In its resolution for action to be taken in 2013 ("Resolution"), the Vietnamese government has initiated, among other things, solutions to reduce difficulties faced by the real estate sector. These solutions include incentives relating to taxes, payment of land rental and land use fees, financial support, project approvals and residential housing ownership for foreigners.
Under the Resolution, the Ministry of Finance will present to the National Assembly for approving the following tax incentives: From 1 July 2013, the rate of company income tax ("CIT") applied to enterprises investing in social residential projects will be 10 percent. Those enterprises will also be entitled to a reduction of 50 percent of input VAT for the period 1 July 2013 to 30 June 2014. For the same period, enterprises investing in low income residential projects (i.e., constructing apartments with an area of up to 70m2 and a price of less than VND15 million/m2) will be entitled to a reduction of 30 percent of output VAT.
Enterprises investing in residential projects will also be given an extension of up to 6 months for payments of CIT due for the first quarter and up to 3 months for payments of CIT due for the second and third quarter of 2013. Further, these enterprises will be entitled to an extension of up to 6 months for payment of VAT due for the first three months of 2013.
Land rental and land use fees
Enterprises, households and individuals renting land from the State, and for which the applicable land rental has doubled compared to the amount payable in 2010 (as a result of the new regulations under Decree 121/2010/ND-CP) will be entitled to a reduction of 50 percent on the payable land rental amount.
The payment of land use fees by enterprises facing financial difficulties can be scheduled alongside their sale progress within a maximum of 24 months from the date of receipt of the tax authorities' payment request.
Under the Resolution, State commercial banks are instructed to reserve at least 3 percent of their total debit balance for loans of low interest to (i) low income earners and other policy beneficiaries to lease/lease purchase social housing and commercial housing with an area of up to 70m2 and a price of less than VND15 million/m2; and (ii) enterprises investing in social residential housing.
Local authorities are also instructed to use their allocated budget to acquire commercial residential projects which can be turned into resettlement and social residential projects benefiting low income earners and other policy beneficiaries.
To further support the implementation of real estate projects, especially those converting from commercial residential projects into social residential projects, the government also directs its licensing authorities to shorten the approval process, paving the way for the smooth operation of these projects.
Housing ownership for foreigners
Under the Resolution, it is directed that regulations relating to housing ownership for foreigners will be more open so that more foreigners will be entitled to own residential housing in Vietnam.
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