Housing

Research on taxing real estate speculation

VN (synthesis) January 16, 2025 07:44

Prime Minister Pham Minh Chinh asked the Ministry of Finance to study and propose tax policies to limit real estate speculation.

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Taxation to limit real estate speculation (illustrative photo)

The above content was mentioned by Prime Minister Pham Minh Chinh in a telegram sent to ministries, branches and localities, requesting to focus on rectifying and handling price manipulation, real estate speculation and inspecting and examining real estate investment and construction projects.

Accordingly, in 2024, some areas recorded real estate prices increasing higher than people's financial ability. The reason is that some speculative groups and associations took advantage of people's lack of understanding and herd mentality to manipulate psychology, "push up prices", "create virtual prices" and disrupt market information for profit.

In addition, some real estate project investors take advantage of the limited real estate supply situation to offer higher than average prices for projects to make profits. The results of auctions for land use rights are unusually high in some areas, causing land and housing prices to increase.

To strengthen control and promptly handle real estate manipulation, price hikes and speculation, the Prime Minister requested the Minister of Finance to study and propose tax policies to limit real estate speculation, ensuring compliance with Vietnam's socio-economic conditions and international practices. In particular, study the tax collection plan for the price difference between the land use fee and the selling price of real estate products of projects, and report to the Government before April 30.

The Prime Minister also requested the Governor of the State Bank to thoroughly review and ensure that credit institutions evaluate real estate collateral assets objectively, reasonably, and in compliance with credit risk management regulations. In particular, they must not assist in price manipulation, create new "virtual" price levels, destabilize and "distort" the market. The Ministry of Public Security directed units to strictly handle organizations and individuals who violate land auction work; provide false information with the purpose of creating virtual fever and defrauding people for profit.

In addition, the Prime Minister also requested the Ministry of Construction, the Ministry of Natural Resources and Environment and relevant ministries and branches to study the pilot project of the model of the State-managed real estate and land use rights transaction center and report to the Prime Minister in the second quarter of this year.

The National Assembly's Supervisory Delegation also made a recommendation on tax policies applicable to people who own many houses and land, and abandon real estate, at the end of November 2024, in the context of real estate and housing prices continuously increasing sharply in many localities. The feverish situation at land auctions in suburban districts has winning prices many times higher than the starting price, affecting the healthy development of the market. Many localities are currently recording a serious imbalance in the real estate market, with an excess of products such as shophouses and villas, and a lack of affordable housing, especially in Hanoi and Ho Chi Minh City.

Previously, the Ministry of Construction also proposed to tax cases of owning and using many houses and lands to limit speculation and buying and selling in a short period of time to make a profit. The Ministry of Finance fully agreed with the proposal and this ministry is also researching and synthesizing international experience, determining tax policies for cases of using many areas of land, houses, abandoned land, land that has been assigned or leased but is slow to be put into use.

In addition, the reform of these tax policies is also placed within the overall implementation of the Strategy for reforming Vietnam's tax system to 2030 approved by the Prime Minister.

In fact, the proposal to tax houses was once proposed by the Ministry of Finance in the draft Law on House and Land Tax 2009, at a rate of 0.03% for houses over 500 million VND. Ten years later, the authorities sought opinions on the draft Law on Property Tax with two options for taxing houses, over 700 million or 1 billion VND, corresponding to a tax of 0.3% or 0.4%. However, these proposals were met with mixed reactions from the public as soon as they were announced, so they were shelved.

VN (synthesis)
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Research on taxing real estate speculation