Circular No. 12/2011/TT-BTC amends certain regulations on personal income tax related to interest on deposits, life insurance contracts, and the transfer of contracts for the sale of future-formed residential properties. This Circular applies to individuals and financial credit organizations.
Scope of application
Individuals, financial credit organizations (such as banks, credit organizations).
Key points
- Individuals → are exempt from personal income tax on interest earned from deposits at credit institutions under certain forms.
- Individuals → must pay personal income tax when transferring contracts for the sale of future-formed residential properties, with a tax rate of 25% or 2% depending on the market price.
- Credit institutions → are permitted to issue bonds, promissory notes, and other securities to foreign organizations operating in Vietnam (except the Government of Vietnam).
- Individuals → are not eligible for the exemption from personal income tax when transferring contracts for the sale of future-formed residential properties.
- Tax authorities → have the right to determine the transfer price for tax purposes if the price stated in the contract does not match the market price.
🌐 Social impact of this document
- Positive impact: Reducing the burden of personal income tax for individuals depositing money at credit institutions.
- Negative impact: Increasing tax costs for the transfer of future-formed residential properties, affecting the real estate market.
❓ Frequently asked questions
When do individuals get exempted from personal income tax on interest received?
Individuals are exempt from personal income tax on interest earned from deposits at credit institutions under certain forms, including demand deposits, term deposits, savings accounts, deposit certificates, bills of exchange, promissory notes, and other deposit forms according to the principle of full repayment of principal and interest to depositors as agreed.
What is the tax rate applied when transferring contracts for the sale of future-formed residential properties?
The tax rate applicable to the activity of transferring contracts for the sale of future-formed residential properties is 25% or 2%, depending on the market price.
Are individuals exempt from personal income tax when transferring contribution contracts to acquire rights to purchase land plots or apartments?
No, individuals who already own housing or land and now generate additional transactions involving the transfer of contracts for the sale of future-formed residential properties are not eligible for the exemption from personal income tax.
When do tax authorities have the right to determine the transfer price for tax purposes?
Tax authorities have the right to determine the transfer price for tax purposes if the price stated in the contract does not match the market price.
Can credit institutions issue bonds, promissory notes, and other securities to foreign organizations operating in Vietnam?
Yes, but only to foreign organizations permitted to establish and operate in Vietnam (except the Government of Vietnam).
Full text
CIRCULAR
Amending Circular No. 84/2008/TT-BTC dated September 30, 2008 of the Ministry of Finance guiding the implementation of certain provisions of the Law on Personal Income Tax and amending Circular No. 02/2010/TT-BTC dated January 11, 2010 of the Ministry of Finance guiding the supplementation of Circular No. 84/2008/TT-BTC dated September 30, 2008 of the Ministry of Finance
Pursuant to the Law on Personal Income Tax No. 04/2007/QH12 dated November 21, 2007;
Pursuant to Decree No. 100/2008/NĐ-CP dated September 8, 2008 of the Government detailing certain provisions of the Law on Personal Income Tax;
Pursuant to Decree No. 71/2010/NĐ-CP dated June 23, 2010 of the Government detailing and guiding the implementation of the Law on Housing.
The Ministry of Finance guides the amendment of Circular No. 84/2008/TT-BTC dated September 30, 2008 and Circular No. 02/2010/TT-BTC dated January 11, 2010 of the Ministry of Finance as follows:
Pursuant to the Law on Credit Organizations No. 47/2010/QH12 dated June 16, 2010;
Amend some points of Circular No. 84/2008/TT-BTC dated September 30, 2008 as follows:
Pursuant to Decree No. 118/2008/NĐ-CP dated November 27, 2008, of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;
1. Amend Point 3.5, Section II, Part A as follows:
Article 1. "3.5. Income received from interest on bonds, treasury bills, and other securities issued by domestic organizations (including foreign organizations permitted to establish and operate in Vietnam), except for income from interest on government bonds of Vietnam and income from interest on deposits regulated at Point 7, Section III, Part A of this Circular".
2. Amend Point 7, Section III, Part A as follows:
"7. Income from bank deposit interest, financial institution interest; interest from life insurance contracts.
7.1. Interest on deposits exempted from tax under this provision is personal income received from VND, gold, foreign currency deposits at financial institutions in the form of demand deposits, term deposits, savings certificates, commercial papers, treasury bills, and other forms of deposits with full repayment of principal and interest according to agreement. Cases where interest on deposits are not from financial institutions established and operating in accordance with the Law on Financial Institutions are not eligible for tax exemption.
7.2. Interest from life insurance contracts is the interest that individuals receive according to life insurance contracts of insurance enterprises.
7.3. Basis for determining tax-exempt income for the aforementioned interest as follows:
- For income from bank deposit interest, it is the savings book (or savings card), savings certificate, commercial paper, treasury bill, and other documents according to the principle of full repayment of principal and interest according to agreement.
- For income from life insurance contract interest, it is the payment receipt from the life insurance contract."
Amend some Articles of Circular No. 02/2010/TT-BTC dated January 11, 2010 of the Ministry of Finance as follows:
1. In Article 2, replace the paragraph: "For individuals who already have housing and land now generate additional transactions of transferring equity contribution contracts to acquire land plots or apartment units or transfer purchase contracts for land plots or apartment units, the income from such activities shall not be subject to the personal income tax exemption regulations" with the paragraph: "For individuals who already have housing and land now generate additional transactions of transferring purchase contracts for future housing, the income from such activities shall not be subject to the personal income tax exemption regulations."
3. At Point 3.5.3.(b) of Article 5, remove the paragraph: "For individuals transferring equity contribution contracts to acquire land plots or apartment units, the purchase price is determined based on capital contribution payment receipts and other invoices and documents proving related expenses. Related expenses for real estate transfers include loan interest payments to financial institutions for purchasing real estate. In cases where only part of the capital has been contributed (not fully paid according to the contract), the purchase price is determined as follows:"
4. Replace Article 6 with a new Article 6 as follows:
3. Delete paragraph "For individuals transferring investment contracts to acquire the right to purchase land plots or apartments, the purchase price shall be determined based on payment receipts for capital contributions and other invoices or documents proving related expenses. Related expenses for the transfer of real estate include interest payments on loans from credit institutions for the purchase of real estate. In cases where only a portion of the capital has been contributed (the full amount under the contract has not yet been paid), the purchase price shall be determined as follows:" at point 3.5.3.(b) of Article 5.
4. Replace Article 6 with new Article 6 as follows:
"Article 6. Supplement Point 2.5.5 to Point 2.5, Section II, Part D as follows:
2.5.5. The procedures for declaring and paying personal income tax on the transfer of contracts for the sale of future housing are as follows:
a) Households and individuals transferring contracts for the sale of future housing shall declare and pay personal income tax at the local Tax Office where the real estate being transferred is located or at organizations or individuals authorized by the tax authority to collect taxes. The declaration documents include:
- The notarized contract for the transfer of the contract for the sale of future housing. If the transfer is the second or subsequent transfer, the parties must present the previous contract for the transfer of the contract for the sale of future housing.
- The contract for the sale of future housing signed with the first-level or second-level project developer or the developer's real estate trading floor.
- Form 11/KK-TNCN (issued together with Circular No. 62/2009/TT-BTC dated March 27, 2009 of the Ministry of Finance). When declaring item (04) on the form, reflect the contract for the sale of future housing instead of the Certificate of Land Use Right and House Ownership.
b) To facilitate individuals transferring contracts for the sale of future housing in declaring and paying taxes, the Tax Department will decide based on the actual situation in the locality to authorize organizations or individuals engaged in housing sales (primary or secondary level project developers and real estate trading floors) to collect personal income tax. The procedures and fees for authorization to collect taxes shall be carried out in accordance with the provisions of the Law on Tax Administration.
c) For households and individuals transferring contracts for the sale of future housing, if the transfer price stated in the transfer contract and on the tax declaration form does not match the market price, the tax authority will determine the transfer price for tax calculation after referring to (in the Minutes of Work) the price at the real estate trading floor of the project developer or the real estate trading floor where the transferred real estate is located.
The taxable income from the transfer of contracts for the sale of future housing is determined by subtracting the total purchase price recorded in the contract for the sale of future housing from the total transfer price calculated according to the trading floor price. The tax rate applicable to the activity of transferring contracts for the sale of future housing is 25%.
In cases where the trading floor price cannot be determined, a tax rate of 2% shall be applied to the total purchase price recorded in the contract for the sale of future housing.
d) In addition to the documents in the declaration dossier already guided in Circular No. 84/2008/TT-BTC dated September 30, 2008 of the Ministry of Finance, Circular No. 161/2009/TT-BTC dated August 12, 2009 of the Ministry of Finance, and this Circular, the tax authority shall not require households and individuals transferring real estate to submit any additional documents.
|
Purchase Price |
={ | Total capital contribution required under the contract | - | Remaining capital contribution (unpaid) | } + |
Other related expenses". |
Article 3. Implementation organization:
1. This Circular takes effect 45 days from the date of signature. Abolish any guidance on personal income tax that contradicts the guidance provided in this Circular.
2. During implementation, if any difficulties arise, please report them to the Ministry of Finance (General Department of Taxation) for timely resolution.
DEPUTY MINISTER
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