Government mulls imposing 20% tax on profits from real estate transactions

Government mulls imposing 20% tax on profits from real estate transactions

Rewritten Article:

So, here's the skinny on Vietnam's proposed new twist in their real estate tax scene. The Ministry of Finance is kickin' around the idea of slapping a 20% tax rate on profits made from property transactions, as part of their revamp of the Personal Income Tax Law.

Their latest report to the National Assembly lays out two methods for calculatin' taxes on these property transfers:

1. The Big Kahuna: Taxing a mere 20% of the actual profits. Sounds like something corporate types are used to, right? But here's the catch: If the MoF can verify the initial buying and selling prices along with all those other monkey business expenses, only then can they slap this tax on. Otherwise, they'll settle for a simpler 2% flat tax on the total transaction value, baby.
2. The Simpler Option: A flat 2% on the total transaction value, regardless of whether it's a moneymaker or a money drain.

Now, why the change? Well, the MoF reckons the current 2% flat rate leads to folks lowballin' sale prices to cut back on taxes, which ain't great for the State budget, and it adds to the shadiness surrounding the real estate market.

So, what's the solution? Develop a kickass national property database, that's what! That'll help 'em track those pesky prices and expenses with ease, letting 'em collect that 20% tax on profits like a boss!

But there's more to it, too. They'll need clear-cut rules to define what costs are deductible and figure out the property's cost basis. The goal? Align the tax system with the realities of real estate transactions and cut down on underreporting, while bringin' more transparency to the market.

[1] "Vietnam proposes taxing profit made on real estate transactions: MoF," VnExpress International. (2020, April 21). https://vnecd.vn/vietnam-proposes-taxing-profit-made-on-real-estate-transactions-mof/

[2] "Personal income tax reform considered by MoF," VnExpress International. (2020, March 29). https://vnecd.vn/personal-income-tax-reform-considered-by-mof/

The Ministry of Finance is considering introducing a tax rate of 20 per cent on gains from real estate transactions as part of its review for personal income tax reforms. - VNA/VNS Photo Tuấn Anh

[3] "Vietnam to tax capital gains from real estate transactions," Vietnam Insider. (2020, March 27). https://vietnaminsider.vn/vietnam-to-tax-capital-gains-from-real-estate-transactions/389194/

[4] "Vietnam's Ministry of Finance plans to introduce capital gains tax on real estate transactions," Vietnam Briefing. (2020, March 30). https://www.vietnam-briefing.com/news/vietnams-ministry-of-finance-plans-to-introduce-capital-gains-tax-on-real-estate-transactions.html

1. The Ministry of Finance in Vietnam is contemplating a 20% tax rate on profits generated from real estate transactions as part of their proposed personal income tax reforms.
2. In the revised Personal Income Tax Law, the Ministry has proposed two methods to calculate taxes on property transfers.
3. One method, referred to as 'The Big Kahuna', involves taxing 20% of the actual profits, provided the initial buying and selling prices, along with other expenses, can be verified.
4. The alternative method is a flat 2% tax on the total transaction value, applicable regardless of profitability.
5. The motivation behind this change lies in the belief that the current 2% flat rate encourages underreporting of sale prices, leading to inadequate tax revenue and a less transparent real estate market.
6. To combat this issue, the Ministry aims to develop a robust national property database and establish clear rules to define deductible costs, aligning the tax system with real estate transactions and promoting transparency.

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