Specific provisions of Vietnamese law on personal income tax when selling houses
Currently, the law has set out specific regulations on personal income tax when selling houses; when carrying out transactions of buying, selling, or transferring real estate. Therefore, to be able to pay personal income tax in accordance with the law, we need to have an understanding of it. Today, LSX Lawfirm will give you an article about “Specific provisions of Vietnamese law on personal income tax when selling houses”, as follows:
Legal grounds
Law on personal income tax 2007.
Decree No. 111/2013/Circular – Ministry of Finance
What is personal income tax?
Personal income tax (Personal income tax) is an amount that income earners have to deduct part of their salary, or from other sources of revenue, into the state budget after deductions have been made. Personal income tax is not levied on low-income individuals, so this revenue will be fair to all beneficiaries, contributing to reducing the disparity between classes in society.
There are 2 subjects that must pay personal income tax: Residents and non-residents in Vietnam with taxable income. Specifically:
- Firstly, For resident individuals: Taxable income is the amount arising inside and outside the territory of Vietnam (regardless of where the income is paid).
- Secondly, For non-resident individuals: Taxable income is income generated in Vietnam (regardless of where the income is paid and received).
Compulsory personal income tax paid when selling a house
As mentioned above, paying personal income tax is the responsibility of each person. However, not everyone needs to pay personal income tax when selling a home. According to Clause 5, Article 2 of Regulation No. 111/2013/Circular – Ministry of Finance; those who receive money and earn income in real estate transactions; are subject to personal income tax. That also means that the buyer does not need to bear this part.
However, in some cases the buyer and seller have agreed on the contract; must follow the contract. If it is not possible to reach a final conclusion, the taxpayer will be regulated by the Law.
Information about taxpayers is more specific in the Law on Personal Income Tax 2007.
For individuals residing in and outside the territory of Vietnam with income
The subjects here include individuals living and working in Vietnam; whether Vietnamese or foreign. These subjects considered to be resident individuals when they fully meet a few of the following conditions:
– Calculated according to 12 solar calendar months, the individual has been to and in Vietnam for more than 183 days.
– Own residence in Vietnam on a regular basis. In the case of rented houses; times the legal housing case register with the Law of Vietnam. If rented, must have rented for more than 183 days during the tax period.
In case the subject resides in Vietnam for less than 183 days; but cannot prove their identity, they still identified as resident individuals. Also, if the above 2 conditions not met; then the subject not confirmed as a resident.
For individuals who do not reside in the territory of Vietnam who has income and are subject to income tax
Grasp the 2 conditions to become a resident above; then surely you will understand what a non-resident individual is. Speak in a simpler and more understandable way; non-resident individuals are those who cannot meet the conditions for becoming a resident.
Procedure to declare personal income tax when selling a house
All income earners from the transfer of real estate (including those subject to real estate transfer tax or exempt from tax) required to file a tax return. The detailed procedure is as follows:
Prepared tax return documents including full information:
Personal income tax return; notarized real estate transfer contract; Certificate of house use right, copy of land use right. If exempt; Individuals need to have sufficient documents to determine that they are exempt from paying personal income tax when selling their houses.
In which, if it is the case of real estate transfer in the future, then:
When submitting a copy of the land use right certificate, it should sign by the project owners or their trading floor. Need to add the previous transfer contract next time, when preparing the second notarized real estate transfer contract. The next step is to file a tax return at the Tax Department or the one-stop-shop.
The next step is to check and confirm the submitted application. Tax notices will send from tax authorities. The final step is to pay taxes to the competent authority.
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Related questions
According to Clause 1, Article 40 of the 2015 Civil Code, an individual’s place of residence is the place where he or she regularly lives. If it is not possible to determine where such a person regularly lives, the place of residence of this person is the place where he/she is currently living. In addition to the case where a citizen’s place of residence is determined to be his/her permanent residence and his/her temporary residence. If these people do not have a permanent place of residence and a temporary place of residence because they are not eligible for permanent residence registration or temporary residence registration, the place of residence will be determined as the current place of residence of such person. In case there is no specific place of residence, the current place of residence is determined as the commune-level administrative unit where that person is actually living
In order to be granted a certificate of land use right, according to the local policy of granting a certificate, the land user (the seller) will have to carry out the procedures for the grant of a certificate in their name first. The two parties can re-sign a notarized contract and complete the registration file for the transfer of land use rights to your family.
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