Latest news with #RealPropertyGainsTax
Business Times
5 days ago
- Business
- Business Times
Vietnam mulls overhaul of property transfer tax, sparks fears of stalling recovery
[HO CHI MINH CITY] Vietnam's Ministry of Finance has unveiled a sweeping proposal to overhaul the way personal income tax is applied to real estate transactions – replacing the current flat 2 per cent levy on selling price with higher percentages, based on how long the property is held, or 20 per cent of the actual capital gains per transaction. The ministry states that the change is necessary to plug tax loopholes, reduce speculation, and create a more equitable tax regime. However, industry stakeholders warn that the shift could dampen liquidity, inflate prices for real homebuyers, and further weaken an already-fragile property market. Under the proposal, individuals selling real estate would be taxed 20 per cent on the net profit, which is the difference between the selling price and the original purchase price, minus related costs. In cases where the purchase price or expenses cannot be verified, tax would be applied to the gross sale value, based on how long the property was held. That marks a sharp increase from the current flat 2 per cent tax on the selling price to as much as 10 per cent for properties owned for less than two years. The ministry says the new model better reflects true earnings and is modelled after systems used in Singapore, Taiwan and Malaysia, where tax rates also scale with holding periods to deter speculative flipping. In Singapore, for instance, residential properties resold within a year are subject to a 100 per cent tax on the price gain. In Malaysia, the Real Property Gains Tax imposes rates of up to 30 per cent on properties sold within three years. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up The latest shift in the rule, outlined in the draft of the revised Personal Income Tax Law, is now open for public consultation until the end of this month and is expected to go before the National Assembly for review and approval this October. Huynh Thi Huong Giang, head of research at property advisory firm Savills in Ho Chi Minh City, said: 'From my perspective, applying this tax model under current conditions without adequate infrastructure would be very challenging.' She noted that Vietnam's property data system remains fragmented, with transfer prices largely based on declared values in sales agreements, and that actual transaction prices are often higher. '(We expect) a negative impact on market liquidity, potentially slowing down transaction processes, causing tax collection bottlenecks, and increasing the risk of disputes and legal conflicts,' she noted. Sellers may also respond to higher taxes by raising housing prices to maintain their profit margins, potentially making homes less affordable for genuine buyers, Giang added. Nguyen Thi Thu Xuan, a Hanoi-based investor who frequently buys and resells homes with a group of friends, believes that speculative investing will continue both in undervalued properties and amid rising market prices due to a supply crunch. 'It won't hurt us as much as it hurts end-buyers who actually need a home,' she said, noting that additional tax costs could push prices even higher. Xuan added that in practice, if sale prices are not truthfully declared, a 10 per cent or 20 per cent tax is mostly symbolic. 'It doesn't mean higher tax costs,' she said. 'In fact, steeper rates might just drive more people to exploit loopholes and under-report transactions.' The finance ministry appears aware of the challenges in applying the new property tax rule. In a response to local media reports, officials stressed the need for a gradual transition with a suitable road map, tied to the development of land and housing policies, data infrastructure and legal frameworks for tracking and taxing property profits. Problematic timing Dinh Minh Tuan, southern regional director at PropertyGuru Vietnam, which owns the country's largest real estate portal said the timing of applying the new rule was problematic. 'While the policy aims to 'reward holders, penalise flippers,' it also raises concerns about timing and broader market impact, especially as the real estate sector remains sluggish,' he stated in a commentary. 'The proposal may prove more harmful than beneficial.' Vietnam's real estate market plunged into a slump in 2022 and 2023, with supply freezing up, liquidity drying out, and many housing projects stalling. Transactions started picking up in 2024 and 2025, showing signs of market recovery following a series of regulatory reforms. However, property prices have been soaring exponentially due to supply-demand imbalance and speculative buying, making them out of reach for most residents. In major urban centres such as Hanoi and Ho Chi Minh City, it now takes several decades of the disposable income of a family at the median to purchase an apartment. 'We expect residential prices to continue their upward trajectory (for the rest of the year), largely driven by the launch of high-end projects and ongoing supply constraints,' noted Savills' Giang. A survey of more than 1,000 users found that 59 per cent bought real estate primarily for investment, not for personal use, and many were planning to sell within the year. Tuan noted that short-term investors now make up a significant share of the market, especially in segments of land plots and high-end condominiums. 'A 10 per cent tax would significantly eat into profit margins, reducing investment appeal and potentially pushing small investors out, further dampening market liquidity,' he stated. He believes this tax hike could act as an untimely brake, stalling the recovery momentum and causing ripple effects in related sectors of the economy. The Vietnamese government is aiming for 8.3 to 8.5 per cent economic growth this year, from 7.1 per cent last year, to create a foundation for double-digit growth in the 2026-2030 period. Prime Minister Pham Minh Chinh recently emphasised that Vietnam must revitalise its traditional growth engines – domestic consumption, exports and investment – while also embracing new drivers such as green growth and the digital economy. With US tariff hikes weighing on trade, experts say that a rebound in the real estate market and increased infrastructure spending would be crucial to boosting consumer confidence in the country's economy, where household consumption contributes to about 60 per cent of the gross domestic product.
Business Times
6 days ago
- Business
- Business Times
Vietnam mulls property transfer tax overhaul, sparking fears of stalled recovery momentum
[HO CHI MINH CITY] Vietnam's Ministry of Finance has unveiled a sweeping proposal to overhaul the way personal income tax is applied to real estate transactions – replacing the current flat 2 per cent levy on selling price with higher percentages based on how long the property is held or 20 per cent of the actual capital gains per transaction. The ministry states that the change is necessary to plug tax loopholes, reduce speculation, and create a more equitable tax regime. However, industry stakeholders warn the shift could dampen liquidity, inflate prices for real homebuyers, and further weaken an already fragile property market. Under the proposal, individuals selling real estate would be taxed 20 per cent on the net profit, which is the difference between the selling price and the original purchase price, minus related costs. In cases where the purchase price or expenses cannot be verified, tax would be applied to the gross sale value based on how long the property was held. That marks a sharp increase from the current flat 2 per cent tax on selling price to as much as 10 per cent for properties owned for less than two years. The ministry says the new model better reflects true earnings and is modelled after systems used in Singapore, Taiwan and Malaysia, where tax rates also scale with holding periods to deter speculative flipping. In Singapore, for instance, residential properties resold within one year are subject to a 100 per cent tax on the price gain, while in Malaysia, the Real Property Gains Tax imposes rates of up to 30 per cent on properties sold within three years. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up The latest rule shift, outlined in the draft of the revised Personal Income Tax Law, is now open for public consultation until the end of this month and is expected to go before the National Assembly for review and approval this October. 'From my perspective, applying this tax model under current conditions without adequate infrastructure would be very challenging,' said Huynh Thi Huong Giang, head of research at property advisory firm Savills in Ho Chi Minh City. She noted that Vietnam's property data system remains fragmented, with transfer prices largely based on declared values in sales agreements, even though actual transaction prices are often higher. '(We expect) a negative impact on market liquidity, potentially slowing down transaction processes, causing tax collection bottlenecks, and increasing the risk of disputes and legal conflicts,' she noted. Sellers may also respond to higher taxes by raising housing prices to maintain their profit margins, potentially making homes less affordable for genuine buyers, Giang added. Nguyen Thi Thu Xuan, a Hanoi-based investor who frequently buys and resells homes with a group of friends, believes that speculative investing will continue both in undervalued properties and amid rising market prices due to a supply crunch. 'It won't hurt us as much as it hurts end-buyers who actually need a home,' she said, noting that additional tax costs could push prices even higher. Xuan added that in practice, if sale prices aren't truthfully declared, a 10 per cent or 20 per cent tax is mostly symbolic. 'It doesn't mean higher tax costs,' she said. 'In fact, steeper rates might just drive more people to exploit loopholes and underreport transactions.' The finance ministry appears aware of the challenges in applying the new property tax rule. In a response to local media, officials stressed the need for a gradual transition with a suitable road map, tied to the development of land and housing policies, data infrastructure, and legal frameworks for tracking and taxing property profits. Problematic timing Dinh Minh Tuan, southern regional director at PropertyGuru Vietnam, which owns the country's largest real estate portal says the timing of applying the new rule is problematic. 'While the policy aims to 'reward holders, penalise flippers,' it also raises concerns about timing and broader market impact, especially as the real estate sector remains sluggish,' he stated in a commentary. 'The proposal may prove more harmful than beneficial.' Vietnam's real estate market plunged into a slump in 2022 and 2023, with supply freezing up, liquidity drying out, and many housing projects stalling. Transactions started picking up in 2024 and 2025, showing signs of market recovery following a series of regulatory reforms. However, property prices have been soaring exponentially due to supply-demand imbalance and speculative buying, making them out of reach for most residents. In major urban centres such as Hanoi and Ho Chi Minh City, it now takes several decades of a family's median disposable income to purchase an apartment. 'We expect residential prices to continue their upward trajectory (for the rest of the year), largely driven by the launch of high-end projects and ongoing supply constraints,' noted Savills' Giang. A survey of more than 1,000 users found that 59 per cent bought real estate primarily for investment, not for personal use, and many plan to sell within the year. Tuan noted that short-term investors currently make up a significant share of the market, especially in segments of land plots and high-end condominiums. 'A 10 per cent tax would significantly eat into profit margins, reducing investment appeal and potentially pushing small investors out, further dampening market liquidity,' he stated. He believes this tax hike could act as an untimely brake, stalling recovery momentum and causing ripple effects across related sectors of the economy. The Vietnamese government is aiming for 8.3 to 8.5 per cent economic growth this year, from 7.1 per cent last year, to create a foundation for double-digit growth in the 2026-2030 period. According to a recent statement, Prime Minister Pham Minh Chinh emphasised that Vietnam must revitalise its traditional growth engines – domestic consumption, exports, and investment – while also embracing new drivers such as green growth and the digital economy. With US tariff hikes weighing on trade, experts say that a rebound in the real estate market and increased infrastructure spending will be crucial to boosting consumer confidence in a key driver of Vietnam's economy, where household consumption makes up around 60 per cent of its gross domestic product.
The Sun
17-07-2025
- Business
- The Sun
CAP backs vacancy tax to tackle property speculation in Malaysia
GEORGE TOWN: The Consumers Association of Penang (CAP) has voiced strong support for implementing a vacancy tax on residential properties left unoccupied for long periods. CAP president Mohideen Abdul Kader stated that such a measure is crucial to reducing property speculation and making housing more affordable for Malaysians. 'A vacancy tax typically applies to properties that remain vacant—unsold or unrented—for more than six months in a year. 'In countries such as Canada and Australia, particularly in cities like Melbourne, this tax is set at between one and three per cent of the property or land value,' he said. Mohideen explained that the tax aims to discourage speculative investments, especially in the medium-cost housing segment, where rising prices in the subsale market have made homeownership unattainable for middle-income earners. He highlighted that many urban properties remain empty while thousands struggle to find affordable homes. 'A vacancy tax would act as a strong disincentive to leave properties idle and would encourage owners to either rent out or sell them, returning more units to the active housing market,' he added. CAP also urged the government to reassess the Real Property Gains Tax and stamp duty, proposing higher rates for short-term property sales and additional home purchases. Mohideen called for tighter restrictions on foreign buyers and stricter housing loan policies for individuals owning multiple properties, including lower loan-to-value ratios to deter speculative borrowing. 'Unless the government introduces comprehensive policy reforms, Malaysia's housing sector will continue to favour investors at the expense of ordinary citizens. It is the government's duty to uphold the principle that housing is a fundamental right, not a speculative commodity,' he stressed. - Bernama
New Straits Times
17-07-2025
- Business
- New Straits Times
CAP calls for vacancy tax, tighter controls to curb property speculation
GEORGE TOWN: The Consumers' Association of Penang (CAP) has called for the introduction of a vacancy tax on residential properties that are left unoccupied for extended periods. It also called on the government to review and strengthen the Real Property Gains Tax (RPGT). CAP president Mohideen Abdul Kader said these measures were urgently needed to address the deepening problems of property speculation and declining housing affordability in Malaysia. "A vacancy tax typically applies to properties that remain vacant — unsold or unrented — for more than six months in a year. "In countries such as Canada and Australia, particularly in cities like Melbourne, this tax is set at between one and three per cent of the property or land value. "Its primary aim is to deter property speculation, particularly in the medium-cost segment, where rising prices in the subsale market have increasingly placed home ownership beyond the reach of middle-income earners," he said in a statement today. According to the Khazanah Research Institute, housing prices in Malaysia rose by an average of 5.8 per cent per year between 2010 and 2022, well above the healthy growth range of three to four per cent. As a result, many in the M40 income group found it difficult to purchase their own homes. In urban areas, the typical 'modern' three-bedroom apartment ranges from 800 to 1,000 square feet. Mohideen said this limited space was not conducive to multi-generational or extended family living, nor does it offer adequate privacy or comfort for those forced to share with other families. "Speculators often compete directly with genuine homebuyers, inflating demand and thereby encouraging developers to acquire more land to keep up with what is essentially artificial pressure. "In land-scarce areas like Penang, this has resulted in a rise in land prices and a growing reliance on costly land reclamation from the sea. "It is also worth noting that many apartment blocks are not fully occupied, despite having been sold. In these developments, owners of vacant units — who are not living in them and cannot easily sell or rent them out —often neglect their obligations to pay maintenance fees. "This undermines the upkeep of the building and penalises residents who do live there. At present, many residential properties, particularly in urban centres, remain empty while thousands of Malaysians continue to struggle to find homes they can afford," he added. The property market, Mohideen noted, had become increasingly dominated by those who treat housing as a speculative investment rather than a basic human need. He said this trend had led to inflated prices and a false sense of scarcity, especially in cities where housing demand is greatest. "A vacancy tax would act as a strong disincentive to leave properties idle and would encourage owners to either rent out or sell them, returning more units to the active housing market. "In addition, CAP also calls on the government to review and strengthen the RPGT, as the current system fails to adequately discourage short-term speculation. "We propose a more progressive model that imposes significantly higher tax rates on profits from properties sold within a short holding period," he added. Mohideen also called for a revision of stamp duty rates and tighter controls on housing loans. He said that unless the government introduced comprehensive policy reforms, Malaysia's housing sector would continue to favour investors at the expense of ordinary citizens.
The Sun
14-07-2025
- Business
- The Sun
LHDN e-TT system temporary closure from July 17 to 21
PUTRAJAYA: The Inland Revenue Board (LHDN) has announced a temporary shutdown of its electronic telegraphic transfer (e-TT) system from July 17 to 21 for system enhancements. Two major upgrades will be implemented during this period. The first is a new feature allowing taxpayers to generate a virtual account (VA) number using their bill number. The second is an automated receipt system that will send payment confirmations directly to taxpayers' email addresses once transactions are processed by LHDN's agent bank. For Income Tax and Real Property Gains Tax payments, receipts can still be accessed through the e-Lejar app or the Withholding Tax Payment Statement by logging into the MyTax portal at using identification documents. LHDN stated, 'Once the e-TT system reopens on July 22, taxpayers will be required to generate a new VA number to proceed with payment.' During the downtime, taxpayers are encouraged to use alternative payment methods such as PFX on LHDN's official portal, appointed agent banks, or Pos Malaysia. Payments can be made via over-the-counter transactions, internet banking, ATMs, or at the Kuala Lumpur Revenue Collection Management Centre. Further details on payment options are available on LHDN's official portal under the quick access menu: Service > Individual > *Individual Life Cycle > Payment > Mode of Payment. - Bernama
