Vietnam: What is the Form No. 03-5/TNDN - Appendix on Corporate Income Tax for real estate transfer under Circular 80?

Vietnam: What is the Form No. 03-5/TNDN - Appendix on Corporate Income Tax for real estate transfer under Circular 80?

The Appendix on Corporate Income Tax for real estate transfer is Form No. 03-5/TNDN specified in Section II of Appendix II issued with Circular 80/2021/TT-BTC.

DOWNLOAD HERE Form No. 03-5/TNDN Appendix on Corporate Income Tax for real estate transfer under Circular 80

Which enterprises are subject to income tax from real estate transfers in Vietnam?

Pursuant to the provisions of Clause 1, Article 16 of Circular 78/2014/TT-BTC, enterprises subject to income tax from real estate transfers include:

+ Enterprises of all economic sectors and industries with income from real estate transfer;

+ Real estate businesses with income from land sublease activities.

What is the Appendix on Corporate Income Tax for real estate transfer in Vietnam under Circular 80? (Image from the Internet)

What income from real estate transfer is subject to corporate income tax in Vietnam?

Pursuant to the provisions of Clause 2, Article 16 of Circular 78/2014/TT-BTC as follows:

Taxable subjects

...

2. Income from real estate transfer includes: income from the transfer of land use rights, land lease rights (including the transfer of projects associated with the transfer of land use rights, land lease rights as prescribed by law); income from land sublease activities by real estate enterprises according to the land law without distinguishing between having infrastructure or architectural works attached to the land; income from the transfer of houses, construction work attached to the land, including assets attached to the house, construction, if the asset value is not separately calculated when transferring without distinguishing whether there is a transfer of land use rights, lease rights or not; income from the transfer of assets attached to the land; income from the transfer of ownership or use rights of housing.

Income from land sublease activities of real estate enterprises does not include cases where enterprises only lease houses, infrastructure, and architectural works on the land.

Thus, income from real estate transfer subject to corporate income tax includes:

+ Income from the transfer of land use rights, land lease rights (including the transfer of projects associated with the transfer of land use rights, land lease rights as prescribed by law);

+ Income from land sublease activities by real estate enterprises according to land law without distinguishing whether infrastructure or architectural works are attached to the land;

+ Income from the transfer of houses, construction works attached to the land, including assets attached to the house, construction, if the asset value is not separately calculated when transferring without distinguishing whether there is a transfer of land use rights, lease rights or not;

+ Income from the transfer of assets attached to the land;

+ Income from the transfer of ownership or use rights of housing.

Income from land sublease activities of real estate enterprises does not include cases where enterprises only lease houses, infrastructure, and architectural works on the land.

Additionally, according to Point a.1, Clause 1, Article 17 of Circular 78/2014/TT-BTC, revenue from real estate transfer is determined according to the actual transfer value of real estate according to the transfer, purchase, sale contract consistent with legal regulations (including additional charges and fees if any).

In cases where the transfer price of land use rights according to the transfer, purchase sale contract is lower than the land price in the land price table issued by the People's Committee of provinces, centrally run cities at the time of signing the transfer contract of real estate, then calculated according to the land price issued by the People's Committee of provinces, centrally run cities at the time of signing the transfer contract of real estate.

- The point in time to determine revenue for tax calculation is when the seller hands over the real estate to the buyer, regardless of whether the buyer has registered asset ownership, land use rights, land use rights establishment at competent state agencies.

- In cases where enterprises carry out infrastructure, housing projects for transfer or lease, collecting advance payments from customers as per schedule in any form, the time to determine revenue for provisional corporate income tax payment is when the enterprise collects money from customers, specifically:

+ In cases where enterprises collect money from customers and can determine costs corresponding to the recorded revenue (including pre-extracted costs of unfinished items corresponding to recorded revenue), enterprises declare and pay corporate income tax according to revenue minus costs.

+ In cases where enterprises collect money from customers but have not determined costs corresponding to the revenue, enterprises temporarily declare and pay corporate income tax at a rate of 1% on the collected revenue, and this revenue is not included in corporate income tax revenue for the year.

- When handing over real estate, enterprises must settle corporate income tax and recalculate the corporate income tax payable. If the provisional corporate income tax paid is lower than the payable amount, the enterprise must pay the remaining tax amount into the State Budget.

- If the provisional corporate income tax paid exceeds the payable amount, the enterprise can deduct the overpaid tax into the corporate income tax payable for the next period or be refunded the overpaid tax.

- For real estate businesses collecting advance payments from customers as per schedule and declaring provisional tax payment as a % rate on collected revenue, this revenue is not yet included in corporate income tax revenue for the year and incurs advertising, marketing, promotion, brokerage commission costs when starting sales in the year revenue as per schedule arises; these costs are not recognized in the year the expense arises.

Advertising, marketing, promotion, and brokerage commission costs are deductible according to the controlled level as prescribed in the first year of handing over real estate, with the revenue generating corporate income tax.