World Bank, Ngo Tri Long, a respected expert, said Vietnam needs to be very cautious with the tax increase.

MOF said it is necessary to restructure the state budget in the context of international integration as collections from import taxes have decreased because of tariff cuts.

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Thanh Mai