Are siblings in Vietnam exempt from personal income tax when gifting land to each other?

Are siblings in Vietnam exempt from personal income tax when gifting land to each other?

Under Point d, Clause 1, Article 3 of Circular 111/2013/TT-BTC:

Tax-free income

1. Pursuant to the provisions of Article 4 of the Law on Personal Income Tax, Article 4 of Decree No. 65/2013/ND-CP, tax-free incomes include:

...

d) Incomes from inherited real estate (including future houses and constructions according to regulations of law on real estate trading) between husband and wife, parents and children; adoptive parents and adopted children; parents-in-law and children-in-law; grandparents and grand children, and among siblings.

...

Thus, siblings gifting land to each other will be exempt from personal income tax.

Are siblings in Vietnam exempt from personal income tax when gifting land to each other? (Image from the Internet)

What are the regulations on the personal income tax declaration for income from real estate transfer in Vietnam?

Under Clause 3, Article 26 of Circular 111/2013/TT-BTC, the personal income tax declaration for income from real estate transfer is as follows:

- The persons that earn incomes from real estate transfer shall declare tax when it is incurred, including the persons eligible for tax exemption. Declaring tax in some cases:

+ If the person puts up his rights to use land or house ownership as collateral loans or making payment at credit institutions, branches of foreign banks and fails to pay debts when they are due, the branches of foreign banks and credit institution shall liquidate, sell such real estate, declare and pay personal income tax on the person’s behalf before setting the person’s debts.

+ If the person mortgages his rights to use land or house ownership to take loans or make payment with other organizations or persons, then transfers the whole or part of such real estate to pay debts, the person that has the rights to use land or house ownership shall declare and pay personal income tax, or the organization/person doing the transfer procedure on the person’s behalf) shall declare and pay personal income tax on the person’s behalf before settling the debt.

+ Where a person transfers the real estate to another organization or person under a court’s decision, the transferor shall declare and pay personal income tax, or the organization/person holding the auction shall declare and pay personal income tax on behalf of the transferor. The real estate that is confiscated and put up for auction by competent authorities, personal income tax shall not be paid.

+ In case of every person that transfers land and houses that do not fall into the case in which agricultural land is converted to serve production, which is eligible for exemption of personal income tax as guided in Point dd Clause 1 Article 3 of Circular 111/2013/TT-BTC, each person that transfers land and houses shall declare and pay personal income tax.

+ If an organization/person declares personal income tax on real estate transfer on behalf of another person, such organization/person shall state “On behalf of the taxpayer or the taxpayer's legal representative”, sign, write the full name, and append the organization’s seal (if any). The taxpayer in the tax return and tax receipts is still the person that transfers real estate.

- Real estate authority shall only initiate the procedure for transferring the ownership, rights to use real estate after the personal income tax invoices are presented, or the tax authority certifies that the income from real estate transfer is eligible for tax exemption or deferred tax collection.

What is the taxable amount for personal income tax on real estate transfer in Vietnam?

Pursuant to Clause 2, Article 12 of Circular 111/2013/TT-BTC amended by Article 17 of Circular 92/2015/TT-BTC:

Basis for calculating tax on income from real estate transfer

The basis for calculating tax on income from real estate transfer is the price of each transfer and tax rate.

...

2. Tax rate

The tax rate on real estate transfer is 2% of the transfer price or the sublease price.

...

Thus, the taxable amount for personal income tax on real estate transfer is the transfer price or the sublease price.