On July 26th, Ho Chi Minh City Real Estate Association (HoREA) made a recommendation on the amendment and supplement to some articles of the Land Law 2013. They also proposed to alter the mechanism of calculating the land use levy of the projects.
In the moment, the land use levy is a "burden" on businesses and consumers. It is likely to trigger the "ask-give" mechanism, which reduces the transparency in the market.
In order for the real estate market to function in a market economy, HoREA recommended two options of modifying the calculating method of land use levy.
As in Option One, HoREA called for a radical change in a viewpoint on the "land use levy" terminology. In the long run, the levy should be replaced with a tax which was suggested at about 10% or 15% of the land price.
Thus, the burden on businesses and consumers will be reduced, the “ask-give” mechanism will be eliminated and a sustainable source of income for the State will be guaranteed.
The HoREA specified that if Option One has not been accepted yet, it should be urgently dealt with the procedures for determining the land use levy, which is the Option Two.
HoREA suggested assigning the Department of Finance to hire the consultants and prepare the content to submit to the city's evaluation group to determine the land use levy of the project. Rather than choosing the contractor that offers the lowest price, we should opt for the open bidding method and choose a qualified contractor.
Moreover, HoREA also proposed to exempt, reduce, or suspend the collection of the land use levy for the commercial apartments and social housing projects. This will satisfy the housing needs of low-income people, workers and immigrants.