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False declaration of prices in transferring real estate cause losses

VIETNAM, May 26 -  

To promote the management of real estate transfer activities, the Ministry of Finance has sent an official dispatch to the People's Committees of provinces and centrally-run cities, to co-ordinate and implement solutions to prevent losses. — VNA/VNS Photo Thành Đạt

HÀ NỘI — Organisations and individuals buying, selling and transferring real estate under two separate prices, meaning that the actual purchase price is lower than that on the notarised contract, is increasingly common and has caused great losses of revenue to the State budget.

The tax industry has implemented many solutions, recommending that taxpayers need to be honest in declaring actual prices to protect their own interests.

In real estate transfer activities, there are still cases in which the house prices declared on real estate transfer contracts with notarised certification, are much lower than the actual prices.

There are also contracts of purchase and sale of houses and construction works which are formed in the future. The value of the future house is somehow equal to the purchase price of the initial investor. In other case, after receiving the certificate of land use right, when the ownership of house and other land-attached assets has been granted, the taxpayer is willing to declare lower selling price. This does not reflect the true value of real estate transactions, and causes a loss of revenue for the State budget.

To promote the management of real estate transfer activities, the Ministry of Finance has sent an official dispatch to the People's Committees of the provinces and centrally-run cities, police and Ministry of Justice to co-ordinate and implement solutions to prevent losses.

The Ministry of Finance and tax authorities at all levels have guided people and businesses to properly declare the transfer price as a basis for tax calculation in accordance with the law. The Ministry of Finance has also directed the General Department of Taxation to request tax authorities strengthen co-ordination with local agencies and departments in the management of real estate transfer activities, especially strengthening criminal handling for acts of tax evasion related to business activities and real estate transfer.

The General Department of Taxation has taken a number of measures to collect evidence to verify the transfer price such as verifying with the Notary Offices about the deposit contract, the contract appendix with the adjusted price, verifying through the banks about transactions related to real estate transfer and loans to buy real estate.

According to the General Department of Taxation, in the first three months of 2022, personal income tax revenue from real estate transfer activities reached VNĐ8.2 trillion; an increase of 63 per cent compared to the first three months of 2021.

In the future, the tax authority said it will provide the database on which taxpayers have declared tax, in case there is a price fluctuation, to the Agency of Natural Resources and Environment so that this agency can co-ordinate with relevant agencies to review and promptly advise the provincial People's Committee to decide to issue the land price list.

The Ministry of Finance and the General Department of Taxation also directed tax authorities not to cause difficulties or trouble for taxpayers in the process of real estate transfer documents, at the same time, thoroughly direct the departments and teams involved in the handling of real estate transfer documents to strictly follow the regulations on the order and procedures for handling documents.

In the long term, the tax sector will advise the authorities to amend legal policies to improve the legal basis for management of real estate transfer.

The General Department of Taxation also said that for cases of intentional violations, it is necessary to transfer the dossier to the police agency for investigation and strict handling, ensuring transparency in real estate transfers. — VNS