Cases in which land prices are deducted for value-added tax calculation

DNHN - The Government has just issued Decree No. 49/2022/ND-CP amending and supplementing a number of articles of the Government's Decree No. 209/2013/ND-CP dated December 18, 2013 detailing and guiding the implementation of a number of articles of the Law on Value Added Tax, which has been amended and supplemented with a number of articles under Decree No. 12/2015/ND-CP, Decree No. 100/2016/ND-CP and Decree No. 146/2017/ND-CP. According to Decree 49 of the Government just issued, there are 6 cases where the land price is deducted to calculate VAT

Accordingly, Decree 49 amending and supplementing Clauses 3 and 4, Article 4 for real estate transfer, the value-added tax calculation price is the real estate transfer price minus the deductible land price for calculating value-added tax. The land price to be deducted for calculating the value-added tax is specified in detail:

Firstly, in case the State is allocated land for investment in infrastructure to build houses for sale, the land price is deducted for calculating value-added tax, including land use levy payable to the state budget under the law on the collection of land use levy and compensation and ground clearance (if any).

Second, in the case of an auction of land use rights, the land price deducted for value-added tax calculation is the auction-winning land price.

Third, in the case of renting land for infrastructure construction or building houses for sale, the land price deductible for calculating the value-added tax is the land rent payable to the state budget following the law on the collection of land rent, water surface rent and compensation and ground clearance (if any).

The compensation and ground clearance money specified in (1) and (3) above is the compensation and ground clearance amount according to the plan approved by the competent state agency, which is deducted from the land use levy, land rent must be paid under the law on the collection of land use levy, land rent and water surface rent.

Fourthly, in case a business establishment receives a land use right transfer from an organization or individual, the land price deductible for calculating the value-added tax is the land price at the time of receiving the land use right transfer, excluding the land use rights. including the value of infrastructure. Business establishments may declare and deduct input value-added tax of the infrastructure (if any). In case the land price cannot be determined at the time of receiving the transfer, the land price deductible 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 transfer contract.

In case of business establishments receive real estate transfer from organizations and individuals, the land price has been determined, including the value of infrastructure as prescribed at Point a, Clause 3, Article 4 of Decree No. 209/2013/ ND-CP (amended and supplemented in Clause 3, Article 3 of Decree No. 12/2015/ND-CP dated February 12, 2015), the land price deducted for value-added tax calculation is the land price at the transfer point excluding infrastructure.

In case the value of infrastructure cannot be separated at the time of transfer, the land price deductible for calculating the value-added tax is the land price set by the People's Committee of the province or centrally run city at the time of signing the transfer contract.

Fifth, in case a business establishment receives a land use right contribution as capital from an organization or individual, the land price to be deducted for value-added tax calculation is the price stated in the capital contribution contract. In case the transfer price of land use right is lower than the price of land received as a capital contribution, only the land price will be deducted according to the transfer price.

Sixth, in case a real estate business establishment implements the form of build-transfer (BT) payment by the value of land use rights, the land price deductible for VAT calculation is the price at the time of signing the BT contract as prescribed by law; if the BT contract cannot be determined at the time of signing the BT contract, the deductible land price is the land price decided by the People's Committee of the province or centrally run city to pay for the work.

In the case of construction, infrastructure business, or construction of houses for sale, transfer or lease, the value-added taxable price is the amount collected according to the project implementation progress or the money collection schedule stated in the contract minus the land price is deducted corresponding to the percentage of the amount collected on the total contract value.

TH