Personal income tax stable in the context of sluggish real estate market

The real estate market in the province is still in a sluggish situation. As a person who closely follows the developments of this market, Mr. Bui Minh Phong, Director of VPM Investment Joint Stock Company (Hai Duong City) said: "Real estate transaction prices in many areas are basically maintaining stability, the level of price reduction is not as high as before. However, liquidity is very poor because there are very few transfer transactions."

Recently, the real estate business of Ms. Nguyen Thi Ngoan in Hai Tan Ward (Hai Duong City) has been significantly affected. On the specialized management software of the Hai Duong City Tax Department, from 2018-2022, Ms. Ngoan has made 102 real estate transactions, an average of more than 20 transactions per year. Meanwhile, from the beginning of the year to August 28, 2023, Ms. Ngoan has only made 7 transactions, equivalent to 30% compared to previous years, of which only 1 transaction was a purchase, the remaining 6 transactions were sales.

“It is difficult to say when the real estate market will recover or at least show more positive signs, because this market depends on many factors. However, recently, transactions have been sluggish, so my income and that of many other business people has decreased significantly,” Ms. Ngoan shared.

The results of land auctions in recent times have not been high, directly affecting personal income tax revenue. For example, after 2 auctions since the beginning of the year, 53 land lots in a residential project in Tan Hung Ward (Hai Duong City) have been auctioned, but only 16 lots have won the auction, the difference between the starting price and the selling price is relatively low. The auction winning rate of only 30% also means that personal income tax revenue has only reached the corresponding rate. In an article we recently published regarding land use revenue, according to a representative of the Provincial Property Auction Service Center, the successful auction rate since the beginning of the year has been relatively low, the difference between the starting price and the selling price is only below 20%.

According to data from the Hai Duong City Tax Department, accumulated from the beginning of the year to the end of July 2023, personal income tax was 66.4 billion VND, accounting for nearly 14% of the total state budget revenue in the city (after deducting land use fees), reaching 69% of the annual plan assigned by the province, only 83% compared to the same period in 2022.

According to Mr. Vu Dang Khoa, Deputy Head of Hai Duong City Tax Department, personal income tax includes many revenue items such as income from real estate transfer, inheritance and gifts of real estate; from salaries and wages; from individual production and business activities; from property leasing activities... "In the city alone, from the beginning of the year until now, tax from real estate transfer income accounts for 45% of total budget revenue from personal income tax. Although it has decreased compared to previous years, it still accounts for a high proportion. The sluggish real estate market has reduced income from transfer, so the obligation to pay personal income tax has also decreased," said Mr. Khoa.

In the whole province, in 2022, revenue from real estate transfer income accounted for 20% of the total personal income tax, the second highest among the 12 constituent revenue items. In the first 8 months of 2023, although this is still the second highest source of revenue, the proportion has decreased to 10%. Accumulated collection progress data from the beginning of the year to the end of August 2023, personal income tax is 780 billion VND, reaching 80% of the annual estimate, equivalent to 98% of the same period in 2022. Of which, revenue from real estate transfer activities is below 50% compared to the same period last year.

According to Mr. Do Cong Tien, Director of the Hai Duong Provincial Tax Department, to stabilize budget revenue from personal income tax, especially in the context of the sluggish real estate market, it is necessary to actively promote other constituent revenues. Revenue from wages and salaries accounts for the highest proportion of personal income tax revenue. For example, in 2022 it accounted for 70%, in the first 8 months of 2023 it accounted for 78%. This revenue depends mainly on the production and business activities of the business community. "For the provincial tax sector, accompanying and supporting businesses from specific tasks such as strengthening the processing of tax refund applications, continuing to research and simplify tax administrative procedures, promoting the implementation of electronic invoices... Thereby contributing to creating an open business environment, helping businesses overcome fluctuations from the world economy," said Mr. Tien.