The Ministry of Finance (MOF) has proposed a real estate taxation law which would tax apartments based on their prices. Higher tax rates would be applied to high-end apartments priced over VND50 million.

Pham Duc Toan, CEO of EZ Property, said that VND50 million per sq m is not a reasonable price threshold to tax, because there are few apartment projects priced below VND30 million per sq m, while apartments priced at VND50 million per sq m are common.

According to Toan, people who buy apartments from real estate developers have to bear many kinds of taxes, including land-use fees and VAT. If they buy apartments in the secondary market, they have to pay personal income tax, registration tax and usage-right transfer tax.

“And now, another kind of tax has been proposed. What is the basis for this kind of tax?” he said.

“If so, sellers and buyers will circumvent the laws to avoid tax, thus distorting the real estate market,” he said.

Toan said that taxation should be designed in a way to ensure compliance with the laws suited to market conditions.

“Agencies can consider taxing second, third and subsequent homes and design a progressive tax so as to restrict speculation, but this should be applied only in large cities,” he said.

“Or they could impose taxes based on the date of transactions. For example, if people sell apartments less than one year after buying them, they will bear a higher tax rate. This will help restrict speculation,” he said.

Tran Khanh Quang, a real estate expert, thinks that it is necessary to reconsider the proposal on taxing apartments priced over VND50 million per sq m.

Previously, prices of apartments were VND20-30 million per sq m, but now, average prices are VND35-40 million per sqm. If the government taxes apartments priced at VND50 million, nearly all apartments will be taxed, which will harm the real estate market.

He said VND70 million per sq m is a more reasonable taxation threshold. For high-income earners, a 5 percent additional cost would be insubstantial, but for low-income earners, the additional cost of VND10-20 million would be a burden. 

Nguyen Le