How is PIT calculated for real estate transfer by non-residents in Vietnam?

How is PIT calculated for real estate transfer by non-residents in Vietnam?

According to Article 21 of Circular 111/2013/TT-BTC, personal income tax for real estate transfer by non-residents is calculated as follows:

- The personal income tax for income from the transfer of real estate in Vietnam by non-residents is determined by multiplying the real estate transfer price by a tax rate of 2%.

The real estate transfer price for non-residents is the total amount received from the transfer of real estate without deducting any expenses, including the purchase price.

- The real estate transfer price for non-residents in specific cases is determined similarly to the real estate transfer price of residents as guided in points a.1, b.1, c.1, d.1, clause 1 Article 12 of Circular 111/2013/TT-BTC, amended by Article 17 of Circular 92/2015/TT-BTC.

- The time to determine income from real estate transfer is when the non-resident completes the real estate transfer procedures in accordance with the laws.

How is PIT calculated for real estate transfer by non-residents in Vietnam? (Image from Internet)

ViWhat does taxable income from real estate transfer include?

According to clause 5 Article 2 of Circular 111/2013/TT-BTC, income from real estate transfer is the income received from the transfer of real estate, including:

- Income from the transfer of land use rights.

- Income from the transfer of land use rights and assets attached to the land. Assets attached to the land include:

+ Housing, including housing formed in the future.

+ Infrastructure and construction works attached to the land, including future construction works.

+ Other assets attached to the land, including agricultural, forestry, and fishery products (such as plants, animals).

- Income from the transfer of ownership of housing, including housing formed in the future.

- Income from the transfer of land lease rights, water surface lease rights.

- Income when contributing real estate capital to establish a business or increase the business capital of an enterprise as prescribed by law.

- Income from authorizing property management where the authorized person has the right to transfer real estate or has similar rights as the property owner under the law.

- Other incomes received from real estate transfer in all forms.

How is PIT calculated for real estate transfer by Vietnamese residents?

According to Article 12 of Circular 111/2013/TT-BTC, amended by Article 17 of Circular 92/2015/TT-BTC, personal income tax for real estate transfer by Vietnamese residents is calculated as follows:

Personal Income Tax Payable = Transfer Price x Tax Rate

Where:

* Transfer Price

- The transfer price for the transfer of land use rights without constructions on the land is the price stated in the transfer contract at the time of transfer.

In cases where the transfer contract does not specify a price or the contract price is lower than the land price prescribed by the provincial People's Committee at the time of transfer, the transfer price will be determined according to the land price list issued by the provincial People's Committee at the time of transfer.

- The transfer price for the transfer of land use rights with constructions on the land, including future constructions, is the price stated in the transfer contract at the time of transfer.

In cases where the contract does not specify a land price or the land price in the contract is lower than the price prescribed by the provincial People's Committee, the land transfer price is the price set by the provincial People's Committee at the time of transfer according to land law.

If transferring a house attached to the land, the value of the house, infrastructure, and architectural constructions attached to the land is determined based on the registration fee rate for the house set by the provincial People's Committee. If the provincial People's Committee does not provide a registration fee rate for the house, it is based on the Ministry of Construction's regulations on house classification, construction standards, basic construction costs, and actual residual value on the land.

For construction works formed in the future, if the contract does not specify a transfer price or the price is lower than the capital contribution ratio on the total value of the contract multiplied by the land price and registration fee rate for construction works prescribed by the provincial People's Committee, the transfer price is determined according to the price set by the provincial authority multiplied by the capital contribution ratio on the total contract value. If there is no unit price regulation by the provincial authority, the investment capital ratio for construction works published by the Ministry of Construction at the time of transfer will apply.

- The transfer price for the transfer of land lease rights, water surface lease rights is the price stated in the contract at the time of transfer of the land or water surface lease rights.

In cases where the sublease price in the contract is lower than the price prescribed by the provincial People's Committee at the time of subleasing, the sublease price is determined according to the price list set by the provincial authority.

* Tax Rate:

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

* Taxable Timeframe:

The taxable timeframe for real estate transfer is determined as follows:

- If the transfer contract does not include an agreement for the buyer to pay the tax on behalf of the seller, the taxable timeframe is when the transfer contract takes effect according to legal regulations;

- If the transfer contract includes an agreement for the buyer to pay the tax on behalf of the seller, the taxable timeframe is when the procedure for property ownership registration or land use rights registration is completed. In cases where individuals acquire future housing or land use rights associated with future construction, it is the time when the individual submits their tax declaration file to the tax authority.