Is real estate brokerage commission subject to personal income tax in Vietnam?

Is real estate brokerage commission subject to personal income tax in Vietnam?

Based on point c, clause 2, Article 3 of Decree 65/2013/ND-CP, amended by clause 3, Article 2 of Decree 12/2015/ND-CP, the regulations are specifically as follows:

Taxable Income

...

2. Income from wages and salaries received by employees from employers, including:

...

b) Allowances and subsidies, excluding the following allowances and subsidies:

- Monthly preferential allowances and one-time allowances according to legal regulations on preferential treatment for people with meritorious services;

- Monthly allowances, one-time allowances for individuals participating in resistance, national defense, international missions, youth volunteering having completed their duties;

- National defense and security allowances; allowances for armed forces;

- Hazardous allowances for industries, occupations, or work at places with hazardous elements;

- Attraction allowance, regional allowance;

- Sudden hardship allowances, labor accident allowances, occupational disease allowances, one-time maternity benefits or adoption benefits, allowances for decreased working capacity, one-time retirement benefits, monthly survivor benefits, severance allowances, job loss allowances, unemployment benefits, and other benefits according to the Labor Code and Social Insurance Law;

- Allowances for individuals under social protection according to the law;

- Service allowances for senior leaders;

- One-time allowances for individuals transferring work to areas with particularly difficult socio-economic conditions, one-time support for officials working on island sovereignty as stipulated by the law. Relocation allowances for foreigners residing in Vietnam, Vietnamese working abroad, and Vietnamese residing overseas returning to work in Vietnam;

- Allowances for village health workers;

- Specific profession allowances.

The allowances and subsidies not counted as taxable income as stated in this Point must be specified by a competent state agency.

c) Remuneration received in forms such as: brokerage commission, participation in projects, royalties, and other commissions or remunerations;

d) Payments received from participation in business associations, boards of directors, supervisory boards, management boards, associations, professional associations, and other organizations;

...

Thus, according to the above regulations, real estate brokerage commission is subject to personal income tax.

Is real estate brokerage commission subject to personal income tax in Vietnam? (Image from the Internet)

What Income is exempt from personal income tax in Vietnam?

According to Article 4 of the Personal Income Tax Law 2007 (amended by clause 2, Article 1 of the Amendment Law on Personal Income Tax 2012, supplemented by clause 3, Article 2 of the 2014 Amendment Law on Tax Laws), incomes exempt from tax are specified as follows:

- Income from the transfer of real estate between spouses, biological parents and children, adoptive parents and adopted children, parents-in-law and daughters-in-law, parents-in-law and sons-in-law, grandparents and grandchildren, and siblings.

- Income from the transfer of residential housing, rights to use homestead land, and assets attached to homestead land of an individual where the individual owns only one residential house or homestead land.

- Income from the value of land use rights allocated by the State.

- Income from inheritances, gifts of real estate between spouses, biological parents and children, adoptive parents and adopted children, parents-in-law and daughters-in-law, parents-in-law and sons-in-law, grandparents and grandchildren, and siblings.

- Income of households, individuals directly engaged in agriculture, forestry, salt-making, aquaculture, which have not been processed into other products or only undergone basic processing.

- Income from changing agricultural land of households or individuals allocated for production by the State.

- Income from interest on deposits at credit institutions, interest from life insurance contracts.

- Income from remittances.

- Night work wages and overtime wages paid higher than the wages for work during the day or within legal working hours.

- Pensions paid by the Social Insurance Fund; monthly pensions from voluntary pension funds.

- Scholarships, including:

+ Scholarships from the state budget;

+ Scholarships from domestic and foreign organizations according to their programs for scholarship support.

- Income from life and non-life insurance contract compensation, labor accident compensations, state compensations, and other compensations as defined by law.

- Income from the charitable funds recognized, established with the consent of the competent state agency, or recognized and operating for charitable, humanitarian, non-profit purposes.

- Income from foreign aid for charitable and humanitarian purposes in forms approved by government and non-governmental organizations.

- Income from wages and salaries of Vietnamese crew members working for foreign shipping companies or international shipping companies of Vietnam.

- Income of individuals who are ship owners, individuals entitled to use ships, and individuals working on ships from providing goods and services directly serving offshore fishing and aquaculture activities.

What are regulations on the personal income tax calculation period in Vietnam?

According to Article 7 of the Personal Income Tax Law 2007, amended by clause 3, Article 1 of the Amendment Law on Personal Income Tax 2012, the tax calculation period is defined as follows:

- The tax calculation period for residents is defined as follows:

+ The annual tax calculation period applies to income from business activities, wages, and salaries;

+ The tax calculation period for each income arising applies to income from capital investment, capital transfer income, except income from securities transfer, real estate transfer income, lottery prize income, royalties income, franchise income, inheritance income, and gift income;

+ The tax calculation period for each securities transfer transaction or annually for securities transfer income.

- The tax calculation period for non-residents is calculated on each occasion that taxable income arises applicable to all taxable incomes.