Combating Tax Evasion from Two-Price Real Estate Transactions

Combating tax evasion from two-price real estate transactions is one of the key requests made by Prime Minister Pham Minh Chinh in his recent directive to strengthen state budget collection, particularly regarding land-related revenues. This issue has been a persistent problem in the tax sector, causing significant damage to the national budget over the years.

The Situation of Tax Evasion in Real Estate Transactions

Under current regulations, taxable income from buying and selling real estate is determined based on the actual transfer price, with a tax rate of 2%. However, in practice, many taxpayers report a lower transfer price than the actual transaction price on the real estate transfer contracts. This is done to reduce the tax liability, evade taxes, and has led to significant tax revenue losses for the state budget.

One of the reasons for this situation is the lack of transparency in the real estate market, where transactions sometimes occur without being accurately recorded, reducing the effectiveness of the tax system. This not only results in tax revenue loss but also undermines fairness in the contributions of individuals and businesses to the national budget.

Measures to Combat Tax Evasion from Two-Price Real Estate Transactions

Prime Minister Pham Minh Chinh has instructed tax authorities to strengthen inspections and combat tax evasion in two-price real estate transactions, especially as the state budget needs resources for development investment. Specifically, authorities will focus on inspecting and detecting cases where reported prices are lower than the actual transaction value and then apply strict measures to stop these tax evasion practices.

The Ministry of Finance has also proposed a new solution, which is to tax personal income from real estate transfers based on the holding period. The goal of this policy is not only to increase budget revenue but also to reduce speculation and “flipping” in the real estate market, thus preventing the formation of real estate bubbles that could pose risks to the economy.

Results and Requests from the Prime Minister

This year, total state budget revenue has exceeded 106% of the forecast, with 16 out of 19 tax categories meeting the progress targets, and 40 out of 63 localities exceeding internal revenue targets. However, the collection of land use fees has been slow, as by the end of November, the nationwide collection only reached 82.8% of the target, indicating the urgent need to accelerate tax collection and address issues related to real estate transfers.

The Prime Minister has requested the Ministry of Finance and tax authorities to lead efforts to speed up public investment fund disbursements and review projects that are delayed, particularly those still owing land use fees. Additionally, the Ministry of Construction has been tasked with addressing challenges for projects with good liquidity potential, thereby promoting the development of the real estate market and attracting more large-scale investment projects.

Conclusion

Combating tax evasion from two-price real estate transactions is an urgent issue that needs to be addressed immediately to ensure the state budget can support economic and social development objectives. Prime Minister Pham Minh Chinh has directed relevant authorities to take strong measures to ensure fairness and transparency in the real estate market while strengthening resources for development investment, thus laying a solid foundation for the sustainable development of the economy.