How to declare and distribute value added tax on transfer of real estate in Vietnam?
Where does real estate transfer submit tax declaration dossier?
According to the provisions at Point b, Clause 1, Article 11 of Decree 126/2020/ND-CP of Vietnam as follows:
Tax declaration dossier submission location
Tax declaration dossiers shall be submitted at the locations specified in Clauses 1, 2 and 3 Article 45 of the Law on Tax administration and the following locations:
1. A taxpayer that has business operation in more than one province as prescribed in Point a and Point b Clause 4 Article 45 of the Law on Tax administration shall submit tax declaration dossiers to the tax authority of the province other than the province in which the taxpayer is headquartered in the following cases:
a) VAT of an investment project in the cases specified in Point d Clause 2 Article 7 of this Decree shall be declared where the project is located.
b) VAT on transfer of real estate or an infrastructure or housing development project for transfer (even if progress payments are collected) shall be declared where the transfer takes place.
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Thus, for transfer of real estate or an infrastructure or housing development project for transfer (even if progress payments are collected), the taxpayer shall submit tax declaration dossiers to the tax authority of the province other than the province in which the taxpayer is headquartered.
In case of real estate transfer other than the above provisions, the tax declaration, submission of tax declaration dossiers to the tax authority directly managing and allocating the payable tax amount to each province where the business activities are carried out in accordance with the provisions of Clause 1 of this Article. Clause 1, Article 12 of Circular 80/2021/TT-BTC of Vietnam.
How to declare and distribute value added tax on transfer of real estate in Vietnam?
How to declare and allocate value added tax on transfer of real estate in Vietnam?
According to the provisions of Clauses 2 and 3, Article 13 of Circular 80/2021/TT-BTC of Vietnam stipulating as follows:
Declaring, calculating, distributing and paying VAT
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2. Distribution methods:
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b) Distribution of VAT on real estate transfer:
VAT payable in each province on real estate transfer equals (=) VAT-exclusive revenue from real estate transfer in the province multiplied by (x) 1%.
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3. Declaring and paying tax:
b) Real estate transfer:
b.1) The taxpayer shall declare VAT and submit the VAT declaration dossier according to Form No. 05/GTGT in Appendix II hereof; pay the declared tax in the province where the transferred real estate is located.
b.2) The taxpayer shall include the VAT-exclusive revenue from real estate transfer in the tax declaration dossier prepared at the headquarters in order to determine the VAT payable on the entire business operation at the headquarters. The VAT paid in the province where the transferred real estate is located shall be offset against the VAT payable in the headquarters' province.
At the same time, Official Dispatch 3134/CTHN-TTHT in 2023 here provides guidance on similar cases as follows:
Pursuant to the above provisions, if Seil Ens Vietnam Co., Ltd. has real estate transfer activities that do not fall into the cases specified at Point b, Clause 1, Article 11 of Decree 126/2020/ND-CP of Vietnam, the tax VAT and CIT of real estate transfer in another province where the Company's head office is located shall be implemented as follows:
- Regarding VAT:
The company shall allocate the payable value-added tax for real estate transfer according to the guidance specified at point b, clause 2, Article 13 of Circular 80/2021/TT-BTC of Vietnam; The company declares value-added tax and pays tax to the state budget according to the provisions of Point b, Clause 3, Article 13 of Circular 80/2021/TT-BTC of Vietnam.
- Regarding CIT:
The Company shall allocate corporate income tax payable on real estate transfer according to the guidance specified at Point b, Clause 2, Article 17 of Circular 80/2021/TT-BTC of Vietnam; The company declares tax, finalizes tax and pays corporate income tax as prescribed at Point b, Clause 3, Article 17 of Circular 80/2021/TT-BTC of Vietnam.
It is recommended that Seil Ens Vietnam Co., Ltd. study the above tax regulations and base on the facts arising at the Unit to comply with regulations.
Thus, regarding the tax allowance, the company having real estate transfer activities shall allocate value-added tax in accordance with the provisions of Point b, Clause 2, Article 13 of Circular 80/2021/TT-BTC of Vietnam.
What are the requirements in terms of transfer of real estate project in Vietnam?
Pursuant to Clause 1, Article 49 of the 2014 Law on Real Estate Trading of Vietnam, the requirements in terms of transfer of all or a portion of real estate project in Vietnam are as follows:
- The project is approved by competent agencies; there is a specific planning 1/500 or general ground planning which is approved;
- The compensation or site clearance of the transferred project or a portion of the transferred project has been finished. Regarding transfer of all infrastructure construction projects, the technical infrastructure must be completed equivalent to schedule as specified in the approved project;
- The land in the project is not disputed or distrained by a competent agency
- There is no decision on project or land revocation conducted by a competent agency; in case there is any violation during the progress of the project, the investor must abide by the decision on penalty.
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