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posted 3 months ago
Vietnam’s real estate market continues to attract strong interest from foreign investors due to rapid urbanization and growing demand for housing and infrastructure. However, accessing this market requires a thorough understanding of the legal framework governing foreign ownership of real estate and the tax obligations arising from investment activities.
See also: Vietnam Port Tax: Current Policies and Regulatory Requirements.
According to the current provisions of the 2024 Land Law and the 2023 Housing Law:
Foreign organizations and individuals are not entitled to own land in Vietnam, as land is under the ownership of the entire people and uniformly managed by the State on behalf of the people (Article 4, Land Law 2024). However, foreign investors may access land through the following mechanisms:
Foreign individuals are permitted to own residential housing (including condominiums and detached houses) within commercial housing development projects, provided that:
Foreign investors may choose from various legal structures to participate in the real estate market in Vietnam, including:
Foreign individuals and organizations earning income from leasing real estate in Vietnam (e.g., residential properties, commercial spaces, office buildings) are subject to tax obligations in accordance with Vietnamese law. These include personal income tax (PIT), value-added tax (VAT), and associated compliance procedures.
According to Circular No. 40/2021/TT-BTC, the following taxes apply to rental income:
See also: Tax Filing Guide for FDI Enterprises in Vietnam.
In cases where a foreign entity conducts real estate leasing activities through a legal entity established in Vietnam (e.g., a foreign-invested enterprise), operational expenses may be deductible when calculating corporate income tax (CIT), in accordance with:
1. Actually incurred and related to business operations;
2. Supported by lawful invoices and documents as prescribed by law.
1. Non-cash payment is required (e.g., via bank transfer, cheque, card, etc.);
2. If the payment has not yet been made at the time of expense recognition, it may still be deductible. However, if the payment is later made in cash, the expense must be adjusted and excluded from deductible expenses.
1. If the value is VND 20 million or more: non-cash payment is required;
2. If under VND 20 million: cash payment is acceptable and still deductible.
According to Clause 3, Article 14 of Circular No. 40/2021/TT-BTC, individuals leasing real estate may choose one of two methods for tax declaration:
1. Per-Contract Tax Declaration: Deadline for tax filing is no later than the 10th day from the start date of the rental period as per the payment schedule. (As guided by the National Public Service Portal)
2. Annual Tax Declaration (per calendar year): Deadline for filing is no later than the last day of January of the following calendar year.
Pursuant to Article 8 of Circular No. 40/2021/TT-BTC, organizations or individuals are required to declare and pay tax on behalf of individuals in the following circumstances:
a) When leasing property from an individual and the lease contract specifies that the lessee (organization) is responsible for paying taxes;
b) When an organization engages in business cooperation with an individual;
c) When an organization pays amounts such as bonuses, promotional rewards, or compensation to a household business under a fixed tax regime;
d) When a Vietnamese organization pays income on behalf of a foreign digital platform provider that has no permanent establishment in Vietnam;
đ) When an e-commerce platform declares and pays taxes on behalf of individuals, in accordance with the roadmap stipulated by the tax authorities;
e) When the organization or individual declares and pays tax on behalf of the taxpayer under a legally valid power of attorney.
Tax may be declared and paid monthly, quarterly, per occurrence, or annually, depending on the specific taxpayer category and applicable tax administration regulations.
If the total annual income exceeds VND 100 million, the individual may authorize the income-paying organization to declare and pay tax on their behalf.
When conducting real estate transfers in Vietnam, foreign investors—whether as individuals or through legal entities—must understand the applicable capital gains tax (CGT) regulations to ensure compliance and optimize tax efficiency during the investment process.
In Vietnam, there is no standalone tax specifically called “capital gains tax”; however, profits earned from selling real estate are taxed under the following structure:
According to Article 4 of the Law on Personal Income Tax No. 04/2007/QH12, individuals may be exempt from personal income tax on real estate transfers in the following specific cases:
To be eligible for the tax exemption, sufficient documentation must be provided, including:
In recent years, Vietnam’s legal framework on taxation and land use has undergone significant changes, directly affecting foreign investors:
1. The scope of home ownership rights for foreign individuals;
2. Investment conditions through land lease mechanisms; and
3. Transfer procedures for real estate projects.
Timely updates on these legal changes and proper fulfillment of tax obligations are critical to maintaining compliance, avoiding tax disputes or penalties, and ensuring the legal validity of investment operations in Vietnam.
Given the complexity and ever-evolving nature of Vietnam’s tax and legal systems—especially for foreign investors in real estate—compliance requires in-depth knowledge of both domestic laws and their practical implementation.
We strongly recommend that investors seek professional legal and tax advisory services to develop appropriate investment strategies, ensure regulatory compliance, and optimize tax obligations.
Harley Miller Law Firm is ready to provide comprehensive legal and investment advisory services, including:
Please contact our team of lawyers and tax consultants for tailored guidance suited to your specific investment goals and legal circumstances.
See also: Compulsory Taxes for Household Businesses – A Practical Guide
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