Tax incentives for developers of social housing projects for lease should be made clear and consistent to encourage private investment in the segment, according to the HCM City Real Estate Association.
The association said that there were inconsistencies among existing legal documents, resulting in a hesitancy to invest because it could take investors up to 20 years to recoup their money.
According to Decree 100/2015 about social housing development and management, a reduction of 70 per cent in value added tax and corporate income tax was being offered to developers of social housing projects for lease.
However, according to the Law on Value Added Tax, the maximum reduction is only 20 per cent.
For example, Lê Thành Company was charged 5 per cent in value added tax and 10 per cent for corporate income tax for Lê Thành An Lạc, a social housing project for lease in Bình Tân District, HCM City.
The General Department of Taxation said the fees were based on the Law on Value Added Tax 2016 and The Law on Corporate Income Tax 2013, according to the association.
These inconsistencies had resulted in many developers missing out on the 70 per cent break, the association said.
According to association President Lê Hoàng Châu, the tax break of 70 per cent should be included in the laws on value added tax and corporate income tax when they are next amended.
Châu said that clearer tax incentives would encourage private developers to invest in social housing projects for lease.
Currenty, developers of social housing projects for sale enjoy a reduction of 50 per cent in value added tax and corporate income tax. - VNS
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