Tiếng Việt
中文 (中国)
Recently, the “land fever” has re-emerged, causing the sale and transfer of the real estate to increase. However, in society, there has been a situation where the selling of a house contains 2 different prices. This phenomenon, caused by the buyers and the sellers, aims to avoid or reduce the taxes that they have to pay. Accordingly, we need to tighten the situation of selling “two-price houses” in Vietnam promptly to help with the development of the economy.
Tax evasion tricks
Corporate income tax from real estate transfer increased by 61.7% in the first 6 months compared to the same period in 2020. However, personal income tax from the transfer of real estate is still quite low. The Hanoi Tax Department said that in the past time, for many different reasons, there were many cases where people incorrectly declared real estate transaction prices, including cases due to illegal advice. Consequences from these actions can have long-term effects on all buyers, sellers, and related entities.
It is illegal to declare the real estate transfer price inappropriately on the sale or transfer contract or on declarations to determine tax obligations to reduce the amount of tax payable. This behavior has many potential risks, seriously affecting the legal contents arising in the process of using real estate such as the process of complaints, lawsuits, denunciations, compensation, and other legal situations arise.
How entities trick the system
The trick often used by investors and customers to evade taxes is that the two parties will make a low-priced contract to declare tax and an addendum to the contract with the correct price to avoid being catch red-handed. After that, the low-value contract will be sent to the tax office for tax payment.
Not only that, in many real estate projects, home buyers also agree to let the investor write a low price in the sale contract, accept to pay the difference, in addition, to help the investor avoid tax. The difference is normally legalized by consulting service contracts or in some circumstances, the investor assigns directly to the brokerage unit to collect, etc.
According to the provisions of Article 17 of Circular 92/2015/TT-BTC guiding the implementation of value-added tax and personal income tax, for resident individuals with business activities, the personal income tax payable from the individual’s real estate transfer is 2% and the registration fee is 0.5%.
Solutions to stop this situation of selling “two-price” houses
The General Department of Taxation said that to handle this situation, the tax sector directed relevant units to take drastic measures to block this tax evasion loophole. Accordingly, tax officers will carefully check tax declaration documents, if there is any difference or abnormality with the market value, they will conduct an inspection, re-evaluation, and re-appraisal of the land value in that project.
Recently, the Tax Department of Hanoi has advised economic organizations, households, and individuals to observe the law when carrying out procedures for buying, selling, registering houses, and transferring land-use rights in Hanoi.
According to the Tax Department, the declaration of prices when buying, selling, or transferring real estate is not consistent with the contract or on declarations to determine tax obligations, which is a violation of the law, posing many potential risks to participated parties when complaints, denunciations and other legal situations arise.
According to the Tax Department in Hanoi, individuals buying and selling houses must honestly declare the true value of the real estate on the sale and purchase contract.
“If false declarations or incorrect declarations are made to reduce the amount of tax payable, many troublesome procedures will arise, and even law enforcement agencies will have to step in to investigate whether there is tax evasion.” Hanoi Tax Department warned.
ASL LAW is the top-tier Vietnam law firm for tax law consulting service. If you need any advice, please contact us for further information or collaboration.
