This proposal is part of the draft Law on Personal Income Tax (amended), which is currently under public consultation by the Ministry of Finance.

The ministry proposes a 20% personal income tax on the profit from each real estate transaction. This profit is calculated as the selling price minus the purchase price and any reasonable expenses related to the transaction.

If the purchase price and related expenses cannot be determined, the tax will be based on the selling price multiplied by a rate tied to the ownership period, up to a maximum of 10%.

Specifically, properties held for less than 2 years would be taxed at 10%. Properties held for 2 to 5 years would be taxed at 6%; 5 to 10 years at 4%; and 10 years or more at 2%, which is the current rate.

The holding period is calculated from the date the individual acquired ownership or use rights to the property until the time of sale.

Inherited properties will continue to be taxed at the current rate of 2%, regardless of the holding period. This is because the Civil Code defines inheritance as the transfer of assets from a deceased person to a living person, distinct from gifting or donating real estate.

The taxable income from the transfer of real estate is determined at the time the transfer contract takes effect or when the ownership or usage rights are registered.

Income from real estate transfers is a significant source of personal income tax revenue. Since 2015, following amendments to the Personal Income Tax Law, a flat rate of 2% has been applied to the sale price of real estate.

At a conference in march, Associate Professor Phan Huu Nghi, Deputy Director of the Banking and Finance Institute at the National Economics University, pointed out limitations in the current tax calculation method. Currently, the tax is 2% of the transaction value, regardless of profit or loss. This simple method facilitates collection but creates a loophole for underreporting the selling price, leading to lost revenue and a lack of transparency in the real estate market.

Therefore, some experts have proposed a 20% tax on the seller's actual profit. In cases where there is insufficient documentation to calculate profit or loss, they suggest a fixed rate of 1-2% based on the official land price set by the provincial or city People’s Committee. This approach is considered more advantageous as it accurately reflects actual income.

However, according to a representative of the Policy Department of the Tax Department (Ministry of Finance), implementing this method requires a reliable database of transaction prices. Clear regulations on deductible expenses, invoice requirements, and documentation of the property's original cost are also necessary.

Phuong Dung