Tax watchdog aims to better manage real estate tax transactions

Saturday, Jul 10, 2021 09:12

The land price frame should be regulated close to the market prices to prevent tax avoidance. — Photo

Tax authorities are aiming to improve tax management of property transactions to prevent tax avoidance and increase State budget collection.

The General Department of Taxation under the Ministry of Finance asked local tax departments to focus on inspecting tax declaration documents from enterprises and individuals involved in real estate to identify those who at high risk of tax avoidance so inspections can be carried out.

Local notary offices would be asked to provide tax departments with a monthly list of organisations and individuals who implemented contracts related to property transactions and business to supervise tax declarations and payments.

Local tax departments must also ask local departments of natural resources and the environment to provide information about the transfer of property projects, projects opened for sale, land ownership transfers and land-use purpose conversions.

Cooperation between local tax departments and police was also important to enhance tax management of individuals and organisations who leased out their properties.

Experts have said tax losses in property transactions come from the difference between the market price and the regulated price frame. To avoid paying high taxes, real estate purchase contracts are often declared at a very low value, many times lower than the agreed value between the sellers and the buyers to avoid taxes.

Do Linh, a real estate broker, said nearly all real estate contracts did not mention the actual transaction value, the notarised contract was only for carrying out the procedures for ownership transfer. The taxes and fees would be calculated based on regulated land price frames.

Doan Hong Nhung from Viet Nam National University, Ha Noi, said the land price frame did not reflect the market price that has existed for many years and this problem must be tackled in the coming amendment of the Law on Land.

This difference has created conditions for people to avoid paying taxes that should be paid to the State when buying and selling real estate, Nhung said.

Former Deputy Minister of Natural Resources and Environment Dang Hung Vo said international experience showed that tax was the most efficient tool to regulate the real estate market and increase revenue for the State budget.

It was necessary for Viet Nam to improve the tax policies for the real estate market, he said.

Cooperation between the tax watchdog, the police and notary offices was important to prevent tax avoidance in real estate and transactions, as well as increase transparency, which would also help reflect a more accurate view of the market so State management agencies could use appropriate policies.

Still, the fundamental solution was to bring the land price frame closer to the market price through the organisation of an independent land valuation council in each locality. — VNS

Comments (0)