The Ministry of Finance has submitted the latest draft of the revised Personal Income Tax Law to the Ministry of Justice for review. In this new draft, the ministry confirms the continuation of the current tax structure for income from real estate transfers.

Under the current and continued policy, personal income tax for residents earning income from real estate transfers will be calculated by multiplying the transfer price by a flat tax rate of 2%. The taxable event is defined as either the effective date of the transfer contract or the date of registration of land use or ownership rights. This approach aligns with the existing tax calculation method.

This decision means the Ministry has officially withdrawn its previous plan, proposed in July, which suggested a 20% tax on the net gain from property sales (the difference between purchase and selling prices). It has also dropped the plan to impose taxes based on the duration of property ownership.

In a prior draft, the Ministry of Finance proposed a progressive tax system in cases where the purchase price and related transaction costs could not be determined. The proposed tax rates were 10% for properties held for under 2 years, 6% for 2-5 years, 4% for 5-10 years, and 2% for properties held for more than 10 years.

According to the drafting committee, retaining the current flat tax rate ensures feasibility and aligns with the present state of administrative capacity. However, the ministry noted that it plans to develop a roadmap for switching to a net income-based model in the future.

"The Ministry will continue studying and report to competent authorities on regulating tax for real estate transfers based on net income and ownership duration, once the digitalization and synchronization of data systems on population and land are completed," the Ministry of Finance stated.

Nguyen Le