Is inheriting the right to lease land from adoptive parents subject to personal income tax in Vietnam?

Is inheriting the right to lease land from adoptive parents subject to personal income tax in Vietnam?

According to point c, clause 9, Article 2 of Circular 111/2013/TT-BTC, the regulation on taxable income is as follows:

Taxable Income

As stipulated in Article 3 of the Personal Income Tax Law and Article 3 of Decree No. 65/2013/ND-CP, taxable personal income includes:

...

9. Income from inheritance

Inheritance income is the income received by an individual under a will or according to inheritance laws. To be specific:

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c) For inherited real estate, including: the right to use land; the right to use land with attached assets; the right to own houses, including future houses; infrastructure and constructions attached to land, including future constructions; the right to lease land; the right to lease water surfaces; and other incomes from inherited real estate in any form; except for income from inherited real estate as guided at point d, clause 1, Article 3 of this Circular.

According to point d, clause 1, Article 3 of Circular 111/2013/TT-BTC, the following inheritance income is not subject to personal income tax:

- Between husband and wife;- Biological parents and biological 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.

Therefore, inheriting the right to lease land from adoptive parents does not require paying personal income tax.

Is inheriting the right to lease land from adoptive parents subject to personal income tax in Vietnam? (Image from the Internet)

How to calculate personal income tax on income from inheritance in Vietnam?

Based on clause 4, Article 16 of Circular 111/2013/TT-BTC, the calculation of personal income tax on income from inheritance is as follows:

* Where:

Taxable income from inheritance is the value of the inherited asset exceeding 10 million VND each time received. The value of the inherited asset is determined for each specific case. To be specific:

- For inheritance as securities: the value of the inherited asset is the value exceeding 10 million VND computed on all securities codes received without deducting any expenses at the time of registration of ownership transfer. To be specific:

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

+ For securities not in the above category: the value of the securities is based on the book value of the issuing company at the latest financial report in compliance with accounting laws before the time of registering ownership of the securities.

- For inheritance as capital contributions in economic organizations or business establishments: the taxable income is the value of the capital contribution based on the book value of the company at the latest preceding the time of registering ownership of the capital contribution.

- For inherited real estate assets: the value is determined as follows:

+ For real estate as the value of the right to use land, the value of the right to use land is based on the Land Price Table prescribed by the provincial People's Committee at the time the individual carries out procedures to register the right to use real estate.

+ For real estate as houses and architectural works on land, the value is based on the regulations of the competent State management agencies about classification and valuation of houses, set standards, and basic construction benchmarks issued by competent State management agencies; the remaining value of houses and architectural works at the time of registration for ownership.

In case of failure to determine it as prescribed above, it is based on the valuation for registration fee imposed by the provincial People's Committee.

- For inheritance as other assets required to register ownership or use rights with State management agencies: the value of the asset is based on the valuation for registration fee imposed by the provincial People's Committee at the time the individual completes procedures to register ownership or use rights of the inherited asset.

In case an individual receives inherited assets that are imported and must pay taxes related to the importation of assets, the value of the asset for personal income tax calculation on inherited gifts is the registration fee valuation imposed by the provincial People's Committee at the time of registration minus (-) import-stage taxes paid by the individual according to regulations.

When is the tax period for calculating personal income tax on income from inheritance in Vietnam?

According to clause 6, Article 3 of the Tax Administration Law 2019, the tax period for personal income tax is understood to be the time frame within which the amount of tax payable to the state budget is determined according to tax laws.

Based on Article 7 of the Personal Income Tax Law 2007, amended by clause 3, Article 1 of the Amended Personal Income Tax Law 2012, the tax period for personal income tax is determined as follows:

Tax Period

1. The tax period for resident individuals is regulated as follows:

a) The annual tax period applies to income from business; income from salaries and wages;

b) The tax period for each occurrence of income applies to income from capital investment; income from capital transfers, except for securities transfers; income from real estate transfers; income from winnings; income from royalties; income from franchise rights; income from inheritance; income from gifts;

c) The tax period for each occurrence of securities transfers or annually applies to income from securities transfers.

2. The tax period for non-resident individuals is calculated for each occurrence of income for all taxable incomes.

Thus, the tax period for personal income tax on income from inheritance will follow each occurrence of income.