The Ministry of Finance (MoF) has just released a draft Law on Housing Tax for public comment before submitting it to the Government.
Under the draft law, which has 13 articles arranged in four chapters, organizations and individuals that have the right to use residential land or land for non-agricultural production and business activities or the right to own houses would be required to pay housing tax.
The draft law proposes two options for tax calculation.
Under the first option, owners of houses worth less than VND 600 million (USD 33,000) would not have to pay tax, meanwhile houses worth more than this would be subject to a tax rate of 0.05 per cent.
According to the MoF, this option is simple and easy to implement. However, it fails to collect tax from those who own several houses and, therefore, cannot help discourage land speculation.
To address this limitation, the MoF proposed another option under which a three-grade progressive tariff would be applied. In the first grade, houses worth under VND 600 million would not be taxed. For houses worth between VND 600 million and VND 1.2 billion, the tax rate would be 0.05 per cent. The third grade of 0.1 per cent would be applied to houses worth VND 1.2 billion and above.
Regarding apartments, there would be different tax rates for each storey. Tax would not be imposed on basements.
Similarly, the MoF introduces three alternatives of taxation on residential land.
The first suggests the application of a single tax rate of 0.05 per cent to residential land of all types. Under the second, the area of land exceeding the limit set by each locality would be charged a tax rate of 0.1 per cent while the tax rate for land areas within the limit is zero per cent. The third maintains the tax rate of 0.1 per cent for land areas beyond the set limit, but imposes the tax rate of 0.05 per cent to land areas within the limit.
The draft law, which is expected to come into force in 2011, would replace the 1994 Ordinance on House and Land Tax.-