Recently, even the Party and the government with Ministries have many measures to improve the situation which our real estate market is almost frozen. However, these efforts have yet to produce a strong boost this activity to pass gloomy scene. To create momentum for the economy in general and real estate business in particular  continues to grow, attract capital and foreign investment, create more attractive competitiveness. Therefore, on 18/06/2014 the Ministry of Finance issued Circular No. 78/2014/TT-BTC provides guidance on implementating Decree No. 218/2013/ND-CP of the Government which provides detailed regulations on implementing the Corporate income tax Law (CIT); Accordingly, transferring capital and transferring real estate have a number of changes to address some problems in the last period; and at the same time encourage and create favorable conditions for this activity. Details are as followed:

Regarding revenue from transferring capital

Adding range of application for the case which company sell the entire Limited company with one member owned by a organization in the form of capital transfer associated with the property will have to declare and pay CIT as transfer Property and corporate income tax declaration form (form 08).

Regarding basis for tax calculation, the transfer price is defined as the total actual value of the transferor receives under the transfer contract. Enterprises have fund transferring activities for institutions and individuals, the transferred value under the transfer contract is 20 million or more must have non-cash payment documents. If there are no payment documents, the Tax Department have the authority to set the transfer prices.

Regarding the purchase price of the transferred capital amount is determined for each specific case; In particular, adding case where contributed capital or business acquisition is originary from loans, the purchase price of the transferred capital amount includes payment of interest expenses for capital investment loans.

Regarding revenue from transferring real estate

Regarding basis for tax calculation, adding identify method for real estate businesses have revenues from customer's advance payments by progress and declared for advance tax payment in proportion% on earned revenues, this revenue does not have to include in the taxable income of the business in year and the cost of advertising, marketing, promotion, brokerage commissions in year. Expenses from advertising, marketing, promotion, brokerage commissions are included in deductible expenses under the prescribed control law in the first year when handover real estate, incurred taxable income.

Regarding expense from transferring real estate, adding principles for determining deductible expense to determine taxable income of the revenue from transferring real estate in the period which corresponding to taxable income and ensure that the specifed conditions on deductible expenses and non-deductible expenses.

Regarding the CIT rate on transferring real estate activities previously was 25%; Now decrease to 22% and continue to decrease to 20% from 01/01/2016. With the tax rate decrease as mention above, the real estate market will hopefully get better.

The above news will be effective from 02/08/2014.