Ministry of Finance studies 2 options for calculating real estate transfer tax

The Ministry of Finance is studying options for applying two tax calculation methods, depending on information about real estate transfer transactions. (Source: Construction Newspaper)

The above information is stated in the report on the implementation of the National Assembly 's resolutions on questioning activities at the sessions of the 15th National Assembly in the financial sector, which has just been sent to National Assembly deputies.

Reviewing and perfecting legal regulations on taxes related to business, real estate transfer, and e-commerce business activities is one of the requirements set by the National Assembly for the Finance sector, after questioning.

Regarding the results of implementing legal regulations related to real estate transfers, the report stated that in order to be consistent with the actual situation of real estate transfer transactions and at the same time optimize the amount of personal income tax paid to the state budget, in the process of amending the Personal Income Tax Law, the Ministry of Finance is studying the option of choosing between two tax calculation methods, depending on information about real estate transfer transactions.

Specifically, in cases where there is a database that accurately determines the purchase price and costs related to the transfer of real estate, the method of collecting personal income tax from the transfer of real estate and land use rights is applied by: Tax rate (proposed rate of 20% to be similar to the tax rate of organizations and enterprises paying corporate income tax on real estate transfer) multiplied by taxable income (equal to the selling price minus the total costs related to the transferred real estate).

In case the purchase price and costs related to the transfer of real estate cannot be determined, personal income tax is determined on the total real estate transfer price multiplied by the tax rate of 2%.

Minister of Finance Nguyen Van Thang (the person who signed the report) also explained that if personal income tax is collected on real estate transfer activities based on taxable income determined by the real estate transfer price for each transfer minus the real estate purchase price and related expenses, it will ensure compliance with the nature of economic transactions and be consistent with the function of taxing on generated income of personal income tax.

However, to effectively calculate tax using the above method, two conditions are required. First, the database of land transaction history accurately reflects the transaction prices of the transfers. Second, the legal documents must clearly stipulate the deductible expenses and the conditions for invoices, supporting documents, as well as the cost price of the transferred real estate.

Regarding the database of land transaction history, Minister Nguyen Van Thang stated that currently, the tax authority's database has the function of looking up the land transaction history and looking up the taxpayer's transaction history (since 2018). However, the transfer price recorded on the contract is still not guaranteed to be correct with the actual transaction price. The control of state agencies to ensure that buyers and sellers record the transaction price on the contract according to the actual transaction price is still inadequate, so collecting the database of transaction prices on the market requires time and search tools.

Regarding the collection of documents and evidence related to real estate transfer costs as well as the cost price of the transferred real estate, according to Minister Nguyen Van Thang, with the current situation, determining and proving related costs that are deductible when determining taxable income also encounters difficulties and obstacles in the implementation process because there are many types of costs related to real estate transfer activities.

In addition to easily identifiable costs such as purchase costs, construction costs, repair costs, and procedural costs, there are also costs that are difficult to prove such as brokerage costs, loan interest costs, and compensation costs for related parties, etc., leading to difficulties in determining the correct amount of profit earned in reality, especially in cases where taxpayers intentionally declare falsely to reduce the amount of tax payable. Some real estate transferred is old or inherited or donated, so the cost price cannot be determined.

Source: https://baoquocte.vn/bo-tai-chinh-nghien-cuu-2-phuong-an-tinh-thue-chuyen-nhuong-bat-dong-san-313216.html