For real estate transfer, the taxable price is the real estate transfer price minus (-) the land price that is deducted for VAT calculation.

According to MK Group Vietnam Joint Stock Company, Circular No. 82/2018 / TT-BTC has repealed the content of example 37 at Point a.4, Clause 10, Article 7 of Circular No. 219/2013 / TT-BTC.

Currently, the Company has tax problems when implementing the guidance content in Circular No. 82/2018 / TT-BTC. The company has referred to the following case:

“Mr. Vo Thai Son (Ninh Kieu district, Can Tho city) proposed the content of example 37 in Circular 219/2013 / TT-BTC:“… In example 37, because Company A does not invest in construction. What on land, so it can be confirmed that the difference from 6 VND billion to 9 VND billion is purely the added value of land use rights. If the VAT is collected over 3 VND billion of this difference, it is the collection of VAT on the land use rights - this is against the law. If not, what VAT will this VAT collect? ... ".

Accordingly, the Policy Department, the General Department of Taxation issued Official Letter No. 26 / TCT-CS replying to Mr. Vo Thai Son: “... content of example 37 at Point a.4, Clause 10, Article 7 of Circular No. 219 / 2013 / TT-BTC dated December 31, 2013 of the Ministry of Finance is consistent with the provisions of Clause 6, Article 5 of the Law on VAT 2008, in accordance with the provisions in the fourth bullet point, Point a, Clause 3 , Article 4 of Decree No. 209/2013 / ND-CP dated December 18, 2013 of the Government ”.

Thus, MK Group Vietnam Joint Stock Company understands that the difference of VND 3 billion (from VND 6 billion to VND 9 billion) in example 37 is still subject to VAT when company A transfers the land use right. The company A does not make any investment activities on this land.

Now the Ministry of Finance has issued Circular 82/2018 / TT-BTC to repeal example 37, through the receiving system, responding to the recommendations of enterprises, MK Group Vietnam Joint Stock Company proposed to answer the purpose this repeal. The company wants to know, is example 37 wrong with the provisions of the Law on VAT, not consistent with Clause 4, Article 6 of Circular No. 219/2013 / TT-BTC when transferring land use rights is not subject to VAT in case of transfer of land use rights without construction investment on that land?

Or example 37 is not necessary, whereby the transfer of land use rights, if there is an increase in difference, the increased difference is subject to VAT regardless of what construction investment is made the transferor on that land by? Removing Listing 37 to avoid misleading or other purposes from the Finance Ministry's policy-making body?

Regarding this issue, The General Department of Taxation - The Ministry of Finance answers as follows:

Clause 6, Article 5; Clause 1, Article 7 of the Law on VAT 2008 (amended and supplemented in 2013) provides:

“Article 5. Subjects that are not taxable

… 6. Transfer of land use rights ”.

- Clause 1, Article 7:

“Article 7. Taxable price

1. Taxed prices are specified as follows:

…. h) For real estate business activities, it is the VAT-exclusive selling price of real estate, minus the price of transfer of land use rights or land rental payable to the State budget;

Article 4 of Decree No. 209/2013 / ND-CP dated December 18, 2013 of the Government stipulates:

 “Article 4. Taxable price

Taxed prices comply with Article 7 of the Law on VAT and Clause 2 Article 1 of the Law amending and supplementing a number of articles of the Law on VAT.

1. For goods and services sold by production and / or business establishments, it is the VAT-exclusive selling price; for goods and services subject to special consumption tax, it is the selling price with the included special consumption tax but not yet the VAT; for goods subject to environmental protection tax, it is the selling price with which the environmental protection tax has been included but without VAT; For goods subject to special consumption tax and environmental protection tax, it is the selling price with the included special consumption tax and environmental protection tax but not yet VAT ...

3. For the transfer of real estate, the taxable price is the real estate transfer price minus (-) the land price that is deducted for VAT calculation.

a) The land price to be deducted for VAT calculation is specified as follows:

- In case land is allocated by the State to invest in infrastructure to build houses for sale, the land price deducted for VAT calculation includes the land use levy payable to the State budget (excluding exempt land use levies, reduction) and cost of compensation and site clearance in accordance with the law;

- In case of auction of land use rights, the land price deducted for VAT calculation is the winning land price; ...

- In case a business establishment receives an assignment of land use rights from an organization or individual, the land price to be subtracted for VAT calculation is the land price at the time of transfer of land use rights, including the value of the basis infrastructure (if any); Business establishments may not declare and credit the infrastructure input VAT that is included in the deductible land use right value, not subject to VAT. If the land price deducted does not include the value of infrastructure, the business establishment may declare and deduct the input VAT on the infrastructure not included in the deductible land use right value.

In case the land price cannot be determined at the time of receipt of the transfer, the land price to be deducted for value-added tax calculation is the land price set by the People's Committee of the province or centrally run city at the time of signing the contract that receive transfer.

In case a business establishment receives capital contribution with land use rights of an organization or individual, the land price to be deducted for value-added tax calculation is the price stated in the capital contribution contract. If the land use right transfer price is lower than the land price contributed as capital, the land price may only be deducted according to the transfer price;

- In case a real estate business operates in the form of build - transfer (BT) with payment by the value of land use rights, the land price to be deducted for value added tax calculation is the price at the time of signing BT contract in accordance with the law; If the price of land to be subtracted at the time of signing BT contract has not been determined, the land price to be subtracted is the land price decided by the provincial People's Committee to pay the works ”.

Based on the above provisions:

- For goods and services, the taxable price is the total VAT-exclusive sale price of goods or services.

- For the transfer of real estate, the VAT-liable price is the real estate transfer price minus (-) the land price deducted for VAT calculation.

However, since "transfer of land use rights" is not subject to VAT, for the transfer of land use rights, the taxable price is not calculated on the entire transfer price (selling price) that the establishment does. business is deducted from the land price based on the origin of the land (price at the time of transfer or price of land allocation). Specifically:

Price for calculating VAT on real estate transfer = Real estate transfer price (selling price) - Deductible land price (subtracted land price is determined by land origin).

In Clause 3, Article 4 of Decree No. 209/2013 / ND-CP dated December 18, 2013 of the Government (amended and supplemented by Clause 3, Article 3 of Decree No. 12/2015 / ND-CP dated 12/12/2013) / 2/2015, Circular No. 26/2015 / TT-BTC dated February 27, 2015) regulated the land price to be deducted in different cases.

Based on the above provisions:

- For goods and services, the taxable price is the total VAT-exclusive sale price of goods or services.

- For the transfer of real estate, the VAT-liable price is the real estate transfer price minus (-) the land price deducted for VAT calculation.

However, since "transfer of land use rights" is not subject to VAT, for the transfer of land use rights, the taxable price is not calculated on the entire transfer price (selling price) that the establishment does. business is deducted from the land price based on the origin of the land (price at the time of transfer or price of land allocation). Specifically:

Price for calculating VAT on real estate transfer = Real estate transfer price (selling price) - Deductible land price (subtracted land price is determined by land origin).

In Clause 3, Article 4 of Decree No. 209/2013 / ND-CP dated December 18, 2013 of the Government (amended and supplemented by Clause 3, Article 3 of Decree No. 12/2015 / ND-CP dated December 12, 2013) / February 2015, Circular No. 26/2015 / TT-BTC dated February 27, 2015) regulated the land price to be deducted in different cases.