Regarding real estate tax policies, Deputy Prime Minister Tran Hong Ha recently asked for studies on taxing abandoned land and delayed projects. He said this must be done thoroughly to avoid affecting citizens legally using their property. 

Additionally, it is crucial to avoid double taxation and clearly distinguish between speculators and genuine users, or lawful businesses and those wasting resources.

Taxation to curb speculation 

The current law stipulates that real estate includes land; houses and constructions attached to land; other assets attached to land, houses, or constructions; and other assets as prescribed by law.

Dinh The Hien, a respected economist, told VietNamNet that the aim of taxing abandoned land, delayed projects, or urban projects that are only allowed to sell built houses rather than land is to use real estate more effectively and prevent speculation.

However, this move is a local reaction and temporary response rather than a long-term approach based on a comprehensive legal foundation. The Land Law, Real Estate Law, and Property Tax Law are more fundamental and comprehensive when dealing with each case.

Thus, Hien said there was a need to refine the Property Tax Law (primarily real estate tax). This law should detail each issue, distinguishing between land left abandoned intentionally by investors or land abandoned due to local policy and administrative delays.

Property tax is one of the most important taxes in any nation, widely applied globally. Hien stressed that land speculation exists in Vietnam because of the lack of property tax.

“Once enacted, there will be no more abandoned land, as individuals and businesses will only buy for use rather than speculation. Those buying to wait for price hikes will face state taxes,” Hien said.

Nguyen Van Dinh, Vice President of the Vietnam Real Estate Association, noted that for real estate project developers, there are regulations on penalties for projects that are not being implemented.

Under the Land Law, if land is not used after 12 consecutive months from the date of land handover, or if the land use is 24 months behind the progress recorded in the investment projects and the land does not continue to be used, the State will reclaim both the land and the construction works on it.

If land remains unused or is delayed compared to the project’s timeline, investors may receive a maximum 24-month extension but must pay an additional amount of money equivalent to rental fees for the extended period. If the land remains unused after the extension, the state will reclaim it without compensation for the land, attached assets, or remaining investment costs.

For individual investors, the legal system lacks mechanisms to identify, control, or prevent speculation and land hoarding. 

Thus, Hien stressed that issuing real estate tax policies is urgent to ensure a safe, healthy, and sustainable market.

Effective and transparent real estate taxation, and targeting accumulators and speculators rather than those buying for residence or production, will not only boost state revenue but also help regulate the real estate market.

Penalties instead of taxation

Real estate expert Tran Khanh Quang said that he believes taxing abandoned land and delayed projects is necessary but requires careful consideration. 

He said real estate already bears multiple taxes and fees, and if a new kind of tax is levied, it is necessary to notice the difference if delays are due to subjective or objective reasons.

For projects that have been approved but are slowly implemented without a valid reason, the first and second extensions can be granted, and the third extension will require tax payment. This measure aims to prevent businesses from "reserving" land, hoarding it, and then reselling it for profit.

However, Quang noted that in the coming time, real estate businesses will have to make compensation at land market prices (rather than prices set by local authorities, which are always lower than real market prices), and prepare their own capital and mobilize capital, all of which significantly increase input costs.

Thus, applying taxes on abandoned land or delayed projects requires thorough consideration.

“It would be advisable to consider penalties to push project progress, thereby increasing market supply. This would be more effective than imposing a long-term tax,” Quang said.

Hong Khanh