Property Tax in Vietnam: Roles
Tax on property in our country has been formed for a long time with some popular taxes such as agricultural land use tax, and non-agricultural land use tax. However, to date, there has not been a tax called the Property Tax in Vietnam to Regulate the types of assets that are actually taxable. Therefore, it is very necessary to study the development of a property tax law, to help ensure revenue for the state budget, fight real estate speculation, and ensure social justice.
Property tax in Vietnam acts as a large and relatively sustainable source of revenue for the state budget
According to international experience, property tax is a major component of a country’s tax system, which always coexists with income tax and consumption tax in order to cover tax payment possibilities in the country. economy and contribute to mobilizing financial resources for the state budget. At that time, the state budget will provide financial resources to ensure that the state apparatus operates and performs its social, economic, security, and defense functions. Currently, in most countries in the world, including developed and developing countries, property tax is one of the indispensable taxes, showing an important role in the total budget revenue of the countries. nation. Typically, in developed countries, this revenue accounts for an average of 3-4% of total tax revenue, in some countries, this rate is up to 8% such as Japan and in the period 2005 – 2013, the rate of tax revenue is high. The ratio of property tax revenue to GDP in developed countries and some developing countries in Asia is about 2% of GDP.
In Vietnam, recently, the tax collected during the use of the property (non-agricultural land use tax and agricultural land use tax) accounted for only about 0.036% of GDP and was only regulated for land. Because of this, our country has lost a large source of revenue from tax collection on housing and this is one of the reasons why our country’s current property-related tax collection accounts for a lower rate than other countries.
Property tax contributes to anti-speculation
As economic and social conditions develop, the population classes have the ability to accumulate a large number of assets, especially housing, which is constantly increasing. They own a large number of apartments but have no need to use them and in the opposite direction, people who need to use them cannot buy houses directly, reducing their chances of accessing properties. because real estate prices increased many times higher than the actual value. Since then, there is inequality in the opportunity to access housing, a very basic human right. In other words, when the asset is not put to use to make a profit, but only to maintain its existence, that is, not to add value. Therefore, combating real estate speculation is one of the important roles, an urgent issue, and it is possible to use the property tax tool on taxable real estate as a tool to combat the current situation. above.
Property tax in Vietnam contributes to ensuring social justice
This is both the role and the goal of the property tax law to ensure fairness between organizations and individuals who have the right to own and use the property. Tax incentives so as not to create inequality between people with many assets and those with few assets. Equity does not mean that every property owner has to pay the same amount of tax. Depending on each type of taxable property and the amount and value of each owner’s property, the amount of tax payable to the state budget is different.
In terms of economics, social justice is reflected in two aspects: horizontal justice and vertical justice. In today’s society, there are many individuals who own many assets of equal value and gain certain benefits from the safety of the property. Therefore, horizontal equity requires that entities with the same conditions and circumstances will perform the same property tax in Vietnam obligations for the state budget. In contrast, the vertical equitable tax system is understood that subjects with different conditions and circumstances will fulfill different tax obligations, and those with more conditions will fulfill higher tax obligations than those with more conditions. less favorable. This is reasonable, fair, and in line with the specific ability of each person to contribute. On the other hand, those who are eligible for tax incentives, exemptions, and reductions when fully qualified, are also entitled to corresponding preferential treatment.
The role of implementing social justice is shown quite clearly in each type of tax. Social justice in property tax law is understood as the orientation for determining the content and requirements in the legal provisions on tax collection for property in order to ensure that the collection and payment of tax are reasonable based on the taxpayer’s ability to pay and need to consider, consider, and account for the circumstances and conditions of the taxpayer.
Property tax is an important tool to manage macroeconomic regulation of the economy
Today, taxes in general and property taxes in particular not only play the role of an important source of revenue for the state budget but also contribute to the macro-regulation of the economy. The State manages and regulates the macroeconomy by many different measures and tools, of which tax is considered the most effective and sharp tool. The State uses taxes as an invisible hand to manage and regulate the economy, and through the tax legal system, the State expresses its will and controls all socioeconomic activities. indirectly contribute to the realization of social justice.
More specifically, with property, the State can change or indirectly interfere in the behavior of property ownership, use, and investment decisions of organizations and individuals to achieve the objectives of the State. a country without the use of administrative measures. For example, the regulation of taxable or non-taxable objects, and different tax rates for each type of property will affect the opportunity to access assets of some classes of society, too. wealth distribution and the need to promote business activities. Thereby, it is possible to change the flow of capital from some rich people to the poor, ensuring the spending needs of the State to serve the issues of social security, security, order, and services. common to the community. Therefore, it can be seen that in fact, tax collection in general and property tax in particular, and the management of the social economy always go hand in hand, it will not be possible to collect the property tax in Vietnam if the job is not done well. socioeconomic management of the State and vice versa.
You can read the previous article here: How to Lease an Office Space in Vietnam: The Basic
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