send superglue: Tax tools restrict real estate speculation ? TalkVietnam

(VEN) ? Many countries do not apply any particular taxes to restrict real estate speculation. They usually prevent real estate speculation through a variety of taxes. In the event that real estate-related taxes are sound, they will create a major source of national and local budgets, while contributing to restricting real estate speculation.

A study from the International Monetary Fund (IMF) shows that high taxes on housing and land help control real estate bubbles and a rapid increase in the price of real estate. Most countries impose property taxes on housing to create a major source of local budget and to contribute to pegging real estate speculation. However, taxes on housing vary in these countries. Russia, China and the Republic of Korea levy housing taxes on the owner. However, in the event that the house owner is unidentified, the house user must pay the tax. France applies housing taxes on people who live in the house; no matter whether they are the owner or the tenant.

Tax rates also vary following the value of the house or the lease price. For example, China imposes a 1.2 percent tax based on the value of the house, and a 12 percent tax based on the price of the lease to domestic individuals or an 18 percent tax for enterprises and foreign individuals.

Vietnam?s Non-farming Land Use Tax Law fixes residential land taxes of 0.03 percent, 0.07 percent and 0.15 percent based on the land area; non-farming production and commercial land 0.03 percent; improperly-used land 0.15 percent; and encroached land 0.2 percent. Experts said that the Vietnamese existing non-farming land tax rates were low when compared with foreign countries causing small budget revenues and not helping restrict real estate speculation. The Republic of Korea applies residential land taxes of 0.2-0.5 percent of the value of land following land use purposes. Chinese Taipei applies land taxes of up to 5.5 percent to the excessive value of land. Several countries such as France have specified taxable land by applying high taxes to unused or barren land in order to encourage the effective use of land.

There is a small gap between taxes on incomes from real estate sales in Vietnam and foreign countries. Vietnam applies taxes on personal income from real estate sales including 25 percent of the gap between the buying and selling prices after deducting related expenditures, and 2 percent of the sales, while most foreign countries apply progressive tax rates to incomes from real estate sales.

Vietnamese tax policies do not clarify real estate ownership periods, while several foreign countries impose taxes on profits from real estate sales following sales frequency in order to prevent real estate speculation and bubbles. For example, Singapore taxes 100 percent of the gap between the buying and selling value in the first year of transaction; 50 percent in the second year and 25 percent in the third year. The Republic of Korea also applies similar tax rates including 50 percent of profits from real estate sales within the first year and 40 percent after the first year to the second year (for registered real estate) or 70 percent (for non-registered real estate). Since 2007 to prevent speculation and bubbles, the Republic of Korea has imposed a tax rate of 50 percent on profits from real estate sales for individuals who have two homes and 60 percent for individuals who own three or more houses or apartments.

Chinese Taipei adopted an excise tax law in April 2011, fixing a 15 percent tax on real estate sales within one year after purchase and 10 percent within two years after purchase in order to prevent speculation and cool down the real estate market. Vietnam should learn from these countries.

However, Vietnam does not have a national housing and land management database system, causing difficulties in state management of housing, land, the real estate market and taxes on real estate trading. For this reason, the Government should ask related agencies to quickly set up a housing and land management database system, while applying information technology to ensure effective enforcement of tax law and to strengthen state management of housing, land and the real estate market.

In addition, tax tools including increasing taxes on house and land ownership and applying progressive taxes on income from real estate sales are needed to prevent unused housing and land. Tax tools will only bring about benefits once authorities can control the amount of real estate and the number of real estate transactions. It is also needed to adjust current price bases for calculating real estate taxes and registration charges, which are fixed annually by provincial and municipal people?s committees and are usually 30 percent lower than the market price./.

Minh Duc

Fed likely to stay course as Cyprus roils markets
The Federal Reserve looked set to keep its loose monetary policy in place this week as a shock Cyprus plan to seize bank deposits stoked fears of a reigniting eurozone banking crisis. The Fed was widely expected to announce Wednesday, after a two-day policy meeting, that it will continue to pump... [Read more]
Eurozone says ditch Cyprus tax grab on smallest accounts
The eurozone told Cyprus on Monday to ditch the part of a hugely controversial 5.8-billion-euro grab on savings that stung even the smallest of account holders in exchange for a 10-billion-euro sovereign bailout deal, according to a statement issued after a conference call. The statement came after Cyprus baulked at putting... [Read more]
IMF Middle East chief in Egypt for aid talks
The head of the International Monetary Fund's Middle East division was in Cairo on Sunday for talks with the Egyptian government to discuss steps towards a possible aid program. Head of the IMF's Middle East division Masood Ahmed, pictured here on May 25, 2010, was in Cairo on Sunday for talks... [Read more]
Public debt under control, finance ministry says
Vietnam's total outstanding public debt was equivalent to 56.3 percent and 54.9 percent of its GDP in 2010 and 2011 respectively, according to Bulletin No. 1 recently issued by the Ministry of Finance. Illustrative image Photo: congthuong.vn The country's external debt was equal to 42.2 percent of GDP in 2010 and 41.5... [Read more]
SOEs' bad debt a threat to public debt payment
VietNamNet Bridge - The government would have to come forward to make payment for the debts incurred by state owned enterprises (SOEs), which would be a threat to the national economy. Phap luat Vietnam has quoted foreign sources as saying that Vietnam's total public debts have reached $71.749 billion, or 49.4... [Read more]
Ministry says public debt remains under control
Vietnam?s public debt still remains in safe waters, the Ministry of Finance said in its Bulletin No.1 on public debt released on Thursday. The covers of the Bulletin No.1 on public debt in two languages are seen in this photo provided by the Ministry of Finance on March 14, 2013 The country?s... [Read more]
Myanmar urges EU to lift sanctions
Myanmar President Thein Sein called on the European Union (EU) to lift its sanctions against his country following his talks with Austrian President Heinz Fischer in Vienna on March 4. Austrian President Fischer and Myanmar President Thein Sein (Source: VNA) Austria is the third leg of Thein Sein's first European visit as... [Read more]
China bets on consumer-led growth to cure social ills
China's new leaders will focus on consumer-led growth to narrow the gap between rich and poor while taking steps to curb pollution and graft, the government said on Tuesday, tackling the main triggers for social unrest in the giant nation China's Premier Wen Jiabao delivers a speech during the opening ceremony... [Read more]
Vietnam scores poorly in budget transparency
Tu Hoang According to the OBI 2012 survey conducted among 100 nations worldwide published on Thursday, Vietnam is one of the 36 countries with the lowest rankings. The country is still far behind Indonesia with 62 points, the Philippines with 50 points, and Thailand with 36 points. The Center for... [Read more]
IMF warns of higher inflation, slower GDP growth in Russia
Inflation in Russia in 2013 and 2014 would exceed government targets and the current growth model had exhausted itself, the International Monetary Fund (IMF) said Wednesday. According to an IMF report titled "Economic Outlook and Policy Challenges for Russia" and obtained by Xinhua, inflation in Russia will exceed the central bank's... [Read more]