Houses worth over 600 million dong to be taxed

Laws - Houses worth over 600 million dong will be taxed 0.03% per annum on the value in excess of the 600 million threshold instead of 0.05% as previously planned, the latest draft of the housing tax law stipulates.

The Ministry of Finance, which is drafting the housing tax law, said that the draft document was open for opinions from 17 ministries and 41 provinces and cities for three months. Most of the ministries and branches agreed to the taxation threshold at 600 million dong, which means that houses worth less than this will be exempt from tax.

According to the Ministry of Finance, it set the threshold of 600 million dong after considering the Government’s current regulation about the average housing area per person. If considering that every person has the housing area of 37.5 square metre and a family has four persons, the taxation area threshold would be 150 square metres for a family. And if considering that the price of one square metre of house is 4 million dong, the taxation threshold per square metre would be 600 million dong (150 square metre X 4 million dong).

The taxable value of houses will be defined based on their areas and taxable price of one square metre of land and houses. The taxable price of houses will be stable for five years.

Regarding the land taxation, the Ministry of Finance has also decided to lower the tentative tax rate from the previously planned 0.05% to 0.03%.

The draft document stipulates six subjects which will enjoy a 50% tax reduction, including projects in disadvantaged areas and families who have special needs.

The Ministry of Finance has said that the draft document has been basically completed and will be submitted to the Government next month. The Housing Tax Law is expected to take effect on January 1, 2011 and replace the current applied house and land tax law, enacted in 1994. This ordinance stipulates that only land for accommodation and for projects is subject to tax, while houses are not.