The new tax on the use of non-agricultural land will not detrimentally affect the domestic real estate market, said Nguyen Dinh Thi, Deputy Head of the Ministry of Finance's Tax Policy Department.

Thi was speaking at a press briefing on two new tax laws in Hanoi on Nov. 16.

The non-agricultural tax and the law on environmental protection will take effect at the beginning of next year.

He said the law on non-agricultural land was designed not to raise money but to more effectively inventory and manage land.

"The money to be collected from the new taxes is estimated at 3 trillion VND (143 million USD), which will be the same amount as collected from the current ordinance promulgated in 1992 on the use of land and houses," he added.

He said the new law will affect about 17 million households.

In addition, the law stipulates specific regulations governing taxpayers – organisations, households and individuals who use land in rural and urban areas.

Production and non-agricultural business land includes land for construction of industrial zones, land for mineral exploitation and processing, land for making construction materials and ceramics, among other things.

The new law stipulates three rates of tax – 0.03 percent, 0.07 percent, and 0.15 percent.

He said the law will be stricter on land encroachment, for which a levy of 0.2 percent will be applied, seven times higher than the tax imposed on allowable land area.

The Ministry of Natural Resources and Environment plans to issue a specific decree on land encroachment in the coming weeks.

The new environmental tax law covers products such as petroleum, coal, nylon bags, hydrochloro-fluorocarbons (HCFC), chemicals used to preserve wood and disinfectants and chemicals used to exterminate termites and kill grass and weeds.

The General Department of Taxation said these chemicals were potentially highly harmful to the environment.

Under the law, a tax of 1,000 VND per litre will be applied to gasoline and aviation fuel, while 300 VND per litre will be levied on other petroleum products.

A tax of 20,000 VND will be imposed on a tonne of coal, 4,000 VND per kilo of HCFC, 40,000 VND per kilo of plastic bags, 500 VND per kilo of grass/weed killer and 1,000 VND per kilo on other chemicals.

However, the department said the tax will be collected from households, organisations and individuals that produce the items not on users./.