Personal income tax on real estate transfer related to the tax payment of people selling properties in Vietnam.
The legal basis for calculating personal income tax from real estate transfer in Vietnam is:
Law on personal income tax No. 04/2007 / QH12 dated November 21, 2007
Law amending and supplementing several articles of Law on Personal Income Tax No. 26/2012 / QH13 dated November 22, 2012.
Decree 65/2013 / ND-CP dated June 27, 2013, of the Government detailing several PIT laws and the Law amending and supplementing several articles of the Law on PIT No. 26/2012 / QH13 (in effect) apart).
Circular 111/2013 / TT-BTC guiding the implementation of the Law on Personal Income Tax, the Law amending and supplementing several articles of the Law on Personal Income Tax. (Partially expired)
Law No. 71/2014 / QH13 dated December 23, 2014, amending several articles of tax laws.
Circular 92/2015 / TT-BTC of June 15, 2015, guiding the implementation of value-added tax and personal income for resident individuals conducting business activities and guiding the implementation of Tax Law No. 71 / 2014 / QH13 …
In particular, Circular 92/2015 / TT-BTC and Circular 111/2013 / TT-BTC are the latest two specific circulars guiding personal income tax from real estate transfer. Circular 92/2015 / TT-BTC has amended some articles of Circular 111/2013 / TT-BTC.
The basis for calculating income tax from real estate transfer
According to Article 17 of Circular 92/2015 / TT-BTC: Amending and supplementing Article 12 of Circular No. 111/2013 / TT-BTC.
The basis for calculating income tax from real estate transfer is taxable income and tax rate:
1. Taxable income (Transfer price)
The transfer price of a land use right transfer without a construction work on the land is the price stated in the transfer contract at the time of transfer. In case the transfer contract does not specify the price or the price on the transfer contract is lower than the land price set by the provincial People’s Committee at the time of transfer, the transfer price is determined according to the price list prescribed by the provincial People’s Committee at the time of transfer. transfer point.
The transfer price of a land use right associated with construction work on the land, including future houses or construction works, is the price stated in the transfer contract at the time of transfer.
In case the transfer contract does not specify the land price or the land price on the transfer contract is lower than the price prescribed by the provincial-level People’s Committee, the land transfer price is the price set by the provincial-level People’s Committee at the time. transfer by the law on land.
In case of transfer of houses attached to the land, the value of houses, infrastructures, and architectural works attached to the land shall be determined based on the price of house registration fee calculation prescribed by provincial-level People’s Committees. If the People’s Committee of the province does not specify the price for calculating registration fee, the regulations of the Ministry of Construction on housing classification, standards, and basic construction norms, and residual value, shall be determined the reality of constructions on land.
For construction works formed in the future, where the contract does not specify the transfer price or the transfer price is lower than the capital contribution ratio to the total contract value multiplied by the land price and the registration fee calculation price. If the construction price is set by the provincial-level People’s Committee, the transfer price is determined according to the price multiplied by the capital contribution ratio to the total contract value. If the People’s Committee of the province has not specified the unit price, the rate of construction investment announced by the Ministry of Construction is applicable at the time of transfer.
2. Tax rates
The tax on real estate transfer is 2% on the transfer price
Personal income tax payable = Transfer price x 2% tax
Personal income tax from real estate transfer for foreigners
Foreigners who transfer real estate in Vietnam also apply the above tax and tax calculation method. Ie 2% of the transfer price.
Points to note about the tax when transferring real estate in Vietnam
Currently, only 2% tax is calculated on the transfer value. The 25% tax calculation on profits is not yet applied, although this is the more reasonable method of tax calculation.
The transfer price is the price stated in the sale and purchase contract. This price is an agreed price between the two parties. Tax authorities base on prices set by the state to set the tax collection rate if the contract price is lower than this price. However, the current state price is too low compared to the market, leading to tax losses (with tax calculation and current practice). Tax authorities, along with other state agencies such as the Police, are working together to detect cases of low-cost real estate transactions to avoid taxes.
In case of buying or selling houses or apartments forming a future, the sale and purchase prices stated in the real estate transfer/sale contract must be accurately recorded. Because the price of real estate formed from the investor is clearly shown in the purchase contract. And the amount paid to the investor is shown on the VAT invoice the investor issues to the customer. The transfer price may be equal or lower than the selling price from the investor (if selling losses, urgently selling but also subject to 2% tax). However, if it is too much lower, the tax authority has the right to ask the investigating authority to enter. And this is what happened in many places.
In the future, the Law on Personal Income Tax on real estate transfer will probably have many changes to suit the economic reality. However, there must be payment improvements, the state price must keep up with the market price …
Investment Land Company – Real Estate Consultant
Address: Mezzanine Floor of An Phu Plaza, 117 – 119 Ly Chinh Thang, Ward 07, District 3, Ho Chi Minh City
Tax code: 0313851136
Hotline: 0902848440 – 0938460400