HA NOI (Biz Hub) — The Ministry of Finance has promulgated circular 141 stipulating the reduction of the current 10 per cent value-added tax (VAT) to 5 per cent for selling and leasing commercial housing projects with an aim to promote purchasing power.
Under the new decree, commercial housing projects which meet conditions, including apartments with selling prices of less than VND15 million per square metre and areas of less than 70sq.m each, would be able to enjoy a tax reduction. These selling or leasing prices must include a 10 per cent VAT and a 2 per cent maintenance cost before the project's eligibility for the tax reduction is determined.
The decree is expected to take effect by the end of this month.
Dang Hung Vo, former deputy minister of Natural Resources and Environment said by nature VAT is imposed on consumers.
It is the reason why the tax reduction for commercial housing projects would be a support for home buyers, Vo said.
He added that the 50 per cent tax decrease was at a relatively high level. For example, the price of a VND1 billion apartment could be reduced by VND50 million because of the tax reduction.
However, he said the importance was that real estate investors were required to strictly implement the decree to facilitate selling apartments to buyers. If they take advantage by pushing the price of their apartments higher and then applying the new tax, then home buyers would not benefit from the policy.
He added that many consumers had been waiting for the new tax reduction first before buying their apartments.
Vu Cuong Quyet, general director of Green Land Company's branch in the North, said the tax reduction would be an opportunity for low-income earners, as property projects which have selling price of less than VND15 million per sq.m would be eligible for the new tax.
The policy would help people with low-and-middle income purchase houses at preferential prices.
However, Quyet was also concerned about the lack of affordable apartments on the market and was not certain whether the market would become hot or not, but said liquidity would improve.
He added investors would not offer such apartments immediately because the supply was limited.
Also, some property investors have been worried about VAT deduction.
Nguyen Van Duc, deputy director of Dat Lanh Real Estate Company said property companies are not certain how the VAT tax reduction for the selling or leasing prices will be determined once the 10 per cent VAT for buying materials is taken into consideration.
Duc said they have been waiting for guidance from the ministry on the issue.
The decree also stipulates that social housing projects would enjoy 5 per cent VAT and 10 per cent corporate income tax. — VNS