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From 2017 to 2022, revenue from personal income tax rose compared to the revenue of this source in previous year. Photo: Hoai Anh

Personal income tax revenue through real estate transfer in 2023 decreases by nearly 50%

According to the Report on the implementation of policies and laws on real estate market management and social housing development from 2015 to the end of 2023 recently sent by the Ministry of Finance to the National Assembly's Economic Committee, the personal income tax revenue from real estate transfer activities from 2017 to 2022 rose compared to the revenue from this source in the previous year.

Specifically, the revenues from this source through 2017, 2018, 2019, 2020, 2021, 2022 and 2023 were VND10,818 billion, VND12,963 billion, VND14,447 billion, VND16,213 billion, VND21,142 billion and VND34, 749 billion respectively. Of which, 2022 had the highest increase of 64.34% compared to the revenue in 2021. This was because that the Ministry of Finance (General Department of Taxation) issued telegram No. 08/CD-TCT dated June 10, 2022 on improving the efficiency of processing tax declarations from real estate transfer activities.

According to the Ministry of Finance, entering 2023, the work of preventing tax loss from real estate transfer activities was still focused by localities. However, the amount of personal income tax from real estate transfer activities decreased because the real estate market was in a very difficult time, purchasing power and liquidity had a sharp decline and there was a lack of cash flow.

Along with that, the lack of housing supply is associated with an unreasonable housing product structure, a lack of affordable housing, and an excess of high-end housing; house prices increased continuously beyond the financial capacity of the majority of people, so the number of transactions on the market decreased, leading to a plummet in personal income tax revenue from real estate transfer activities in 2023.

Declared price does not match the actual transfer price

Regarding the issue of real estate transfer, the Ministry of Finance said that regarding transfer prices, there is a situation where taxpayers declare taxable value that are not true to the actual transfer price.

The buyer and seller use a handwritten contract signed by both parties to record the actual transaction price to prevent disputes in court. Therefore, it is very difficult for competent state agencies to verify the true value of real estate transfer transactions, especially since the Tax agency currently does not have an investigation authority.

For transfer contracts, contracts for sales of future houses and construction projects from the 2nd party to the 3rd party, declared price is equal to the purchase price of the investor or when the house use right is issued, the taxpayer also declared a price lower than the price set by the investor. This also leads to revenue loss for State budget.

Regarding the method of real estate transfer, the Ministry of Finance said a number of tricks to avoid transfer tax. Accordingly, the investor agrees to allow the buyer to re-sign the future house contract with the new buyer to avoid personal income tax from real estate transfer; the investor is circumventing the provisions of the Housing Law on the limit on the number of houses allowed to be owned by foreigners by signing a long-term lease contract and the lessee has full rights as a house owner.

Besides, the actual transaction of real estate transfer is legalized by buying shares, then splitting the business.

Demand for real estate in industrial park is growing positively

Taxpayers transferring real estate do not sign a transfer contract but sign an authorization contract (in which the authorized person has the right to possess, use, and dispose of the real estate) to avoid personal income tax from real estate transfer.