Is income from gifts being real estate between parents and children exempt from tax in Vietnam?

Is income from gifts between parents and children exempt from tax in Vietnam?

Pursuant to Point d, Clause 1, Article 3 of Circular 111/2013/TT-BTC, the regulations state:

Income exempt from tax

1. Pursuant to the provisions of Article 4 of the Personal Income Tax Law, Article 4 of Decree No. 65/2013/ND-CP, the types of income exempt from tax include:

...

d) Income from inheritance, gifts that are real estate (including houses, constructions formed in the future in accordance with the law on real estate business) between: husband and wife; parents and children; adoptive parents and adopted children; parents-in-law and daughters-in-law; parents-in-law and sons-in-law; paternal grandparents and grandchildren, maternal grandparents and grandchildren; siblings.

...

Thus, income from gifts between parents and children is income exempt from personal income tax.

Is income from gifts being real estate between parents and children exempt from tax in Vietnam? (Image from the Internet)

What is the personal income tax rate for taxable gift income in Vietnam?

Pursuant to Clause 2, Article 16 of Circular 111/2013/TT-BTC, the regulations state:

Basis for tax calculation from inheritance, gifts

...

2. Tax rate: The personal income tax rate for inheritance and gifts is applied according to the whole tax schedule with a tax rate of 10%.

...

Thus, the personal income tax rate for gifts is applied according to the whole tax schedule with a tax rate of 10%.

What is the formula for calculating personal income tax on taxable gift income in Vietnam?

Pursuant to Clause 4, Article 16 of Circular 111/2013/TT-BTC, the method for calculating personal income tax on gifts is as follows:

* In which:

Taxable income from receiving gifts is the value of the gift asset that exceeds 10 million VND each time it is received. The value of the gift asset is determined in each case. Specifically:

- For gifts that are securities: the value of the asset is the value of the gift asset exceeding 10 million VND for all received securities codes, not deducting any expenses, at the time of registration for ownership transfer. Specifically:

+ For securities transacted on the Stock Exchange: the value of the securities is based on the reference price on the Stock Exchange at the time of registering for ownership of the securities.

+ For securities not in the above case: the value of the securities is based on the accounting book value of the issuing company’s securities at the time of the latest financial report according to the accounting laws before the time of registering for ownership of the securities.

- For gifts that are capital contributions in economic organizations, business units: the income for tax calculation is the value of the capital contribution determined based on the company's accounting book value at the nearest time before registering for ownership of the capital contribution.

- For gift assets that are real estate: the value of the real estate is determined as follows:

+ For real estate as land use rights, the value of land use rights is determined based on the Land Price List issued by the provincial People's Committee at the time the individual completes the procedures for registering land use rights.

+ For real estate as houses and architectural works on land, the value of the real estate is determined according to regulations by competent state management agencies on classifying the value of houses; construction standards and norms stipulated by competent state agencies; the remaining value of houses and architectural works at the time of completing the procedures for property ownership registration.

If the value cannot be determined as per the above regulations, it shall be based on the registration fee base price list issued by the provincial People's Committee.

- For gifts that are other assets required to register ownership or usage rights with the state management agency: the asset value is determined based on the registration fee base price list issued by the provincial People's Committee at the time the individual completes the procedures for registering ownership or usage rights of the gift.

In the case of an individual receiving a gift that is an imported asset and the individual must pay taxes related to the import of the asset, the value of the asset for calculating personal income tax on the gift is the registration fee base price set by the provincial People's Committee at the time of registering ownership or usage rights of the asset, minus (-) the import tax that the individual personally pays according to regulations.