Công văn 3598/TCT-TNCN

OFFICIAL LETTER

ON PERSONAL INCOME TAX FOR TRANSFER AND RECEIPT OF INHERITANCES OR GIFTS BEING REAL ESTATE

To: The Tax Department of Quang Binh province

In response to the Tax Department of Quang Binh province’s Official Letter No. 1264/CT-TNCN of July 27, 2009, inquiring about personal income tax for incomes earned from the transfer and receipt of inheritances or gifts being real estate, the General Department of Taxation gives the following opinion:

1. Tax policies applicable to land use right transferors who submitted valid dossiers before January 1, 2009:

Point 1.1, Article 4 of the Ministry of Finance’s Circular No. 161/2009/TT-BTC of August 12, 2009, guiding personal income tax for some cases of transfer and receipt of inheritances or gifts being real estate stipulates: “For individuals signing contracts on real estate transfer under law and submitting valid dossiers to competent state management agencies before January 1, 2009, if the payable tax amount calculated under the Law on Land Use Right Transfer Tax is lower than that calculated under the Law on Personal Income Tax, the transferor may pay tax under the Law on Land Use Right Transfer Tax. If the payable tax amount calculated under the Law on Land Use Right Transfer Tax is higher than that calculated under the Law on Personal Income Tax, the transferor may pay tax under the Law on Personal Income Tax. If the taxpayer paid the tax amount to the state budget before the effective date of this Circular, which is higher than the payable tax amount, the tax agency shall refund the overpaid amount under regulations.”

Under this guidance:

- Real estate transferors who submitted valid dossiers to competent state agencies before January 1, 2009, and were notified in writing by tax agencies of the payment of land use right transfer tax will pay tax as notified.

- Real estate transferors who lawfully signed real estate transfer contracts and submitted valid dossiers to competent state agencies before January 1, 2009, but have not been notified in writing by tax agencies of the payment of land use right transfer tax (as of the end of December 31, 2008) will comply with Point 1.1, Article 4 of Circular No. 161/2009/TT-BTC.

2. Tax for incomes from receipt of inheritances or gifts being real estate:

Clause 1, Article 34 of the Law on Personal Income Tax stipulates: “This law takes effect on January 1, 2009.”

Clause 6, Article 2 of the Ministry of Finance’s Circular No. 160/2009/TT-BTC of August 12, 2009, guiding exemption from personal income tax in 2009 under the National Assembly’s Resolution No. 32/2009/QH12 of June 19, 2009, stipulates: “For incomes from inheritances or gifts, the time for determining the tax-exempt income is the time a recipient of an inheritance or gift submits a valid dossier to a competent state management agency in accordance with the tax-exempt period under the guidance of Clause 2, Article 1 of this Circular.”

Pursuant to above provisions:

- Residents deriving incomes from inheritances or gifts being real estate who submitted valid dossiers to competent state management agencies before January 1, 2009, are subject to tax policies under legal documents on taxes at the time of dossier submission (they are not liable to pay personal income tax).

- Residents deriving incomes from inheritances or gifts being real estate who submitted valid dossiers to competent state management agencies between January 1, 2009, and the end of June 30, 2009, are exempted from personal income tax.

This official letter replaces the General Department of Taxation’s Official Letter No. 3456/TCT-TNCN of August 21, 2009, on personal income tax for transfer and receipt of inheritances or gifts being real estate.

The General Department of Taxation notifies its opinion to the Tax Department of Quang Binh province for information.