Chương V Thông tư 78/2014/TT-BTC: Thu nhập từ chuyển nhượng bất động sản

Chapter V

INCOMES FROM REAL ESTATE TRANSFER

Article 16. Taxpayers

1. Liable to pay CIT on incomes from real estate transfer are enterprises of all economic sectors and business lines having incomes from real estate transfer; and real estate enterprises having incomes from land sublease.

2. Incomes from real estate transfer include income from the transfer of land use rights, or land lease right (including also the transfer of projects associated with the transfer of land use rights or land lease right in accordance with law); income from the sublease of land of real estate enterprises in accordance with the land law regardless of whether there is an infrastructure facility or architectural work attached to land; income from the transfer of houses or construction works attached to land, including their appurtenances, in case the value of such appurtenances is inseparable upon the transfer, regardless of whether land use rights or land lease right are/is transferred; and income from the transfer of house ownership or use right.

Real estate enterprises that have income from the sublease of land do not include those that only lease houses, infrastructure facilities or architectural works on land.

Article 17. Tax bases

Bases for calculating income tax on real estate transfer include taxed income and tax rate.

Taxed income equals (=) taxable income minus (-) previous years’ losses from real estate transfer (if any).

1. Taxable income

Taxable income from real estate transfer is the turnover from real estate transfer minus the cost of the real estate and deductible expenses related to the real estate transfer.

a/ Turnover from real estate transfer

a.1/ Turnover from real estate transfer shall be determined based on the actual transfer price under the real estate transfer or purchase and sale contract in accordance with law (including surcharges and extra fees, if any).

If the transfer price of land use rights under the real estate transfer or purchase and sale contract is lower than the land price prescribed by the provincial-level People’s Committee at the time of signing the contract, the price prescribed by the provincial-level People’s Committee at the time of signing the contract shall be applied.

- The time of determining taxed turnover is the time the seller hands over the real estate to the purchaser, regardless of whether the purchaser has registered the property ownership or land use rights or has its land use rights established at a competent state agency.

- If an enterprise that is allocated or leased by the State land for implementing investment projects to build infrastructure facilities or houses for transfer or lease collects advanced money in any form by customers according to schedule, the time of determining turnover used for calculating the temporary CIT amount is the time of money collection, specifically as follows:

+ If the enterprise collecting money from customers can determine expenses corresponding to recorded turnover (including also pre-deducted expenses in the estimated costs of uncompleted work items corresponding to recorded turnover), it shall declare and temporarily pay an CIT amount based on turnover minus these expenses.

+ If the enterprise collecting money from customers cannot determine expenses corresponding to turnover, it shall declare and temporarily pay an CIT amount equal to 1% of the collected sum of money which is not required to be included in the turnover used for calculating CIT in the year.

When handing over real estate, the enterprise shall finalize CIT and re-finalize the payable CIT amount. If the temporarily paid CIT amount is smaller than the payable CIT amount, the enterprise shall fully remit the deficit into the state budget. If the temporarily paid CIT amount is higher than the payable CIT amount, the enterprise may either have the overpaid tax amount cleared against the subsequent period’s payable CIT amount or have it refunded.

For a real estate enterprise that collects advanced money amounts from customers according to the schedule, declares and temporarily pays tax according to the percentage (%) of its turnover not yet accounted as turnover for calculating CIT in the year, and has expenses for advertising, marketing, sales promotion or brokerage commissions upon starting the offering in the year of money collection according to schedule, such expenses are not accounted in the year when expenses arise. Expenses for advertising, marketing, sales promotion or brokerage commissions may be accounted as deductible expenses at the limit level prescribed in the first year of handover of real estate and arising of turnover for calculating CIT.

a.2/ Turnover for calculating taxable income in some cases is determined as follows:

- For enterprises subleasing land, the turnover used for calculating taxable income is the rent paid periodically by the lesser under the lease contract. If the lesser pays in advance the rental for many years, the turnover for calculating taxable income shall be divided by the number of years for which the rental has been paid in advance or determined according to the turnover paid in a lump sum. The turnover paid in a lump sum is selected only when the enterprise has fulfilled all of its financial obligations toward the State and assured its obligations toward the lessees until the land sublease term expires.

If an enterprise enjoying CIT incentives selects the method of determining the turnover for calculating taxable income to be the whole rental paid in advance by the lessee for many years, the CIT amount to be exempted or reduced for each year will be the total CIT amount of the years for which the rental has been paid in advance divided by (:) the number of years for which the rental has been paid in advance.

- When a credit institution receiving the value of land use rights as the mortgaged loan security in substitution of the performance of the secured obligations transfers land use rights, the turnover for calculating its taxable income is the transfer price of land use rights agreed by the involved parties.

- In case of transfer of land use rights distrained to secure judgment enforcement, the turnover for calculating taxable income is the transfer price of land use rights agreed by the involved parties or the price determined by the valuation council.

The determination of turnover in the cases specified in Item a2 must adhere to the principles referred to in Item a1 of this Point.

b/ Real estate transfer expenses:

b.1/ Principles of determination of expenses:

- Deductible expenses for determining taxable income from real estate transfer in a tax period must correspond to turnover for calculating taxable income and satisfy the conditions for being accounted as deductible expenses or as non-deductible expenses prescribed in Article 6 of this Circular.

- If an investment project is partially completed and gradually transferred according to the completion progress, general expenses for the project and direct expenses for the completed part of the project may be distributed by square meter of the transferred land for determining taxable income from the transferred land area, including expenses for internal roads and tree planting; construction of water supply and drainage systems and transformer stations; compensations for assets on land; compensation, support and resettlement and organization of compensation and ground clearance work, which have been approved by competent authorities but not yet cleared against land use levies or rentals in accordance with regulations on collection of land use levies or rentals; land use levies or rentals remittable into the state budget and other investments in land which are related to the land use or lease right transfer.

The above expenses are allocated according to the following formula:

When part of the project’s non-transferred land area is used for other business activities, the above general expenses must also be allocated to this land area for monitoring, accounting, declaration and payment of CIT for other business activities.

When an enterprise invests in building an infrastructure facility over many years and can finalize the value of the infrastructure facility only when the whole work is completed, when summing up real estate transfer expenses for the transferred land area, the enterprise may temporarily allocate actual infrastructure investment expenses based on the ratio of the transferred land area according to the above formula and pre-deduct infrastructure investment expenses corresponding to the turnover recorded upon the determination of taxable income. After completing the construction investment, the enterprise may readjust infrastructure investment expenses temporarily allocated to and pre-deducted for the transferred land area to match the total value of the infrastructure facility. Upon the adjustment, if the paid tax amount is higher than the payable tax amount on the real estate transfer, the enterprise may have the overpaid amount cleared against the subsequent tax period’s payable tax amount or have it refunded under current regulations; if the paid tax amount is insufficient, the enterprise shall fully pay the deficit under regulations.

b.2/ Deductible expenses for real estate transfer include:

- The cost of the transferred land, determined according to the land use right origin, specifically as follows:

+ For land allocated or leased by the State with collection of land use levy or land rental, its cost is the land use levy or land rental actually remitted into the state budget;

+ For land with use rights transferred from another organization or individual, its cost shall be determined based on the contract and lawful payment document upon receiving its lease right or use rights; if the contract and payment document are unavailable, such cost shall be calculated based on the price set by the provincial-level People’s Committee at the time the enterprise receives the real estate transferred;

+ For land contributed as capital, its cost is the value of its lease right or use rights indicated in the asset valuation record upon capital contribution;

+ If the enterprise has exchanged a construction work for state land, the cost of such land is determined based on the value of the exchanged work, unless competent state agencies’ separate regulations are applied;

+ The auction-winning price, in case of auction of land use or lease rights;

+ For land inherited under the civil law or donated land with unidentifiable cost, its cost shall be determined based on the land price decided by the provincial-level People’s Committee on the basis of the land price bracket prescribed by the Government at the time of inheritance or donation.

For land inherited or donated before 1994, its cost shall be determined based on the land price decided by the provincial-level People’s Committee in 1994 on the basis of the land price brackets for different land categories specified in the Government’s Decree No. 87/CP of August 17, 1994.

+ For land mortgaged to secure loans or land distrained to secure judgment enforcement, its cost shall be determined on a case-by-case basis under the above guidance.

- Expense for land damage compensation.

- Expense for crop damage compensation.

- Compensation, support and resettlement expenses and expenses for organization of compensation, support and resettlement in accordance with law.

If the above compensation, support and resettlement expenses and expenses for organization of compensation, support and resettlement have no supporting invoice, a list shall be made, specifying the names and addresses of recipients; compensation or support amounts; signatures of recipients. This list shall be certified by the administrations of the wards or communes where are located land areas eligible for compensation or support in accordance with the law on compensation, support and resettlement when the State recovers land.

- Charges and fees related to the grant of land use rights as provided by law.

- Expense for soil improvement and ground leveling.

- Expense for the construction of infrastructure, such as roads, power lines, water supply and drainage systems, post and telecommunications facilities, etc.

- The value of infrastructure facilities and architectural works on land.

- Other expenses related to the transferred real estate.

An enterprise that conducts different business lines shall separately account expenses for each business line. If separate accounting cannot be conducted, general expenses shall be allocated based on the ratio of turnover from real estate transfer to the total turnover of the enterprise.

Expenses already paid by the State or from other capital sources must not be included in real estate transfer expenses.

2. The CIT rate for real estate transfer is 22% (or 20% from January 1, 2016).

3. Determination of payable CIT amounts:

The amount of CIT on real estate transfer in a tax period is the taxed income from real estate transfer multiplied by (x) the tax rate of 22%.

Income from real estate transfer shall be separately determined for tax payment declaration. The preferential tax rates and tax exemption and reduction duration guided in Chapter VI of this Circular are not applicable to income from real estate transfer.

Losses from real estate transfer, if any, shall be handled under the guidance in Clause 3, Article 9 of this Circular.

Dossiers for declaration and payment and documents of payment of CIT on incomes from real estate transfer in geographical areas where the transferred real estates are located serve as a basis for carrying out procedures for tax finalization in geographical areas where enterprises are headquartered.

4. Credit institutions that receive the value of real estate used as loan security in substitution of the performance of secured obligations shall, when transferring such real estate in accordance with law, declare and remit tax on the income from real estate transfer into the state budget. In case real estate mortgaged as loan security is put up for auction, the proceeds from such auction must be paid under the Government’s regulations on securing credit institutions’ loans, and tax shall be declared and paid under regulations. After paying these amounts, the remaining money shall be returned to business organizations that have mortgaged their real estate to secure loans.

If credit institutions that are allowed by law to transfer the mortgaged real estate for recovering capital cannot determine the cost of such real estate, such cost equals (=) payable loans under the real estate mortgage contract plus (+) unpaid loan interests at the time of public sale of the mortgaged real estate under the credit contract plus (+) expenses arising during the real estate transfer with lawful invoices or evidencing documents.

5. When a judgment enforcement agency auctions real estate used to secure judgment enforcement, the proceeds from such auction shall be used under the Government’s Decree on distraint and auction of land use rights to secure judgment enforcement. Organizations authorized to auction real estate shall declare and deduct tax on income from real estate transfer and remit it into the state budget. Such documents must specify the tax declaration and payment for the auction of real estate for judgment enforcement.

In case the judgment enforcement agency that transfers real estate used as judgment enforcement security cannot determine the cost of such real estate, such cost equals (=) payable debts under the court ruling for judgment enforcement plus (+) expenses arising during the real estate transfer with lawful invoices or evidencing documents.