Is income from real estate transfers between biological parents and their children in Vietnam subject to PIT?

Is income from real estate transfers between biological parents and their children in Vietnam subject to PIT?

Under Clause 1, Article 4 of the Personal Income Tax Law 2007, tax-exempt income is stipulated as follows:

Tax-exempt incomes

1. Incomes from transfer of real estate between spouses; parents and their children; adoptive parents and their adopted children; fathers-in-law or mothers-in-law and daughters-in-law or sons-in-law; grandparents and their grandchildren; or among blood siblings.

2. Incomes from transfer of residential houses, rights to use residential land and assets attached to residential land received by individuals who have only one residential house or land plot each.

3. Incomes from the value of land use rights of individuals who are allocated land by the State.

4. Incomes from receipt of inheritances or gifts that are real estate between spouses, parents and their children; adoptive parents and their adopted children; fathers-in-law or mothers-in-law and daughters-in-law or sons-in-law; grandparents and their grandchildren; or among blood siblings.

5. Incomes of households and individuals directly engaged in agricultural or forest production, salt making, aquaculture, fishing and trading of aquatic resources not yet processed into other products or preliminarily processed aquatic products.

6. Incomes from conversion of agricultural land allocated by the State to households and individuals for production.

 

...

Thus, income from real estate transfers between biological parents and their children in Vietnam is not subject to PIT.

Is income from real estate transfers between biological parents and their children in Vietnam subject to PIT? (Image from Internet)

What does taxable income from real estate transfer in Vietnam include?

Under Clause 5, Article 3 of the Personal Income Tax Law 2007, amended by Clause 1, Article 1 of the Law on Amendments to Personal Income Tax Law 2012, taxable income from real estate transfer includes:

- Income from the transfer of land use rights and assets attached to the land;

-  Income from the transfer of ownership or use rights of residential houses;

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

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

What is the time for determining taxable income from real estate transfer in Vietnam?

Under Clause 3, Article 14 of the Personal Income Tax Law 2007 amended by Clause 6, Article 2 of the Law Amending Various Tax Laws 2014, the regulation is as follows:

Taxable income from real estate transfer

1. Taxable income from real estate transfer is the price of each transfer.

2. The government shall decide the principles and methods for determination of real estate transfer prices.

3. Taxable income from real estate transfer shall be determined when the transfer contract takes effect as prescribed by law.

Thus, taxable income from real estate transfer shall be determined when the transfer contract takes effect as prescribed by law.

What are the regulations on the real estate transfer price for calculating personal income tax in Vietnam?

Under Clause 1, Article 12 of Circular 111/2013/TT-BTC, amended by Article 17 of Circular 92/2015/TT-BTC, the real estate transfer price for calculating personal income tax in Vietnam is determined as follows:

- The price of transfer of right to use land without constructions thereon is the price written on the transfer contract at the time of transfer.

If transfer contract does not specify the price or the price written on the transfer contract is lower than the land prices imposed by the People’s Committee of the province at that time, the land price imposed by the People’s Committee of the province at that time shall apply.

- The price of transfer of right to use land having constructions thereon, including off-the-plan constructions, is the price written on the transfer contract at the time of transfer.

If transfer contract does not specify the land price or the land price written on the transfer contract is lower than the land prices imposed by the People’s Committee of the province at that time, the land price imposed by the People’s Committee of the province at that time shall apply.

In case of transfer of a house associated with land, the value of the house, infrastructure, and architectural works on the piece of land shall be determined according to the prices imposed by the People’s Committee of the province. If prices are not imposed by the People’s Committee of the province, regulations of the Ministry of Construction on classification of houses, standards, basic construction norms, and value of remaining constructions on land shall apply.

For off-the-plan constructions, if the contract does not specify the transfer price of the transfer price is lower than the ratio of capital contribution to total contract value multiplied by (x) land price and price imposed by the People’s Committee of the province, the transfer price shall equal the price imposed by the People’s Committee of the province multiplied by (x) ratio of capital contribution to total contract value. If the People’s Committee of the province has not imposed the unit prices, the rate of construction investment announced by the Ministry of Construction which is applicable when the transfer is made shall apply.

- The price of transfer of right to lease land/water surface is the price written on the transfer contract at the time of transfer.

If the sublease price written on the contract is lower than the price imposed by the People’s Committee of the province when the sublease is taken, the sublease rent is based on the price list compiled by the People’s Committee of the province.