Proposal to calculate 20% tax on each real estate transfer transaction

Ministry of Finance seeks comments on draft revised Law on Personal Income Tax

The Ministry of Finance is seeking opinions from ministries, sectors, localities and relevant agencies on the draft Law on Personal Income Tax (replacement), in which the notable content is the proposal to impose a tax rate of 20% on income from real estate transfers, calculated on the difference between the selling price minus the purchase price and related costs.

According to the draft, in case the purchase price and valid costs cannot be determined, tax will be calculated directly on the selling price, based on the time of holding the asset. Specifically:

Under 2 years: tax rate 10%

From 2 to under 5 years: 6%

From 5 to under 10 years: 4%

From 10 years or more or assets of inherited origin: 2%

However, in the case of inherited real estate with signs of speculation, individuals will be taxed as for real estate business activities.

Towards reflecting the true nature of income and preventing tax losses

According to the Ministry of Finance, calculating tax on actual income reflects the economic nature of the transfer activity, similar to the current corporate income tax calculation at 20%.

The drafting agency emphasized that, for effective implementation, it is necessary to build a complete data system on real estate transaction history, combined with the requirement of transparency of invoices and documents proving costs to accurately determine capital costs and taxable income.

The draft also emphasizes the need to synchronize tax policies with land and housing policies, and apply modern information technology platforms in real estate registration and transfer management. This will help tax authorities clearly determine the holding period, origin of assets and related factors for tax calculation.

Prevent real estate transfer price fraud, increase budget revenue

Recently, the Ministry of Finance has recorded many cases of declaring transfer prices lower than actual prices to evade taxes, causing losses to the state budget. The proposal to impose a 20% tax on each transaction is considered a solution to tighten management and at the same time create more equality in tax policy between individuals and businesses participating in the real estate market.

The draft is still in the process of collecting opinions and finalizing, to ensure transparency, fairness and feasibility in practice before submitting to the Government and the National Assembly for consideration.