mandatory for real estate transaction

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The Ministry of Finance has proposed that a regulation be introduced to ensure that payments for all real estate transactions are made by bank transfer.

It has been suggested to prevent tax evasion in real estate transactions by declaring selling prices well below actual cost.

The ministry said making payments by wire transfer would help ensure transparency and improve fiscal management.

Finance Minister Ho Duc Phoc told a recent session of the National Assembly that tax payment prices in real estate transactions are often declared much lower than actual transaction prices in order to reduce the amount of the tax paid.

In some cases, the tax declaration prices were around 500 million VND, but the actual transaction prices were 10 billion VND, or 20 times more. In some cases, the gap was even 40 times, Phoc said, adding that on average, reported prices were around six times lower than actual transaction prices.

According to the regulations in force, the price mentioned on the real estate transfer contract was the price for the calculation of the payment of the tax. If the contract did not mention the price or if the price was lower than the regulated land price framework, the taxation would be based on the regulated price.

Phoc said reporting lower prices was an act of tax evasion, adding that it was legal to tighten tax collection on real estate transactions.

The tightening of tax collection would increase the value of tax collection from VND 6.6 trillion to VND 16.2 trillion in total in the first five months of this year compared to the same period last year, according to statistics. of the ministry.

According to the HCM City Real Estate Association, it was reasonable to require bank transfers, which would help prevent tax evasion, prevent tax losses, combat money laundering and improve market transparency, while helping to limit price spikes and market manipulation.

Association president Le Hoang Chau said that before, everyone had many personal papers such as ID cards and passports and many bank accounts, which made it difficult to check the cash declaration. for real estate transactions.

However, with the personal identification number program, each individual would only have one identification number, which would create better conditions for handling transactions, Chau said.

Lawyer Nghiem Quang Binh said declaring lower prices was risky for buyers and sellers in the event of a dispute, as resolution in court must be based on the contract.

According to Trang Bui, managing director of Cushman & Wakefield Viet Nam, requiring payment for real estate transfers to be made through banks made sense.

She said that the parties involved and the banks could reach a three-party agreement, which would help prevent risks for the buyer and the seller because the proof of the transaction could be saved.

However, it will take time to change as the habit of cash remains popular, especially in rural areas, she said, adding that a proper plan was needed, as well as coordination from agencies. management, notaries and banks.

The land price framework should be market-based

Although the solution of using the banking system to control real estate transactions has been applied effectively in many countries, it has not been easy to implement in Viet Nam where cash has remained popular, said Le Minh Cuong. , director of the law firm S&P.

The most optimal solution was for the government to introduce a land price framework close to the market price and serve as the basis for taxation, Cuong said, stressing that this would create equity and transparency in the compensation prices for mine clearance. site.

According to Phoc, the ministry would ask localities across the country to develop real estate data to ensure transparency.

Source: VNS

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