When is the time to determine taxable income for PIT when receiving an inheritance in Vietnam?

When is the time to determine taxable income for personal income tax (PIT) when receiving an inheritance in Vietnam?

According to Clause 3, Article 16 of Circular 111/2013/TT-BTC, the time to determine taxable income for resident individuals is specified as follows:

Basis for taxation from inheritance, gifts

The basis for taxation of income from inheritance, gifts is the taxable income and tax rate.

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3. Time of determining taxable income

The time to determine taxable income from inheritance or gifts is when the individual completes procedures for registering ownership or the right to use inherited or gifted property.

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Additionally, according to Point b, Clause 3, Article 23 of Circular 111/2013/TT-BTC, the time for determining non-resident taxable income is specified as:

For income from winnings, inheritance, gifts

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3. Time of determining taxable income

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b) For income from inheritance: the time of determining taxable income is when the individual completes procedures for registering ownership or the right to use the property in Vietnam.

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Thus, the timing for determining taxable income for PIT when receiving an inheritance is as follows:

- For resident individuals, it is when the individual completes procedures for registering ownership, the right to use the inherited property, or gifts.- For non-resident individuals, it is the time when the individual completes procedures for registering ownership or the right to use the property in Vietnam.

When is the time to determine taxable income for PIT when receiving an inheritance in Vietnam? (Image from the Internet)

What is the deadline for submitting a personal income tax declaration for income from inheritance in Vietnam?

According to Point g, Clause 4, Article 8 of Decree 126/2020/ND-CP, the regulation is as follows:

Taxes declared monthly, quarterly, annually, per each arising tax obligation, and tax finalization declarations

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4. Taxes and other revenues of the state budget declared per each arising instance include:

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g) Personal income tax directly declared by individuals or organizations, individuals declaring and paying taxes on behalf of income from real estate transfers; income from capital transfers; income from investment capital; income from royalties, franchising, winnings from abroad; income from receiving inheritance, gifts.

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Additionally, as stipulated at Clause 3, Article 44 of the Law on Tax Administration 2019:

Deadline for submitting tax declaration documents

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3. The deadline for submitting tax declaration documents for taxes declared and paid per each arising tax obligation is no later than the 10th day from the date of the arising tax obligation.

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Accordingly, the personal income tax for income from inheritance and gifts (excluding real estate) is declared per each arising instance.

The deadline for submitting a personal income tax declaration for income from inheritance, gifts (excluding real estate) is no later than the 10th day from the date of the arising tax obligation.

From receiving real estate inheritance, between which entities is PIT exemption applicable?

According to Point d, Clause 1, Article 3 of Circular 111/2013/TT-BTC, the exemptions are specified as follows:

Tax-exempt income

1. Based on the provisions at Article 4 of the Personal Income Tax Law, Article 4 of Decree 65/2013/ND-CP, tax-exempt incomes include:

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b.1.3) Transfer of entire residential houses, homestead land. In cases where an individual has sole or joint ownership rights to a house or homestead land but transfers part, tax exemption is not applicable to that transferred part.

b.2) The only house or homestead land is exempt from tax due to the individual declaring and taking responsibility. Upon incorrect declarations, retroactive tax collection and penalties for violations of tax laws will be applied as per tax management laws.

b.3) Transfers of houses, future construction projects are not eligible for personal income tax exemption as guided at Point b, Clause 1, of this Article.

c) Income from the value of land use rights of individuals receiving land allocation from the State without payment or with land levy reduction as regulated by law.

In cases of land use levy exemption or reduction when land is allocated, if transferring the land area with land use levy exemption or reduction, tax must be declared and paid according to the guidelines at Article 12 of this Circular.

d) Income from receiving inheritance, gifts in the form of real estate (including residential houses, future construction projects as per real estate business laws) between: husband and wife; biological parents and children; adoptive parents and adopted children; in-laws and daughter-in-law; in-laws and son-in-law; grandparents and grandchildren; siblings.

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Thus, income from receiving real estate inheritance is exempt from PIT if it falls under the following parties:

- Husband and wife;

- Biological parents and children; adoptive parents and adopted children; in-laws and daughter-in-law;

- In-laws and son-in-law;

- Grandparents and grandchildren;

- Siblings.

Note: Income from real estate inheritance includes residential houses and construction projects formed in the future as per real estate business laws.