My family has 3 plots of land with land use right certificates for each piece. Now that I am old, I have a need to transfer to some family members. However, some argue that donating land will not be taxed, but some opinions are completely opposite. So about the matter “Donating land will not be taxed under Vietnam law” Let’s find out with LSX in the article below.
Legal grounds
- Law on Personal Income Tax 2007
- Decree 10/2022/ND-CP
- Circular 13/2022/TT-BTC
- Circular 111/2013/TT-BTC
What is land donation?
Donation of land is an agreement between the parties whereby the donor transfers its land use right and the area of the land plot to the donor without asking for compensation.
In fact, the donation of land use rights occurs in two common forms:
– Parents give land to their children;
– People who have land donate their land to other people (not parents who give land to their children).
Currently, when receiving a donation as a land use right but not carrying out the procedures to transfer the name, it leads to the following situation: The land belongs to the parents, the house belongs to the children. In this case, disputes are likely to arise.
For example: When a husband and wife divorce and divide the property, the parents for various reasons think that the land is “borrowed” to build a house, not “donated”, so that land plot is not divided and want to get it back.
In order to avoid such risks, even if you are given the use right by your parents, you should also carry out the procedure for transferring the name (it is required by law to register the change of land when donating the land use right).
Current taxes, fees and charges when donating land use rights
Personal income tax
Pursuant to Clause 10, Article 3 of the Law on Personal Income Tax 2007 stipulates on types of income subject to personal income tax:
Incomes from receiving gifts are securities, capital in economic organizations, business establishments, real estate and other assets subject to registration of ownership or registration of use. For resident individuals:
Article 18 of the Law on Personal Income Tax 2007 provides for taxable income from inheritance and gifts as follows:
• Taxable income from inheritance or gift is the value of inheritance or gift in excess of VND 10 million that a taxpayer receives each time it is incurred.
• Time to determine taxable income for income from gifts is the time when organizations or individuals give to taxpayers or the time when taxpayers receive income. In addition, the determination of taxable income for inheritances and gifts must be consistent with market prices at the time of income generation. For real estate, the land value is determined based on the land price list prescribed by the provincial People’s Committee at the time of inheritance or gift receipt.
Registration fee
Land subject to registration fee includes: Agricultural land and non-agricultural land in accordance with the provisions of the Land Law 2013 (regardless of whether the land has been built or not). Price for calculating registration fee for land
The registration fee calculation price for land is the land price in the land price list promulgated by the People’s Committee of the province or centrally run city in accordance with the law on land at the time of registration fee declaration.
Fees for notarization and certification of donation contracts for land use rights
Notarization fee Notarization of contracts on transfer, donation, giving, division, splitting, merging, exchange, capital contribution with land use rights: Calculated on the value of land use rights. Notarization of economic, commercial, investment and business contracts: Calculated on the value of assets or the value of contracts and transactions.
Fees for issuance of land use right certificates
Fees for issuance of certificates of land use rights and ownership of houses and land-attached assets are revenues that organizations, households and individuals must pay when they are granted certificates by competent state agencies. land use rights, ownership of houses and properties attached to land.
Fees for issuance of certificates of land use rights and ownership of houses and land-attached assets include:
• Issuance of certificates of land use rights, ownership of houses and properties attached to land;
• Certificate of registration of changes in land;
• Extracts of cadastral maps; document; cadastral data.
– Based on specific local conditions and local socio-economic development policies to determine appropriate fee rates, ensuring the following principles:
• The rate of collection for households and individuals in districts of central-affiliated cities, urban wards of cities or provincial towns is higher than that of other areas;
• The level of collection for organizations is higher than that for households and individuals
Donating land will not be taxed under Vietnam law
Tax-free land donation
Parents who donate land will be free of registration and personal income tax
In Article 4 of the Law on Personal Income Tax 2007 amended and supplemented in 2014, cases of personal income tax exemption from gift giving are real estate between: Wife and husband; natural parents with their own children, adoptive parents with their adopted children; parents-in-law with daughter-in-law, parents-in-law with son-in-law; paternal grandparents with grandchildren, maternal grandparents with grandchildren; siblings together.
Registration fee exemption: According to Article 8 of Decree 10/2022/ND-CP, the registration fee rate for houses and land is 0.5%. However, in the above cases, if you donate land or houses, you will also be exempt from registration fees.
In case of donation of land subject to tax
In addition to the above subjects, any other case of donating real estate must also pay registration fees and personal income tax. According to Circular 13/2022/TT-BTC, real estate objects subject to registration fees include:
• Housing, working house, house used for other purposes.
• All kinds of agricultural and non-agricultural land under the management and use rights of organizations, households and individuals. Besides, in addition to the subjects who are exempt from personal income tax mentioned above, any type of donation transaction is also subject to the tax rate of 10% as prescribed in Article 16 of Circular 111/2013/TT-BTC. .
Where do I pay taxes on real estate?
The place of tax payment or the place of tax payment is specified in Article 56 of the Law on Tax Administration. Attached to the tax payment location is the form of tax payment, whereby, Article 56 provides that:
“1. Taxpayers pay tax into the state budget according to the following provisions:
a) At the State Treasury;
b) At the tax administration agency where the tax declaration dossier is received;
c) Through an organization authorized by the tax authority to collect tax;
d) Through commercial banks, other credit institutions and service organizations as prescribed by law. 2. The State Treasury, commercial banks, other credit institutions and service organizations as prescribed by law are responsible for arranging locations, vehicles, civil servants and tax collectors to ensure convenience benefits taxpayers who timely pay taxes into the state budget.
3. When receiving tax money or deducting tax money, agencies and organizations must provide taxpayers with tax receipts.
4. Within 08 working hours from the date of tax collection from taxpayers, the tax-receiving agency or organization must transfer the money into the state budget. In case tax is collected in cash in remote areas, islands, and areas with difficult access, the time limit for transferring tax money to the state budget is as prescribed by the Minister of Finance.
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Please see more
- Collecting yields from public land funds in Vietnam
- Guidance on how to calculate residential land tax in Vietnam
- Land valuation income method in Vietnam
Frequently asked questions
Under the regulations of the Land Law, nn case parents donate land to their children, they will not have to pay personal income tax and registration fee.
Personal income tax For resident individuals:
Personal income tax rate when donating land use rights: 10%
For non-resident individuals: Tax on gift income of non-residents = Taxable income * 10%
Registration fee for land: 0.5%
The donation of real estate by siblings is not subject to tax as prescribed by law, in case siblings donate real estate to each other, they will be exempt from personal income tax and registration fee. However, you will still have to pay administrative fees when carrying out the conversion and donation procedures.
Conclusion: So the above is Donating land will not be taxed under Vietnam law. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com
