Tourists ride three-wheel bicycle taxis, known as cyclos, in the old quarter of Hanoi - AFP
HANOI: Taxing personal income from real estate transfers based on ownership duration, as practised in some countries, is necessary to curb speculation, according to economists and industry experts.
However, some argue a carefully calibrated roadmap is essential to prevent under-reporting or misreporting to evade taxes.
In its latest draft proposal submitted to the government for the new personal income tax law, the Finance Ministry has supported studying a tax rate structure for real estate transfer income based on how long property has been held.
Currently, Vietnam’s personal income tax policy does not differentiate based on how long a property has been held before being sold.
In contrast, several countries have adopted tax measures to discourage so-called “flipping” of property, increase costs for such speculative activities and reduce their appeal.
For example, in Singapore, properties resold within the first year are taxed at 100% of the price difference, with the rate decreasing to 50% in the second year and 25% in the third year.
In Taiwan, transactions within the first two years are taxed at 45%, dropping to 35% for sales within two to five years, 20% for five to 10 years, and 15% after 10 years.
To implement an effective tax mechanism and curb speculation and real estate bubbles, the Finance Ministry proposes applying a similar approach.
The vice-chairman of the Vietnam National Real Estate Association, Nguyen Van Dinh, supports the proposal, stating that taxing property sales based on ownership duration will help reduce speculative activity.
However, he emphasised that comprehensive data is necessary to track short-term property transactions accurately.
“The principle of taxation is that only those who profit should pay. If a property is resold within months, a higher tax should apply.
“If it is sold after three, five, or seven years, the tax rate should decrease accordingly,” he added.
Economist Dr Dinh Trong Thinh said higher taxes should apply to properties left empty or not used as intended.
In major cities, many prime urban areas remain vacant for years due to speculation. — Viet Nam News/ANN
