Vietnam - Apartment owners to be required to pay land tax

Owners of houses and apartments at high-rise buildings will have to pay the land tax from this year as the law on non-agricultural land tax has taken effect.

The non-agricultural land tax law replacing the 1992 Ordinance on Land and House Tax will leave an impact on land users, from organisations allocated or leasing lands to households and individuals using the land to live or do business.

The tax rate is calculated based on the progressive tax. Specifically, the land area not exceeding the limit will be subject to a tax rate of 0.03 percent while any areas exceeding the limit by no more than three times and over three times will be imposed a respective rate of 0.07 percent and 0.15 percent.

Every square metre of land will be taxed based on the land price set by the provincial authorities and kept unchanged in five years' time, starting from January this year.

For instance, as land on Hai Ba Trung Street in HCM City's District 1 is priced at around 70 million dong per square metre by the municipal government, the owner of a 100-square-metre piece of land will have to pay 2.1 million dong in tax, calculated by multiplying the total area by 0.03 percent and then by 70 million dong.

In principle, tax payers are organisations, households and individuals holding the land use right. In case the ownership certificates of land and homes have not been issued, those who are using the land will have to pay the tax.

With apartment buildings, investors will be the ones to pay the land tax until apartments are handed over to buyers. The taxed area will be set by multiplying the distribution coefficient by the area of an apartment.

An apartment project is developed on an area of 1,000 square meters and has a total floor space of 4,000 square meters, and thus the coefficient will be 0.25. Therefore, a 60-square-metre apartment will have the taxable area of 15 square meters.

Nguyen Thi Bich Van from the HCM City Tax Department said that although there are more taxpayers, the total tax collected would only account for around 1 percent of total revenues. The tax collection of non-agricultural land aims to monitor the land use more closely, she added.

With this tax, property investors will have to pay not only the land rental but also the non-agricultural tax every year, and those owning many land lots will also feel much impact.

Saigon Times

Business & Investment Opportunities

YourVietnamExpert is a division of Saigon Business Corporation Pte Ltd, Incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Consulting, Investment and Management, focusing three main economic sectors: International PR; Healthcare & Wellness;and Tourism & Hospitality. We also propose Higher Education, as a bridge between educational structures and industries, by supporting international programs. Sign up with twitter to get news updates with @SaigonBusinessC. Thanks.