Are incomes from inheritance subject to tax in Vietnam?

Are incomes from inheritance subject to tax in Vietnam? (Internet image) 

Regarding this issue, LawNet would like to answer as follows:

1. Are incomes from inheritance subject to tax in Vietnam?

Pursuant to the provisions of Clause 9, Article 2 of Circular 111/2013/TT-BTC, individuals with income from inheriting real estate assets in one of the following cases must pay personal income tax:

- Inheritance of land use rights;

- Inheriting land use rights with assets attached to the land;

- Inheriting home ownership rights, including houses formed in the future;

- Inheriting infrastructure and construction works attached to land, including construction works formed in the future;

- Inheritance of land lease rights;

- Inheritance of water surface lease rights;

- Other income received from inheritance is real estate in any form.

Except for the case of income arising from inheritance of real estate (including houses and constructions formed in the future according to the provisions of law on real estate business) between the following people: are exempt from personal income tax:

- Between husband and wife;

- Biological father, biological mother and biological children;

- Adoptive father, adoptive mother and adopted child;

- Father-in-law, mother-in-law and daughter-in-law;

- Father-in-law, mother-in-law and son-in-law;

- Grandfather, grandmother with grandchildren, maternal grandfather, grandmother with grandchildren;

- Brothers and sisters.

(Point d Clause 1 Article 3 of Circular 111/2013/TT-BTC)

In short, in case there is income arising from inheriting real estate mentioned above, the inheritor must pay tax, except in cases of inheritance between the above mentioned subjects.

2. What is basis for calculating tax on incomes from inheritance and gifts in Vietnam?

The way to calculate personal income tax payable when inheriting real estate is calculated according to the following formula:

In there:

- The value of inheritance and gifts being real estate is determined as follows:

+ The value of rights to use land is based on the land price list made by the People’s Committee of the province before the person registers the rights to use real estate.

+ The value of houses and constructions on land is based on the regulations of competent authorities in charge of house classification, construction standards and limits imposed by competent authorities, residual value of the house or construction when the ownership is registered.

If the value is not identifiable, the prices imposed by the People’s Committee of the province shall apply.

- The rate of personal income tax on the income from inheritance and gifts is 10% according to the whole income tax table.

Note: Only real estate with a value greater than 10 million VND must pay tax.

- Time to calculate the assessable income

The assessable income from inheritance and gifts is calculated when the person registers the ownership or rights to use of inheritance and gift.

(Article 16 of Circular 111/2013/TT-BTC)

3. What are cases where personal income tax be reduced?

According to Article 5 of the Law on Personal Income Tax 2007, tax reduction is prescribed as follows:

Taxpayers who face difficulties caused by natural disasters, fires, accidents or severe diseases and affecting their tax payment ability may be considered for tax reduction corresponding to the extent of damage they suffer from but not exceeding payable tax amounts.

Nguyen Ngoc Que Anh

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