How to declare and pay tax for a company that transfers its contributed capital which is the value of land use rights in Vietnam?
- Guidance on tax declaration and payment for companies that transfer capital contribution as the value of land use rights in Vietnam?
- Guidance on tax declaration, tax calculation, tax finalization, distribution and payment of CIT for companies that transfer capital contribution as the value of land use rights in Vietnam?
- Regulations on taxes declared monthly, quarterly, annually, separately and tax finalization in Vietnam?
Guidance on tax declaration and payment for companies that transfer capital contribution as the value of land use rights in Vietnam?
According to Point d, Clause 8, Article 4 of Circular No. 219/2013/TT-BTC stipulating goods and services that are not subject to VAT as follows:
Goods and services that are not subject to VAT
…
8. The finance, banking, and securities services below:
…
d) Capital transfer includes the transfer of part of or the whole capital invested in another business organization (regardless of the creation of a new legal entity), securities transfer, transfer of the right to contribute capital, and other forms of capital transfer prescribed by law, including business acquisition in which the acquirer inherits all rights and obligations of the acquired company.
At the same time, based on Clause 14, Article 7 of Circular No. 78/2014/TT-BTC (amended and supplemented by Article 2 of Circular No. 151/2014/TT-BTC) stipulating as follows:
Other incomes
Other incomes are taxable incomes in a tax period which arise not from the sectors and business lines indicated in enterprises’ business registration certificates. Other incomes include:
…
14. Differences from the revaluation of assets as prescribed to contribute capital or transfer assets upon division, splitting, consolidation, merger or conversion (except for equitization or restructuring of the enterprises whose charter capital is wholly held by the state) shall be specifically determined as follows:
a) Increase or decrease resulting from the revaluation of assets is the difference between the re-evaluated value and the residual book value of assets and shall be included once in other incomes (for increase) or deducted from other incomes (for decrease) in a tax period for determining taxable incomes of businesses having their assets re-evaluated;
b) Increase or decrease resulting from the revaluation of land use rights (hereinafter referred to as land) for: capital contribution (in which the land transferee may gradually aggregate this value with deductible expenses), transfer upon division, splitting, consolidation, merger or conversion; or for capital contribution to investment projects to build houses and infrastructure facilities for sale shall be included once in other incomes (for increase) or deducted from other incomes (for decrease) in a tax period for determining taxable incomes of the land transferor;
…
In case after capital contribution, businesses continue to transfer capital in the form of land (including also the case of capital contribution ahead of the 10-year time limit), the income from the transfer of capital in the form of land shall be calculated and declared for tax payment as income from real estate transfer.
The difference resulting from the revaluation of land includes: the difference between the re-evaluated value and book value of land if land use term is indefinite, or the difference between the re-evaluated value and value of land that remains after aggregation with income if land use term is limited.
Official Dispatch No. 7567/CTTPHCM-TTHT in 2022 guides as follows:
In case the Company transfers the contributed capital which is the value of land use rights at An Ty Co., Ltd, the tax declaration and payment shall be as follows:
- VAT: capital transfer activities are not subject to VAT, the company issues an invoice to the buyer according to regulations.
- PIT: income from the transfer of contributed capital equal to the value of land use rights must be calculated and declared and paid according to the income from real estate transfer as prescribed in Article 2 of Circular No. 151/2014/TT-BTC.
In case there is income from this transfer, the Company cannot offset the loss of production and business activities and other income of the Company.
How to declare and pay tax for a company that transfers its contributed capital which is the value of land use rights in Vietnam? (Image from the Internet)
Guidance on tax declaration, tax calculation, tax finalization, distribution and payment of CIT for companies that transfer capital contribution as the value of land use rights in Vietnam?
According to the provisions of Article 17 of Circular No. 80/2021/TT-BTC stipulating as follows:
Declaring, calculating, finalizing, distributing and paying corporate income tax (CIT)
1. Distribution cases:
…
b) Real estate transfer;
…
2. Distribution methods:
...
b) Distribution of CIT on real estate transfer:
Quarterly and finalized CIT payable in each province where real estate transfer takes place equals (=) revenue subject to CIT from real estate transfer in the province multiplied by (x) 1%.
…
3. Declaring, finalizing, paying tax:
…
b) Real estate transfer:
b.1) Declaring, paying provisional tax quarterly:
The taxpayer is not required to submit tax declaration dossiers quarterly but have pay provision tax quarterly according to Point b Clause 2 of this Article in the provinces where real estate transfer takes place.
b.2) Tax finalization:
The taxpayer shall finalize CIT on every real estate transfer according to Form No. 03/TNDN, determine the CIT payable in each province according to Point b Clause 2 of this Article in the CIT distribution sheet, which is prepared according to Form No. 03-8A/TNDN in Appendix II hereof to the supervisory tax authority; pay CIT in the provinces where real estate transfer takes place in accordance with Clause 4 Article 12 of this Circular.
Paid provisional tax in the provinces (excluding provisional tax paid on behalf of enterprises executing infrastructure, housing projects for transfer or lease purchase with collection of advances from buyers which are yet to be included in revenue subject to CIT in the year) shall be deducted from the CIT on real estate transfer payable in each province specified in Form No. 03-8A/TNDN in Appendix II hereof. The remainder (if any) shall be deducted from the finalized CIT on real estate transfer at the headquarters, which is specified in Form No. 03/TNDN in Appendix II hereof.
In case the paid provisional CIT is smaller than the finalized CIT specified in Form No. 03/TNDN in Appendix II hereof, the taxpayer shall pay the CIT arrears in the province where the taxpayer is headquartered. In case the paid provisional CIT is greater than the CIT payable, the overpaid CIT shall be handled in accordance with Article 60 of the Law on Tax Administration and Article 25 of this Circular.
Official Dispatch No. 7567/CTTPHCM-TTHT in 2022 guides as follows:
The tax declaration, tax calculation, tax finalization, distribution and payment of CIT should be researched by the company in accordance with the provisions of Article 17 of Circular No. 80/2021/TT-BTC.
Regulations on taxes declared monthly, quarterly, annually, separately and tax finalization in Vietnam?
According to Point b, Clause 6, Article 8 of Decree No. 126/2020/ND-CP stipulating as follows:
Taxes declared monthly, quarterly, annually, separately; tax finalization
…
6. The following taxes and amounts shall be declared annually and finalized when an enterprise is dissolved, shuts down, terminates a contract or undergoes rearrangement. In case of conversion (except equitized state-owned enterprises) where the enterprise after conversion inherits all tax obligations of the enterprise before conversion, tax shall be finalized at the end of the year instead of the issuance date of the decision on conversion. Tax shall be finalized at the end of the year):
...
b) Corporate income tax (except corporate income tax on transfer of foreign contractor's capital; monthly or separately declared corporate income tax on revenue specified in Point dd Clause 4 of this Article). The taxpayer shall calculate the provisional corporate income tax every quarter (including distribution of corporate income tax among dependent units, business locations and other real estate in provinces other than the province in which the enterprise is headquartered) and may deduct the provisional tax from the tax payable under the annual tax finalization dossier (terminal tax).
Taxpayers that have to prepare quarterly financial statements under accounting laws shall calculate provisional corporate income tax quarterly according to the quarterly financial statements and tax laws.
…
The total amount of provisional corporate income tax paid in the first 03 quarters of the year shall be at least 75% of the terminal tax. Otherwise, late payment interest shall be charged on the arrears over the period from the deadline for paying corporate income tax of the third quarter to the date of payment of the arrears.
In case the taxpayer executes a project of investment in infrastructure or housing for transfer or lease purchase and collect progress payments from customers, provisional corporate income tax shall be paid quarterly at the rate of 1% of the amount collect. In case the project is yet to be transferred and not included in the revenue subject to corporate income tax in the year, it shall be included in the tax finalization dossier when the project is partially or fully transferred instead of the annual tax finalization dossier.
Thus, the above is the regulation on taxes declared monthly, quarterly, annually, separately and tax finalization in Vietnam.
LawNet
