(CPV) - The Ministry of Finance is proposing important changes in the Draft Law on Personal Income Tax (PIT), notably applying different tax rates to real estate transfers depending on the holding period. This policy is expected to limit speculation, stabilize the real estate market and ensure fairness in tax regulation.
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| Illustration photo (Photo: VH) |
Apply flexible tax rates to limit real estate speculation
One of the highlights of this Draft Law on Personal Income Tax is the proposal to adjust the Progressive Tax Schedule, which applies to income from salaries and wages of resident individuals. According to the Ministry of Finance, the current tax schedule is divided into 7 tax brackets with tax rates of 5%, 10%, 15%, 20%, 25%, 30% and 35%. However, in practice, this tax structure has revealed many shortcomings such as the number of tax brackets is too large and the gap between income brackets is too narrow.
Specifically, having multiple tax brackets makes it easy for taxpayers to fall into a situation of “jumping” tax brackets, when income increases slightly, they have to pay tax at a higher bracket. This not only increases the burden on employees but also creates pressure on the annual tax settlement work of tax authorities. The tax amount arising from these cases is often not large, but increases the workload and administrative costs.
The Ministry of Finance affirmed that reducing the number of tax brackets to a reasonable level and widening the gap between income brackets will create more convenience for taxpayers and tax authorities. At the same time, this adjustment will contribute to ensuring transparency and fairness in income regulation, encouraging the healthy development of the labor market.
This solution is in line with the orientation of the Tax System Reform Strategy to 2030 , ensuring harmony with the socio-economic context, people's living standards and international practices. Accordingly, people with higher incomes will have to pay more taxes, while those with low and middle incomes will enjoy more reasonable regulations.
In addition to adjusting income tax from salaries and wages, the Ministry of Finance also proposed to change the tax policy on income from real estate transfers. Currently, personal income tax from real estate transfers is applied at a fixed rate, regardless of the time of holding the property. This policy unintentionally creates conditions for widespread speculative activities, contributing to increasing real estate prices, creating real estate "bubbles".
This draft of the new Personal Income Tax Law proposes to apply different tax rates based on the duration of real estate holding. According to international experience, many countries have applied this policy to limit short-term buying and selling activities. Specifically, real estate transactions held for a short period of time will be subject to higher tax rates, creating a large cost for speculative activities. Conversely, transactions held for a long period of time will be subject to lower tax rates to encourage long-term investment and stabilize the market.
The Ministry of Finance believes that applying the personal income tax policy based on the asset holding period will not only help limit speculation but also increase the effectiveness of tax regulation, contributing to stabilizing the real estate market. This policy is also consistent with major policies of the Party and the State, such as Resolution No. 18-NQ/TW dated June 16, 2022 on effective land management and use and Resolution No. 62/2022/QH15 of the National Assembly on strengthening tax management in the real estate sector.
To effectively implement the tax policy based on the period of holding real estate, the Ministry of Finance emphasized the need for synchronization in related policies such as land management, housing and information technology infrastructure. The land and real estate registration system needs to be modernized to ensure the ability to fully and accurately record the period of holding assets.
Currently, the information technology infrastructure for real estate management is still limited, and the connection and sharing of data between tax authorities and relevant agencies is not really synchronized. Therefore, the Ministry of Finance proposes to promote the digitalization process, build a national database on land and real estate to effectively support tax collection. When information is strictly managed, tax authorities will have enough basis to apply appropriate tax rates for each specific case.
Expectations of a fair and transparent tax system
Experts assess that the changes in the Draft Law on Personal Income Tax will create a fair, transparent tax system that is consistent with the reality of socio-economic development. Simplifying the tax schedule, reducing the number of tax brackets and adjusting tax rates for specific incomes will not only reduce the burden on taxpayers but also contribute to increasing state budget revenue in a sustainable manner.
In particular, applying flexible tax rates to income from real estate transfers based on holding period will help limit speculation, minimize the risk of market “bubbles” and encourage long-term investment. This is an appropriate step in the context of the Vietnamese real estate market needing strong solutions for stability and sustainable development.
The Ministry of Finance affirmed that the development and completion of the personal income tax policy will be carried out on the basis of thorough research, ensuring the harmony of interests between the state, people and businesses. At the same time, the new policy will be consistent with the international tax reform trend and facilitate the implementation process in practice.
The draft Law on Personal Income Tax is expected to bring about a fairer, more transparent and more effective tax system. Adjusting the tax schedule and applying flexible tax rates to income from real estate transfers is an important step forward, not only helping to limit speculation but also creating momentum for healthy market development. In the coming time, the synchronization between tax policy and information infrastructure will be the key factor for this policy to maximize its effectiveness./.
Source: https://dangcongsan.vn/kinh-te/siet-thue-chuyen-nhuong-bat-dong-san-de-han-che-dau-co-686905.html
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