Following Part 3 specializing on incomes from capital investment, Part 4 on incomes from real estate transfer, Part 5, 6, 7 on incomes from wages and remunerations, Part 8 on incomes from capital transfer, and Part 9 on incomes from copyrights, this part of the series on Personal Income Tax for Foreigners will focus on incomes from inheritance.
i. Types of incomes from inheritance
Incomes from inheritance are the incomes the person receives under a will or in accordance with regulations of law on inheritance. To be specific:
– Inherited securities: shares, call options on shares, bonds, treasury bills, fund certificates, and other securities according to the Law on Securities; shares of the person in the joint-stock company according to the Law on Enterprises.
– Inherited capital in economic organizations and businesses: capital contribution to limited liability companies, cooperatives, partnerships, business cooperation contracts; capital in private enterprises and businesses of the person; capital in associations and funds established within the law, or the entire business if the private enterprise or business is under the ownership of the person.
– Inherited real estate: rights to use land, rights to use land and property thereon; ownership of houses, including future houses, infrastructure and constructions on land, including off-the-plan constructions; rights to rent land or water surface; other incomes from inheritance being real estate in any shape or form, except for incomes from the inherited real estate mentioned in Point d Clause 1 Article 3 of the Circular No. 111/2013/TT-BTC.
– The ownership and use rights of other inherited assets (cars, motorbikes, ships, barges, speedboats, towboats, yachts, airplanes, hunting guns, sporting guns) must be registered with state agencies.
ii. Tax rate
The rate of personal income tax on the income from inheritance is 10% according to the whole income tax table.
iii. Tax calculation time
The taxable income from inheritance is calculated when the person registers the ownership or rights to use of inheritance and gift.
iv. Relevant laws and regulations
The following pieces of legislation, regulations, and documents are the grounds mainly governing the tax imposed on incomes from capital investment.
– The 2007 Law on Personal Income Tax.
– Circular No. 111/2013/TT-BTC on the implementation of the law on personal income tax, the law on the amendments to the law on personal income tax, and the Government’s Decree No. 65/2013/ND-CP elaborating a number of articles of the law on personal income tax and the law on the amendments to the law on personal income tax.
– Circular No. 92/2015/TT-BTC on guidelines for VAT and personal income tax incurred by residents doing business, amendments to some articles on personal income tax of the Law No. 71/2014/QH13 on the amendments to tax laws, and the Government’s Decree No. 12/2015/ND-CP dated February 12, 2015.
– Circular No. 156/2013/TT-BTC guidance on some articles of the law on tax administration, the law on the amendments to the law on tax administration, and the Government’s Decree No. 83/2013/ND-CP.
The taxable income from inheritance is the excess over 10 million VND of the inheritance received. The value of inheritance is determined as follows:
– The value of inheritance being securities is the value of securities at the time of registration of ownership transfer. Taxable income from an inheritance or gift being securities is the value of the inheritance or gift in excess of VND 10 million regardless of ticker symbols without any deductions at the time of registration of securities ownership transfer. To be specific:
+ The value of securities traded at the Stock Exchange is based on the reference price at the Stock Exchange at the time of registration of securities ownership.
+ The value of securities in cases other than the above is based on the book value provided by the corresponding issuer at the time of making the latest financial statement before the time of registration of securities ownership.
– The taxable income from the inheritance being contributions to businesses is the value of the contributions based on their latest book values of the companies before the contribution ownership is registered.
– The value of inheritance being real estate is determined as follows:
+ The value of rights to use land is based on the land price list made by the People’s Committee of the province before the person registers the rights to use real estate.
+ The value of houses and constructions on land is based on the regulations of competent authorities in charge of house classification, construction standards and limits imposed by competent authorities, residual value of the house or construction when the ownership is registered.
If the value is not identifiable, the prices imposed by the People’s Committee of the province shall apply.
– For inheritance being other assets of which the right to ownership or right to enjoyment must be registered with regulatory agencies: the value of assets are based on the prices imposed by the People’s Committee of the province at the time the person registers the right to ownership or right to enjoyment of inheritance.
If the person who receives the inheritance or gift being imported goods has to pay taxes on the import of such goods, the property value subject to PIT is the price imposed by the People’s Committee of the province at the time of registration of right to ownership or right to enjoyment of the property minus (-) taxes paid by the person during the import stage.