VCN- In the context of the draft new property tax law published by the Ministry of Finance, the Department of Tax Policy provided more details through an example.
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Accordingly, the average apartment size is 75m2 in the urban area in Hanoi (20-storey apartment). Apartment price under a purchase contract is VND 2.5 billion. The land price in the land price list announced by the provincial People's Committee is VND 10,000,000 per m2. The investment capital for construction of apartment buildings announced by the Ministry of Construction (according to Decision No. 706 / QD-BXD dated 30 June 2017) is VND 9,710,000 per m2 (applicable to condominiums from 18 floors to 20 floors).
Pay for the difference
According to the Draft Law on Property Tax, the calculation of property tax will not be based on the purchase price of the house under the purchase contract (equal to VND 2.5 billion) but based on the price of the property tax from the tax calculation price for land promulgated by the provincial-level People's Committee at the time of tax calculation. The taxable price of a house is based on the taxable house price stipulated by the provincial people's committee at the time of tax calculation based on the rate of investment capital announced by the Ministry of Construction. The price-based tax calculation by the competent authority will ensure the simplicity, feasibility and convenience of taxpayers in tax declaration.
In addition, the taxable value of the property is fixed for 5 years from the effective date of the property tax law (in the five-year stability period if there is a change in the taxpayer, it will not be necessary to re-determine the tax amount payable for the remaining period).
Total property tax is expected to be paid annually for the house and land by the amount of property tax payable on land plus the amount of property tax payable for the house.
The drafting agency gave 2 cases including a new apartment and a used 7-year apartment.
Specifically, the amount of property tax to pay for land for apartment is determined by the price of 1m2 of land in the land price list prescribed by the provincial People's Committee.
Then, the estimated taxable price for the land determined for that apartment = 75m2 x VND 10 million / m2 x 0.2 = VND 150 million.
And the property tax amount to pay for the land determined for the apartment above (with the expected property tax rate of 0.4%) = VND 150 million x 0.4% = VND 600,000 / year.
For apartments, the taxable price for new buildings is determined by the price of 1m2 of tax set by the provincial People's Committee (based on the capital investment rate set by the Ministry of Construction (x) the area of the house used by the organization, household or individual.
At that time, the taxable price for the apartment = 75m2 x VND 9.71 million / m2 = VND 728.25 million. Because the threshold not subject to tax is VND 700 million, the apartment above must pay property tax on the house of VND 28.25 million x 0.4% = VND 113,000 per year.
Thus, in the case of newly built and non-tax threshold for the house equal to VND 700 million, the amount of property tax payable for land is VND 600,000. The tax payable for the house is VND 113,000. Total property tax payable for houses and land is VND 713,000 / year.
Used houses enjoy deductible tax
In the case where the apartment has been put into use for 7 years, the property tax amount expected to be paid for the land is determined as for the case of newly built apartment buildings at the rate of VND 600,000 / year.
Estimated amount of property tax payable on a house is determined by the price of 1m2 of tax calculation set by the provincial People's Committee (based on the rate of construction investment announced by the Ministry of Construction) multiplied (x) the organization, household or individual using the percentage (x) the remaining quality of the house.
At present, the provincial People's Committee is setting the remaining quality of the house to declare and pay registration fee. Therefore, the expected quality of the rest of the house to calculate property taxes will be assigned to the provincial People's Committee regulations.
Assume that the remaining quality ratio of the house for calculating property tax is equal to the remaining quality ratio of the house to declare and pay the registration fee (80% for 7-year house), then the price for tax calculation = 75m2 x VND 9.71 million x 80% = VND 582.6 million.
Thus, in the case where the common area has been used for 7 years, only the property tax of VND 600,000 per year will be levied, and no tax will be levied on houses as the value of the house is within the non-taxable threshold.
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According to the Law on the Promulgation of Legal Documents, this is the file of the draft Law initially sent to public agencies, organizations and individuals directly affected by the policy as the basis to elaborate and complete proposals for elaboration of law projects to be submitted to competent authorities for consideration before submitting them to the National Assembly. Therefore, the Ministry of Finance wants to acknowledge the comments to complete the project dossier.
By Hong Van/ Hoang Anh