Công văn 762/BTC-TCT

To: Provincial – level Tax Offices

In order to contribute to preventing economic downturn, sustaining economic growth and ensuring social security, the Ministry of Finance issued Official Letter No. 16181/BTC-TCT on December 31, 2008, guiding the determination of tax obligations with respect to some incomes arisen in 2008 and before. Upon the request of several Tax Offices in the course of implementation, the Ministry of Finance additionally guides the calculation of tax on the transfer of real property as follows:

1. For individuals who have transferred land use rights and works attached to land and have submitted valid dossiers as prescribed by law to competent state management agencies before January 1, 2009, and tax authority have issued notice of tax payment on the transfer of land use rights, individual transferor shall pay tax on the transfer of land use rights as notified.

2. For individuals who transfer apartments:

For cases where individuals have signed contracts on the transfer of apartments and submitted valid dossiers to competent state agencies before January 1, 2009, individuals are not required to pay PIT on the value of the apartment; for the value of allocated land area (if any), they shall pay tax on the transfer of land use rights under the guidance above.

3. Methods of calculating PIT on income derived from real property transfer:

Under the PIT Law, PIT on income derived from real property transfer will 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 derived from real property transfer.

In order to create favorable conditions for taxpayers, PIT on income from real property transfer will be calculated at the rate of 2% of the price of real property stated in the transfer contract. If this price is lower than the price set by the provincial-level People’s Committee, the latter will be used.

If real property transferors have sufficient and valid dossiers and vouchers for determine the transfer price, real property cost and other transfer-related expenses and taxpayers request the application of the rate of 25% of income because the payable tax amount calculated by this method is lower than that calculated at the tax rate of 2% of the transfer price, they may pay the tax at the tax rate of 25% of income from real property transfer.

Provincial Tax Offices shall publicize this guiding document and provide specific guidance to real property transferors.

Any problems arising in the course of the implementation should be reported to the Ministry of Finance (the General Department of Taxation) for promptly handling.