Công văn 16181/BTC-TCT

To: Provincial-level Tax Offices

The Ministry of Finance issued Circular No. 84/2008.TT-BTC on September 30, 2008, guiding the implementation of a number of articles of the Law on Personal Income Tax and the Government’s Decree No. 100/2008/ND-CP of September 8, 2008, detailing the implementation of a number of articles of the Law on Personal Income Tax.

In order to ensure the successful implementation of the Law on PIT, the Ministry of Finance guides some specific contents as follows:

1. For income items derived by individuals and arisen in 2008 and before, such as dividends, salaries, bonuses,... but paid in 2009, they will be subject to tax policies applicable in the year that income arisen and not be regarded as taxable income.

Business individuals deriving income in December 2008 and filing tax returns in January 2009 shall calculate and pay enterprise income tax and include them in the 2008 tax finalization (if paying tax basing on filing).

2. For individuals transferring real property:

a/ For individuals who transfer land use rights and constructions attached to land and have signed transfer contracts as required by law before December 31, 2008, but, by January 1, 2009, have not yet paid tax on the transfer of land use rights and have not completed transfer procedures, they shall make PIT filing and payment.

b/ For individuals who transfer apartments: As no tax is imposed on the transfer of apartments in and before 2008, individuals who have signed contracts on the transfer of apartments and made full payment before December 31, 2008, are not required to pay PIT.

c/ Under the Law on PIT, PIT on income from real property transfer shall be calculated by either of the following two methods:

- Applying the rate of 2% of the transfer price of real property;

- Applying the rate of 25% of income from real property transfer.

In order to create favorable conditions for taxpayers, provincial-level Tax Offices are requested to direct tax offices to calculate tax at the rate of 2% of the transfer price of real property (the price prescribed by provincial-level People’s Committee). In case the payable tax amount calculated at the rate of 2% of the transfer price is higher than that calculated at the rate of 25% of income from real property transfer, the latter will be used (if suffering from losses, taxpayers are not required to pay PIT). Individuals may apply the tax rate of 25% if they have sufficient invoices and vouchers for determining taxed income from real property transfer.

The Ministry of Finance notifies the above guidance to provincial-level Tax Offices for compliance and requests provincial-level Tax Offices to report any problems arising in the course of implementation to the Ministry of Finance for consideration and handling.