Not doing real estate business is still subject to tax
A business reported to the tax authority that: The company had bought an apartment in another locality to arrange accommodation for employees. After a period of difficulties, the unit was forced to resell this apartment. The sale generates revenue equal to expenses, without profit.
However, businesses are still subject to a temporary collection of 1% corporate income tax (CIT) in the area where they have real estate. Meanwhile, the company did not register to do real estate business, nor did it generate any interest from this activity.
The enterprise said it has paid 1% of the provisional corporate income tax in the locality where the apartment was sold.
At the same time, declare annual tax settlement at head office, attached to form 03-8A/TNDN, showing that the transaction did not generate profits. The enterprise has also paid all corporate income tax for the whole year according to the correct settlement at the head office.
Faced with the above situation, the company asked 3 questions to the General Department of Taxation:
When no interest is incurred, is it necessary to pay corporate income tax at the locality where the property is sold?
Will the amount of 1% of corporate income tax that has been temporarily paid be refunded?
What regulations are needed to handle it properly?
Binh Thuan Provincial Tax Department requests to provide documents
Responding to this situation, the Binh Thuan Provincial Tax Department said that to have a basis for accurate handling, businesses need to:
- Providing complete business information, tax code, address.
- Submit documents proving the apartment sale transaction.
- Tax declaration form with form 03-8A/TNDN.
- Certificate of payment of 1% of local corporate income tax.
These documents will be used to determine whether they are eligible for a tax refund or not, or to be offset for other tax obligations. The Tax Department also recommends that the unit contact directly for detailed instructions at the address: Ton Duc Thang Avenue, Phan Thiet City, Binh Thuan; support phone number: 0252.3822767.
Notes when companies sell assets internally
In case of buying assets (such as apartments) for internal service, not for business purposes, but then having to sell them, it can still be considered by the tax authority as an income-generating activity in another locality. According to Circular 80/2021/TT-BTC, the allocation of revenue from property sales activities may lead to an obligation to temporarily pay 1% of the corporate income tax.
Therefore, businesses need to:
Proactively and transparently declare non-interest-bearing amounts.
Keep full documents proving the original purpose of use and cause of sale.
Clearly grasp the right to refund taxes or make adjustments after settlement in accordance with regulations.
