Wednesday , May 29 2024

Vietnam considering taxing land and buildings separately

The government is considering taxing land and buildings separately as Vietnam’s property tax remains low compared to other countries.

In Vietnam there is no tax on buildings although urbanization has created a considerable added value to land, while some countries tax both land and buildings, the government said in a draft bill that is set to be presented to the National Assembly in October next year.

The government therefore proposed an accumulative tax on buildings, in which the bigger the value of a property the higher the tax.

While it also suggested that the current land tax be increased, the government did not say by how much.

In some countries such as Denmark, Indonesia, Japan, the Philippines, and in some U.S. states, the taxable value of a building is its cost of construction.

For apartments, the government proposed that the taxable value will be the price of the apartment. Taxes could be higher for premium apartments that are priced over VND50 million ($2,132) per square meter.

Social and worker housing, and temporary buildings will be exempt from the tax so that low-income people will not be affected.

Vietnam’s property tax is lower than many countries. The country collects only VND1.7 trillion in taxing non-agriculture land annually.

Tax collection from both agriculture land and non-agriculture land accounts for only 0.24% of total tax or 0.03% of GDP, which is “too low,” the government said.

In middle-income countries, property taxes account for 1% of GDP, while the figure is low-income areas is 0.5%.

Only some African countries have a ratio under 0.1% GDP.

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