Proposal to allow project transfer even though tax obligations have not been fulfilled

The Ho Chi Minh City Real Estate Association (HoREA) has just sent a document to the Prime Minister "Giving comments on some provisions of the Draft Law on Real Estate Business (amended)". In which, HoREA proposed to allow project transfer when financial obligations have not been fulfilled.

According to Mr. Le Hoang Chau, Chairman of HoREA, the Law on Real Estate Business needs to be amended and supplemented with regulations that in case an investor transfers a project or part of a real estate project without fulfilling financial obligations regarding land - including land use fees, land rent; related taxes, fees, and charges - the transferee is responsible for implementation.

Kiến nghị cho phép chuyển nhượng dự án dù chưa hoàn thành nghĩa vụ thuế - Ảnh 1.

Many projects will be "untied" if allowed to transfer (Illustration photo)

According to Mr. Chau, in case the project has a land use right certificate, the transferring investor has fulfilled its financial obligations to the state. In case the project only has a land allocation or land lease decision from a competent state agency, there are two cases: The transferring investor has fulfilled its financial obligations but has not been granted a land use right certificate; has not fulfilled its financial obligations to the state so has not been granted.

The Investment Law 2020 stipulates "investment project adjustment", allowing "investors to have the right to adjust the objectives (...) to merge projects or split one project into many projects...", including cases where after receiving the project transfer, the investor needs to adjust a part of the project, leading to additional financial obligations to the state.

According to HoREA, the transfer of a project or part of a project is a "normal" business activity under the "autonomy of production and business" of enterprises as stipulated in Article 7 of the Enterprise Law 2014, 2020.

"There are opinions that if project transfers are allowed to be "open", a project can be transferred many times, leading to "inflated" housing prices, or businesses "taking advantage of" project shares and then transferring them to "make price differences and make illegal profits". However, we see that there is no need to worry because in a market economy, prices are determined by market rules, not by the subjective will of businesses, and the state has many tools to control and manage the real estate market" - Mr. Le Hoang Chau acknowledged.

Furthermore, when transferring a project or part of a project, the enterprise must pay taxes, overcoming the situation of "underground transfers" in the form of transferring shares, changing shareholders, transferring enterprises (in fact, transferring projects) which can cause loss of revenue, loss of state budget revenue and reduce the transparency of the real estate market.

HoREA said that the land law stipulates that project investors are only granted land use right certificates after they have fulfilled their financial obligations to the state. This financial obligation is only performed once. The project transferee is usually an economic organization with financial capacity. Therefore, it is entirely possible to add a provision that the transferee is responsible for performing this obligation and there is no "risk" of losing revenue or losing state budget revenue.

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