How to calculate personal income tax on real estate transfer in Vietnam?

What incomes from real estate transfer in Vietnam are taxable?

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

+ Residential houses, including houses formed in the future.

+ Infrastructure and constructions attached to the land, including constructions formed in the future.

+ Other assets attached to the land, including agricultural, forestry, and fisheries products (such as crops and livestock).

- Income from the transfer of the ownership rights of residential houses, including houses formed in the future.

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

- Income when contributing capital by real estate to establish an enterprise or increase production and business capital of the enterprise in accordance with the law.

- Income from authorizing the management of real estate, where the authorized person has the right to transfer real estate or has rights similar to the owner of the real estate as prescribed by law.

- Other income received from transferring real estate in any form.

How to calculate personal income tax on real estate transfer in Vietnam? (Image from the Internet)

How to calculate personal income tax on real estate transfer for resident individuals in Vietnam?

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

Personal income tax payable = Transfer price x Tax rate

Where:

* Transfer price:

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

In cases where the transfer contract does not record the price or the price on the transfer contract is lower than the land price stipulated by the Provincial People's Committee at the time of transfer, the transfer price will be determined by the land price table as stipulated by the Provincial People's Committee at the time of transfer.

- The transfer price for transferring land use rights attached to constructions on the land, including future constructions, is the price recorded in the transfer contract at the time of transfer.

In cases where the transfer contract does not record the land price or the land price on the transfer contract is lower than the price stipulated by the Provincial People's Committee, the transfer price is the price stipulated by the Provincial People's Committee at the time of transfer according to the legal regulations on land.

For transferring houses attached to the land, the value of the house, infrastructure, and architectural works attached to the land is determined based on the housing registration fee price set by the Provincial People's Committee. If the Provincial People's Committee does not have regulations on the housing registration fee price, it will be based on the Ministry of Construction’s regulations on house classification, standards, basic construction norms, and the actual remaining value of the works on the land.

For future constructions, if the contract does not record the transfer price or the transfer price is lower than the capital contribution ratio on the total contract value multiplied by the land price and the construction registration fee price prescribed by the Provincial People's Committee, the transfer price is determined by multiplying the provincial price by the contribution ratio on the total contract value. If the Provincial People's Committee has not stipulated the unit price, the construction investment unit price set by the Ministry of Construction will apply, valid at the time of transfer.

- The transfer price for transferring lease rights of land, water surface is the price recorded in the contract at the time of transferring the lease right of land, water surface.

If the sublease price on the contract is lower than the price stipulated by the Provincial People's Committee at the time of sublease, the sublease price is determined by the price table stipulated by the Provincial People's Committee.

* Tax rate:

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

* Tax calculation timing:

The tax calculation timing for transferring real estate is determined as follows:

- If the transfer contract does not have an agreement where the buyer pays tax on behalf of the seller, the tax calculation timing is the time when the transfer contract takes effect according to the law;

- If the transfer contract has an agreement where the buyer pays tax on behalf of the seller, the tax calculation timing is the time when procedures for the registration of ownership, use rights of the real estate are conducted. If an individual transfers future residential houses, land use rights associated with future constructions, the tax calculation timing is the time when the individual submits tax declaration dossiers to the tax agency.

How to calculate personal income tax on real estate transfer for non-resident individuals in Vietnam?

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

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

The transfer price of real estate of non-resident individuals is the entire amount received from the real estate transfer without deducting any expenses, including the cost price.

- The transfer price of real estate for non-resident individuals in specific cases is determined as the transfer price of real estate for resident individuals according to the guidance at points a.1, b.1, c.1, d.1, Clause 1, Article 12 of Circular 111/2013/TT-BTC, as amended by Article 17 of Circular 92/2015/TT-BTC.

- The timing for determining income from transferring real estate is the time when the non-resident individual conducts the transfer procedures of real estate according to the law.