Tax revenue from real estate transfer surges

The tax revenue from real estate transfer in 2022 is higher than the same period in 2021. Photo: T.D

In the Ministry of Finance’s report on the implementation of Resolution 62/2022/QH15 on questioning activities at the 3rd session of the 15th National Assembly, the Ministry of Finance said that the management agency has reviewed and improved tax laws related to real estate business and transfer, strengthened management and combated tax loss, ensured budget revenue while facilitating business operations, protecting the legitimate rights of the people and the development of the real estate market.

The Ministry of Finance is also developing measures to disseminate legal policies to taxpayers. Accordingly, the ministry has worked with press agencies to publish articles to guide real estate participants to declare the transfer price close to the actual transaction price; provide guidance to provincial/municipal Tax Departments to disseminate to taxpayers and notary offices about the rights, obligations and responsibilities of taxpayers in order to improve compliance in the declaration of transfer price in accordance with the actual transaction.

According to the report of the Ministry of Finance, the accumulated income tax revenue from real estate transfer, inheritance and gift receipt in the first eight months of 2022 reached more than rose more than VND13.2 trillion or 96.4% year-on-year to VND26.86 trillion. In addition, from the beginning of the year to September 6, 2022, nationwide, the number of declarations of transfer price higher than the price issued by the People’s Committee accounted for 72%, on average.

However, the Ministry of Finance also acknowledged that this work still has many shortcomings. Accordingly, current regulations on tax administration for real estate transfer activities have been stipulated in legal documents, but to effectively manage tax on real estate transfer activities, in addition to regulations on tax administration, there should be regulations of the Land Law, the Law on Real Estate Business and the coordination of relevant agencies and departments.

In fact, the people’s sense of self-discipline to fulfill their tax obligations is not high; people do not have an adequate awareness of tax policy and related laws; and have not been yet aware of the consequences of the declaration of the wrong transfer price.

According to the tax law, if the taxpayer declares and pays tax not in accordance with the actual transfer price, the tax authority has the right to impose tax. However, the tax office does not have the right to investigate, so it is difficult to collect information for tax assessment.

Only when the relevant agencies (Investigative Police, Inspectors, etc.) collect enough evidence to prove the actual transaction price, and conclude tax fraud or evasion is detected, the tax authority has a basis to impose tax. However, the General Department of Taxation also received reports from some local tax authorities about the fact that the dossier was transferred to the police investigation agency, but the police investigation agency transferred it back to the tax office for administrative handling because there were not enough evidence to determine the act of tax evasion.

The Ministry of Finance also said that the real estate transfer has been managed by many agencies (such as Ministry of Natural Resources and Environment, Ministry of Construction).

Legal documents of ministries and agencies are not unified, on the other hand, land data of state management agencies has not been interconnected for exchange for the management of land-related information.

In addition, the information collection for the post-inspection work of the tax authorities is still difficult because taxpayers open many bank accounts; banks have slow responses to verification information, so the verification process of transfer price faces many difficulties.

When the verification results are issued, if there is a difference in the transfer price, the tax branch has difficulty in inviting the taxpayer (the seller has changed his permanent address or went abroad, etc.).

The Ministry of Finance said that the management agency will closely follow Resolution 18/NQ-TW of the Central Committee and Resolution 62/2022/QH15 of the National Assembly, and continue to implement the Project “Strengthening tax administration and combating loss of revenue for land and real estate revenues”.

Real estate businesses manage with sustainable capital flow

Moreover, the Ministry of Finance will continue to request the tax authorities to work with the press agencies to disseminate tax policies and develop a set of risk criteria for real estate transfer activities.