How to declare personal income tax on incomes form real estate transfer in Vietnam?

How to declare personal income tax on incomes form real estate transfer in Vietnam?

According to Clause 3, Article 26 of Circular 111/2013/TT-BTC, the declaration of personal income tax on incomes form real estate transfer is as follows:

- Individuals with income from real estate transfers must declare tax on each arising instance, even in cases where tax exemption is applicable. Tax declaration for specific cases is as follows:

+ In cases where individuals with land use rights or house ownership rights mortgage, guarantee loan capital, or payment at credit institutions or foreign bank branches, and by the end of the repayment period, the individual is unable to repay the debt, then the credit institution or foreign bank branch shall handle the sale of the real estate and declare, pay personal income tax on behalf of the individual before settling the individual's debts.

+ When individuals with land use rights or house ownership rights mortgage to borrow capital or settle payments with other individuals or organizations and now transfer the entire (or part of) real estate to settle debts, the individuals with land use rights or house ownership rights must declare, and pay personal income tax, or the entity processing the transfer shall declare and pay personal income tax on behalf of the individual before settling the debts.

+ In cases where individuals transfer real estate to other individuals or organizations following a court enforcement decision, the transferring individuals must declare and pay tax, or the entity conducting the auction must declare and pay personal income tax on behalf of the transferring individual. However, for real estate confiscated by competent State authorities and sold at auction to contribute to the State Budget as per the law, it is exempt from declaring and paying personal income tax.

+ In cases where exchanging houses or land among individuals, which do not fall under agricultural land exchange for production that is exempt from personal income tax as specified in point d, clause 1, Article 3 of Circular 111/2013/TT-BTC, each individual exchanging houses or land must declare and pay personal income tax.

+ In cases where declarations are made on behalf of the personal income tax declaration for real estate transfer activities, the entity or individual making the declaration on behalf must add "Declared on behalf" before the phrase "Taxpayer or Legal Representative of Taxpayer" and the declarant must sign and clearly state their name. If an organization makes the declaration, it must also stamp the organization's seal. Tax calculation documents and tax collection receipts must still correctly indicate the taxpayer is the individual transferring the real estate.

- Real estate management authorities shall only process the transfer of ownership or usage rights for real estate when there is a personal income tax payment receipt or tax authority confirmation of income from real estate transfers that are exempt from tax or temporarily not taxed.

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

What are taxable incomes from real estate transfer in Vietnam?

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

- 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:

+ 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 include agricultural, forestry, aquacultural products (such as crops, livestock).

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

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

- Income from contributing capital with real estate to establish businesses or increase capital for business operations of enterprises according to the law.

- Income from authorizing real estate management where the authorized person has the right to transfer real estate or has rights equivalent to the real estate owner according to the law.

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

What is the personal income tax rate for real estate transfer in Vietnam?

According to Clause 2, Article 12 of Circular 111/2013/TT-BTC as amended by Article 17 of Circular 92/2015/TT-BTC, the regulations are as follows:

Basis for Calculating Tax on Income from Real Estate Transfers

The basis for calculating tax on income from real estate transfers is the transfer price per instance and the tax rate.

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2. Tax Rate

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

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Thus, the personal income tax rate for real estate transfers is 2% of the transfer price or sublease price.