What tax rate will enterprises in Vietnam operating in transfer of real estate be subject to?

What tax rate will enterprises in Vietnam operating in transfer of real estate be subject to?

Pursuant to Article 2 of Circular 96/2015/TT-BTC taxable income is as follows:

2. Taxable income

Taxable income in a tax period includes income from manufacturing, trading of goods, services (hereinafter referred to as business operation), and other incomes.

Taxable income in a tax period is calculated as follows:

Taxable income

=

Revenue

-

Deductible expenses

+

Other incomes

Incomes from the business operation equals (=) revenue from the business operation minus (-) deductible expenses of such business operation. If an enterprise engages in multiple business operations that apply various tax rates, revenue from each of them must be calculated separately, which is multiplied by the corresponding tax rate.

Incomes from transfers of real estate, project of investment, right to participate in a project of investment, right to mineral exploration and/or mineral extraction and/or mineral processing must be separated, shall apply 22% CIT tax (20% from January 01, 2016) and are not given CIT incentives (except for the income from projects of investment in social housing for sale, for lease, or lease purchase, which applies 10% CIT according to Point d Clause 3 Article 19 of Circular No. 78/2014/TT-BTC).

In a tax period, if a enterprise makes a transfer of real estate, project of investment, or right to participate in a project of investment (except for mineral exploration and extraction) and suffers from a loss, such loss shall be offset against the profit from the business operation (including other incomes prescribed in Article 7 of Circular No. 78/2014/TT-BTC). The loss that remains after offsetting shall carried forward to the next years within the carryforward time limit.

The loss on a transfer of real estate, project of investment, right to participate in a project of investment (except for mineral exploration and extraction) in 2013 and earlier, which may still be carried forward, must be deducted from the income from transfer of real estate, project of investment, right to participate in a project of investment. The loss that remains shall be deducted from income from the business operation (including other incomes) from 2014 onwards.

In case a enterprise initiates the procedures for dissolution, after a decision on dissolution is made, if real estate which is fixed assets of the enterprise is transferred, the income (profit) from such transfer (if any) shall be offset against the loss on the business operation (including loss carried forward from the previous years) of the tax period during which real estate is transferred

Thus, according to current regulations for real estate transfer activities, enterprises will be subject to a tax rate of 20% in Vietnam.

What tax rate will enterprises in Vietnam operating in transfer of real estate be subject to? (Image from the Internet)

What is determination of amount of corporate income tax payable in Vietnam? 

According to Article 9 of Circular 96/2015/TT-BTC, regulations on determination of CIT payable are as follows:

CIT on real estate transfer in the period equals (=) assessable income from real estate transfer multiplied by (x) 22%.

Income from real estate transfer must be declared separately and is not eligible for CIT incentives.

Tax declaration and receipts of payment of CIT from real estate transfer in the administrative division where the transferred real estate is located are the basis for settling tax in the headquarter’s administrative division where

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