Recently, our firm has received a question from a customer: ” I am working as a broker for a real estate company. I want to ask if the brokerage fee taxable under the current regulations? What rights, obligations, and responsibilities do I have as a broker?”
In this article, LSX legal firm will answer the question: Do brokerage fees taxable under Vietnamese legislation?
Legal grounds
- Law on Commercial 2005
- Circular 111/2013/TT-BTC
The fee of brokerage
The Law on Commercial 2005 provides:
Commercial brokerage means a commercial activity whereby a trader acts as an intermediary (referred to as a broker) between parties selling and purchasing goods or providing commercial services (referred to as principals) in the course of negotiations and entering into contracts for the sale and purchase of goods or provision of services and shall entitled to remuneration under a brokerage contract.
Accordingly, you can understand that brokerage commission costs mean the amount of money that the business pays the broker for the business activities of the enterprise. The level of brokerage commissions must be based on the economic efficiency of each brokerage activity.
Do brokerage fees taxable under Vietnamese legislation?
According to the Law on Personal Income Tax, organizations and individuals that pay incomes to residents who do not sign labor contracts or sign labor contracts for less than 3 months, shall deduct at the consistent rate of 10% for income of 2 million VND or more/time of income payment (regardless of whether individuals have or do not have a tax code).
Under Circular 111/2013/TT-BTC guiding the Law on Personal Income Tax: “Remuneration received in the form of commissions for goods sale agents, brokerage commissions; money for participation in scientific and technical research; money for participation in projects, schemes; royalties in accordance with the law on royalties; money for participation in teaching activities; money for participation in cultural, art, physical training and sports performance; money for advertising services; other service fees, other remuneration” belongs to the taxable income.
Accordingly, commissions from sales agents and brokers will be considered as salary and wages income that employees receive from employers. Therefore, the sales agent’s commissions and brokerage commissions will be taxable income, and the recipients of this money must pay personal income tax if they are subject to tax.
Rights and obligations of the parties in commercial brokerage
Commercial brokerage is now classified as commercial intermediary activities with the role of helping the seller of goods and providing services to find customers. At the same time, it also creates conditions for buyers of goods and services to choose products that suit their needs and capabilities. Besides, the obligation “Responsible for the legal status of the brokered parties” will ensure the legal safety of the parties involved in the transaction.
The parties have the following rights and obligations:
Rights and obligations of the broker
Unless otherwise agreed, a commercial broker shall have the following obligations and rights:
- Firstly, to preserve samples of goods and documents assigned for the performance of brokerage activities, and return them to the principals after the completion of the brokerage;
- Secondly, not to disclose or supply information to the detriment of the interests of the principals;
- Thirdly, take responsibility for the legal status, but not for the solvency, of the principals;
- Fourthly, not to take part in the performance of contracts between the principals, except where so authorized by the principals.
- Lastly, receive brokerage remuneration as agreed and reasonably incurred costs related to the brokerage (even if the brokerage does not bring results for the brokered party)
Rights and obligations of the principal
Unless otherwise agreed, a principal shall have the following obligations and rights:
- Firstly, supply information, documents, and necessary means related to goods and services;
- Secondly, pay brokerage remuneration and other reasonable expenses to the broker.
- Thirdly, has the right to request the broker to properly and fully perform the brokerage work
The Broker’s Duties
Responsibilities of a broker when working for a client may include:
- Firstly, determine the market value of the property sold.
- Secondly, list and advertise properties for sale.
- Thirdly, introduce property features to potential buyers.
- Fourthly, advising clients on incentives and impact issues.
- Submit all purchase offers to the seller for review.
- Help buyers find out all the features in the area that customers are looking for such as the potential of the property, price range, and whether the buyer’s criteria are convincing.
- Coordinate and help buyers find out information.
- When making a purchase decision, the buyer broker helps the customer create a purchase agreement and conclude their initial purchase agreement.
- On behalf of the buyer in negotiations with the seller through their agent or broker.
- When a purchase contract is made, coordinate the transaction process on the buyer’s side.
- Provide and interpret documents during the transaction.
- …
Legal service of LSX Legal Firm
LSX legal firm provides legal services to clients in various legal areas. To make your case convenient, LSX will perform:
- Legal advice related to new regulations;
- Representing in drafting and editing documents;
- We commit the papers to be valid, and legal for use in all cases;
- Represent to submit documents, receive results, and hand them over to customers.
With a team of experienced, reputable, and professional consultants; The firm is always ready to support and work with clients to solve legal difficulties.
Furthermore, using our service, you do not need to do the paperwork yourself; We guarantee to help you prepare documents effectively and legally.
Also, you will not have to waste time preparing the application, submitting application, or receiving results. At those stages, we will help you do it smoothly.
After all, LSX provides the service with the desire that customers can experience it the best way. Additionally, we guarantee the cost to be the most suitable and economical for customers.
Related articles
- Organizational structure of a single-member limited liability company in Viet Nam
- Viet Nam legal regulations on the capital of a single-member limited liability company
- Procedures for registration of change of owner when contributing capital to a company in Vietnam
Related questions
Unless otherwise agreed, the right to enjoy brokerage remuneration arises from the time the principals enter into contracts.
Where there is no agreement, brokerage remuneration rates shall be determined.
Unless otherwise agreed, principals must pay all reasonable expenses incurred in relation to brokerage to brokers, even where the brokerage does not bring about any results for principals.
The commission rate for a successful transaction is usually around 1 to 2% of the contract value for a sale and 1 month of rent payment for a 1 year lease.
Contact LSX
Finally, hope this article is useful for you to answer the question about “Do brokerage fees taxable under Vietnamese legislation?”. If you need any further information, please contact LSX Law firm: +84846175333 or Email: [email protected]
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