Vietnam mulls scrapping 25 pct option for capital gains tax on property

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In Vietnam capital gains tax on property is levied in two ways, with authorities choosing from between a flat  2 percent tax on the sale value and a 25-percent tax on profit.

But the Ministry of Construction has proposed scrapping the 25 percent option, with deputy minister Nguyen Tran Nam saying the other alternative is simpler and prevents tax evasion.

In many cases, tax authorities find it difficult to calculate how much a house had cost the seller, he said.

Apart from inflation, repair costs and consulting and brokers' fees too are excluded from the book value of a house, meaning sellers suffer losses by paying tax on their apparent profits, he said.

In August the Ho Chi Minh City People's Committee had made a similar proposal to the government.  

Nguyen Thai Son, former chief of the city Taxation Department, had said there should be just one method to calculate the tax.

Government accountants and inspectors often "put pressure" on tax agencies to choose the alternative that yields higher tax revenues, he said.

Vo Thanh Hung, director of law firm Tam Diem Luat, said having just a flat 2 percent rate would mean sellers have to pay tax even if they sell their house at a loss.

It would be "humane" to let payers decide for themselves which option to take, he added.

Hoang Anh Tuan, general director of property firm Tac Dat Tac Vang, called for exempting taxes when sellers make a loss.

A property investor, identified only as Quang, said some sellers bribe tax authorities and buyers to undervalue the sale to evade tax. 

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