Prevent many cases of "dodging" real estate transfer tax

	Commercial banks tighten real estate lending
	Overcoming backlog to promote M&A in the real estate market
	False declaration of real estate transfer price still occurs

People pay real estate transaction tax at Thu Duc City Tax Department on April 7, 2022. Photo: T.D

Tighten price declaration

Recently, the declaration of real estate transfer prices that are lower than the actual transaction price to evade tax happens in the real estate market. However, this situation is being prevented by tax authorities in coordination with relevant agencies. In many cases, the price was re-declared close to the market price, increasing dozens of times compared to the original price.

For example, in a recent case, an area of ​​more than 10,000 m2 of perennial crops in Tang Nhon Phu B ward, Thu Duc city (HCMC) was declared by both parties under a purchase and sale contract for only VND1 billion. After investigating the price, the tax authority of Thu Duc city has mobilized people to re-declare the price up to VND40 billion. This means that the initial tax receivable of about VND25 million has now increased to VND1 billion.

In another case, a transaction file for a house with an area of ​​nearly 70 m2 in Linh Dong ward, Thu Duc city was initially declared for tax purposes only for VND1.7 billion. However, the tax authority returned the dossier, requested the price to be re-declared, and the new declared price was nearly VND5 billion.

The above cases are just two of thousands of documents that the Tax Department of Thu Duc City has requested to re-declare since the beginning of 2022. Than Thiet Son, Deputy Director of Thu Duc City Tax Department, said that as of March 31, 2022, the unit has received 10,975 real estate transfer documents, of which 1,648 documents have been returned to the Branch Land Registry Office due to incorrect information, missing information, duplicate transfer documents, and transfer price not according to the normal transaction price in the market.

Thu Duc City Tax Department corrected 1,949 records that were not in line with actual transaction prices. After adjusting, the transfer price difference is VND3,701 billion. Accordingly, the amount of personal income tax and registration fee collected by the unit is VND92.5 billion.

In Ba Ria-Vung Tau province, in the first two weeks of March 2022, the tax authority returned more than 1,200 tax records for land transfer because of signs of inaccurate declaration, of which 155 additional declaration dossiers were submitted to tax authorities. The re-declared price increased from 2 to 5 times compared to the original, in particular, there were documents declaring the land transfer price increased from VND500 million to VND10 billion.

Similarly, since the beginning of 2022, the Long An tax sector has returned and requested an adjustment to the declaration according to the actual price of nearly 500 real estate purchase and sale transactions. Accordingly, after the taxpayers self-adjusted the transaction price to the market, the tax amount paid to the state budget increased by nearly VND2.2 billion compared to the initial declaration.

Synchronous solution

According to the tax authorities, through fighting the declaration of real estate transfer prices in recent years, there has been a positive change. The number of dossiers of declaration of prices close to transactions on the market tends to increase.

After completing the transaction documents for the sale of an 80m2 house for customers at the Branch of the Land Registration Office in District 12, Ho Chi Minh City, Truong Phuoc Tai, specializing in real estate brokerage services, said that declaration of real estate prices that are lower to evade tax is no longer the same as before.

“In the past, because the State had not tightened regulations on declaring selling prices, customers made documents with low prices to enjoy low tax rates. But now, if the lower price declaration dossiers are not accepted by the tax authorities, even though the price is about 70-80% of the market price,” said Tai.

In order to be able to assess whether the transaction declaration is really appropriate or not, the tax authority must refer to many data sources such as the basis of the selling price of the same property in the nearest time; based on the real estate records at the tax office of similar locations and the same area.

For properties that are real estate and apartment buildings, in the process of processing tax documents, the tax authorities can collect transaction prices at real estate exchanges, as well as the selling price of the investor to serve as a basis for comparison with declared prices. These are all reliable sources of information for tax authorities to fight acts of deliberately declaring the wrong amount of tax payable.

However, according to Than Thiet Son, Deputy Head of the Tax Department of Thu Duc City, it is extremely difficult to determine the right price of real estate transfer.

There are many documents that the tax authorities detect irregularities, and request the two parties to come to work, but the broker causes difficulties. This leads to a delay in the submission of results according to regulations.

Besides, the land price bracket issued by the People's Committees of the provinces and cities is often much lower than the actual transaction price. Therefore, the law needs to amend and supplement the land price and the annual land price adjustment coefficient to ensure that it is on time and in line with the actual market price. In particular, it is necessary to stipulate mandatory non-cash payments for real estate transactions to limit risks for sellers and buyers. Only then will we be able to monitor prices and prevent loss of revenue in real estate transfer activities.