Is income from inheritance subject to personal income tax in Vietnam?

What does income from inheritance in Vietnam include? Is income from inheritance subject to PIT?

Under Clause 9 Article 2 of Circular 111/2013/TT-BTC, incomes from inheritance are the incomes the person receives under a will or in accordance with regulations of law on inheritance. To be specific:

- Inherited securities: shares, call options on shares, bonds, treasury bills, fund certificates, and other securities according to the Law on Securities; shares of the person in the joint-stock company according to the Law on Enterprises.

- Inherited capital in economic organizations and businesses: capital contribution to limited liability companies, cooperatives, partnerships, business cooperation contracts; capital in private enterprises and businesses of the person; capital in associations and funds established within the law, or the entire business if the private enterprise or business is under the ownership of the person.

- Inherited real estate: rights to use land, rights to use land and property thereon; ownership of houses, including future houses, infrastructure and constructions on land, including off-the-plan constructions; rights to rent land or water surface; other incomes from inheritance being real estate in any shape or form, except for incomes from the inherited real estate mentioned in Point d Clause 1 Article 3 of Circular 111/2013/TT-BTC.

- The ownership and use rights of other inherited assets (cars, motorbikes, ships, barges, speedboats, towboats, yachts, airplanes, hunting guns, sporting guns) must be registered with state agencies.

Is income from inheritance subject to personal income tax in Vietnam? (Image from the Internet)

What is the calculation of PIT on income from inheritance for residents in Vietnam?

Under Article 16 of Circular 111/2013/TT-BTC as amended by Article 19 of Circular 92/2015/TT-BTC, the calculation of PIT on income from inheritance for residents is as follows:

The formula for calculating PIT on income from inheritance for residents is as follows:

PIT on income from inheritance payable = Assessable income x Tax rate of 10%

- Assessable income

The assessable income from inheritance is the excess over 10 million VND of the inheritance received. The value of inheritance is determined as follows:

+ The value of inheritance being securities is the value of securities at the time of registration of ownership transfer. Assessable income from an inheritance or gift being securities is the value of the inheritance in excess of VND 10 million regardless of ticker symbols without any deductions at the time of registration of securities ownership transfer. To be specific:

++ The value of securities traded at the Stock Exchange is based on the reference price at the Stock Exchange at the time of registration of securities ownership.

++ The value of securities in cases other than the above is based on the book value provided by the corresponding issuer at the time of making the latest financial statement before the time of registration of securities ownership.

+ The assessable income from the inheritance being contributions to businesses is the value of the contributions based on their latest book values of the companies before the contribution ownership is registered.

+ The value of inheritance being real estate is determined as follows:

++ The value of rights to use land is based on the land price list made by the People’s Committee of the province before the person registers the rights to use real estate.

++ The value of houses and constructions on land is based on the regulations of competent authorities in charge of house classification, construction standards and limits imposed by competent authorities, residual value of the house or construction when the ownership is registered.

If the value is not identifiable, the prices imposed by the People’s Committee of the province shall apply.

+ For inheritance being other assets of which the right to ownership or right to enjoyment must be registered with regulatory agencies: the value of assets are based on the prices imposed by the People’s Committee of the province at the time the person registers the right to ownership or right to enjoyment of inheritance and gifts.

If the person who receives the inheritance or gift being imported goods has to pay taxes on the import of such goods, the property value subject to PIT is the price imposed by the People’s Committee of the province at the time of registration of right to ownership or right to enjoyment of the property minus (-) taxes paid by the person during the import stage.

- Time to calculate the assessable income

The assessable income from inheritance is calculated when the person registers the ownership or rights to use of inheritance and gift.

What is the calculation of PIT on income from inheritance for nonresidents in Vietnam?

Pursuant to Article 23 of Circular 111/2013/TT-BTC, the calculation of PIT on income from inheritance for non-residents is as follows:

The formula for calculating PIT on income from inheritance for non-residents is as follows:

PIT on income from inheritance payable = Assessable income x Tax rate of 10

- The taxable income from inheritance and gifts earned by a non-resident is the excess over 10 million VND of the inheritance or gift received in Vietnam.

- Time to calculate the assessable income

The assessable income from inheritance is calculated when the person registers the ownership or rights to use the assets in Vietnam.