Real Estate Transfer Tax Collection in Ho Chi Minh City Increases by One and a Half Times

In the context of the imminent implementation of the 2024 Land Law, residents of Ho Chi Minh City have accelerated real estate transaction activities, leading to a significant increase in land transfer revenue in the first nine months of 2024. According to data from the Ho Chi Minh City Tax Department, income from personal income tax and registration fees related to real estate transfer transactions reached VND 6,540 billion, an increase of 50% compared to the same period last year.

Of these revenues, approximately 75% came from personal income tax related to real estate transfers, while the rest came from registration fees. The primary reason for this increase is that residents wanted to complete transactions before August 1st, when the 2024 Land Law would officially come into effect. The new law’s regulations concerning transfer value, tax calculations, and the timeframe for completing legal procedures prompted residents to expedite transactions to avoid increased complexity and costs once the law took effect.

Data shows that personal income tax revenue in June and July increased by 50% to 80% compared to the same period last year. This growth reflects the residents' efforts to complete real estate transactions before the legal changes took place. However, after August 1st, the volume of real estate transactions fell sharply, resulting in a 32% decrease in the number of tax payments in August and a 28% drop in the amount of tax paid. This indicates the significant impact of the 2024 Land Law on the market, as the uncertainties and difficulties of the new procedures led many to temporarily halt their transaction plans.

By the end of September, the People's Committee of Ho Chi Minh City decided to temporarily apply the old land pricing table to mitigate the negative impact of the new regulations, resulting in a 9% rebound in tax payment instances and a 19% increase in tax revenue compared to the previous month. The application of the old land pricing brought short-term stability to the market, encouraging residents to proceed with transactions that had been postponed in August. This also demonstrates the substantial impact of policy measures on market psychology and the decision-making process of residents in real estate transactions.

Other budget revenues related to land, including land use fees, agricultural land tax, and non-agricultural land tax, also increased by 58%, reaching VND 10,510 billion in the first nine months of the year. However, the progress of these revenues only reached 26% of the annual plan, largely due to difficulties related to legal procedures, bidding processes, and the implementation of real estate projects in Ho Chi Minh City. These legal obstacles have hindered project progress, preventing land use fee revenues from achieving their targets. This highlights the need to improve the licensing process and shorten the legal procedure timelines to ensure stable contributions of real estate income to the national budget.

Specifically, land use fee revenue reached VND 5,933 billion, an increase of nearly 54% compared to the same period last year. Among these, there were substantial one-time revenues such as VND 811 billion from the Khang Phuc Housing Company for a project in Binh Chanh District. However, despite the significant growth compared to last year, this revenue still fell short of the planned progress, achieving only 17% of the budget assigned by the National Assembly and the Government for this year. The main reasons include delays in project implementation, legal challenges, land auction issues, and general market instability.

Land lease revenue reached VND 4,234 billion, an increase of 72% compared to the same period last year. The substantial increase in revenue was primarily due to some real estate enterprises opting to pay land rent in one lump sum to mitigate future legal risks and costs. For instance, Dat Xanh Group Joint Stock Company paid VND 156 billion, while the Transportation Construction Mechanical Joint Stock Company paid VND 115 billion. This demonstrates the proactive measures taken by enterprises to adapt to changes in land policy, thereby ensuring stability and proactivity in their business activities.

In the first nine months, the total revenue from land in Ho Chi Minh City, including from real estate transactions, reached VND 17,050 billion, an increase of 56% compared to the same period last year. Particularly in the first week of October, land revenue increased by VND 17,504 billion, reflecting a partial recovery of the market after the severe fluctuations caused by the new Land Law. However, this increase also poses significant challenges for management agencies in ensuring transparency and efficiency in tax collection and adjusting real estate-related policies.

In fact, according to analysts, capital flows are shifting from investment channels like stocks and gold to real estate. VinaCapital, citing its sources, noted that real estate transaction volumes in the first nine months of 2024 may have increased by 35% compared to the same period last year. This is an important signal of many investors seeking stable and secure investment channels, particularly as the global economy continues to face many uncertainties.

According to Mr. Vo Huynh Tuan Kiet, Director of Residential Project Marketing at CBRE, recent financial market volatility, including stock market fluctuations and currency devaluation, has prompted investors to redirect their capital to real estate as a risk mitigation measure. He also noted that real estate remains a safe and sustainable investment choice, especially as other financial channels become unstable. This is mainly because real estate not only offers the potential for capital appreciation but also helps preserve asset value in the long term. According to Mr. Kiet, the investor mindset is that “the sense of security in owning a house is very strong,” especially compared to the complex fluctuations of other investment channels.

Furthermore, some experts believe that the influx of investors into the real estate market may also indicate their expectations for upcoming government policy adjustments to create more favorable conditions for this sector. Measures such as reducing legal obstacles, increasing transparency in the land auction process, and expediting project approval processes could make the real estate market in Ho Chi Minh City and nationwide more attractive to both domestic and foreign investors.