Real estate firms in HCM City, on one hand, applaud the government’s plan to stop land speculation, but on the other hand, have expressed their concern that the progressive tax will put big difficulties on them.

Directors of Van Phat Hung, Phuc Duc and Kien A real estate firms, Tran Van Thanh, Lam Van Chuc and Huynh Truong Phat, said that if the taxation agencies could not differentiate real estate firms from speculators, real estate firms would have to bear high tax rates.

The directors say that the corporate income tax is considered a kind of progressive tax already. If the progressive tax on real estate is imposed, real estate firms will be victims of double taxation.

The directors have every reason to worry about the possible taxation as real estate firms have many land plots and houses.

Mr Chuc from Phuc Duc Company said that real estate firms would pay the tax, but the sufferers would be the customers who buy land and houses. Real estate firms will have to raise selling prices to offset the higher taxes they have to pay, which will make land prices escalate further. As a result, low income earners will never be able to buy houses.

The directors have warned that the progressive tax may help prevent speculation, but it will also freeze the market if real estate firms are subject to the taxation.

Tran Van Thanh, Deputy Chairman of Van Phat Hung Company, said that it was necessary to differentiate between speculators and real estate firms as both of them have a quantity of land and houses.

“It would be better to support enterprises so that they can implement real estate projects rapidly instead of imposing tax,” Mr Thanh said, adding that the problems would not be solved if there was no way of pushing up project implementation.

“The support may be to simplify procedures in licencing projects, support in site clearance and capital mobilisation.”

“The market having more supply – that would help stabilise prices and prevent speculation,” he added.

Mr Thanh has warned that the progressive tax will show effects in the short term, but will cause disadvantages in the long term.

He said that enterprises now had to spend a lot on expenses, including several tens of fees and charges. “If real estate firms have to pay anything else, they will be overloaded and collapse,” he warned.

After a lot of new regulations promulgated recently, real estate firms now find it harder to mobilise capital. For example, firms can only get a ‘red book’ after finishing the construction of the foundations of buildings. As a result, a lot of real estate firms have given up or shifted to new business.

Source: VietnamNet.