The Client is a foreign person who purchased a condominium unit in Vietnam in 2016 (the “Unit”) by way of entering into the Unit lease contract with the owner developer (the “OD”) with the lease term of 50 years as from 2016.
Question:
- Is this accurate that the Client is able to own the Unit for 50 years from the Government with the pink booklet under the New Law?
- Is it correct that the Client will be owning the Unit for another 50 years as from the officially issued date of its pink booklet?
- It is legally possible that the Client can own the Unit for 100 years, including: (i) first 50 years with the OD; and (ii) 50 years with the pink booklet?
- If the Client wishes to sell the Unit to another foreigner, whether money transfer transaction must be made in the Vietnamese bank?
- Is it possible for the Client to transfer the money from sale of the Unit to another country if the Client can show the official transaction paper and pay Vietnamese tax duties, including VAT 10% and PIT?
- How many percentage of the Unit selling price is the Client required to pay for the PIT?; and
- When selling the Unit, is the Client entitled to decide own price at the buyer or has to follow the suggesting price of the OD?
Answer:
Based on your questions, we have some legal advices as follow:
1.Is this accurate that the Client is able to own the Unit for 50 years from the Government with the pink booklet under the New Law?
Is it correct that the Client will be owning the Unit for another 50 years as from the officially issued date of its pink booklet?
=> Article 161.2.c of Law on housing promulgated that: “The foreign individuals are eligible for the homeownership as agreed in agreements on housing sale, lease purchase, gifting, or inheritance for not more than 50 years, from the day on which they are granted the Certificate and they may be also granted extension as prescribed in regulations of the Government; the duration of the homeownership must be stated in the Certificate”.
Therefore, in accordance with such regulation, the Client can own the Unit for 50 years from the officially issued date of the pink booklet.
2.It is legally possible that the Client can own the Unit for 100 years, including: (i) first 50 years with the OD; and (ii) 50 years with the pink booklet?
=> Article 77.1.b of Decree No 99/2015/ND-CP on guidelines for the Law on housing promulgated that: “Within 30 days from the receipt of the owner’s application, the People’s Committee of the province shall consider and issues a written permission for one extension of the time limit for house ownership at the request of the owner. Such extension must not exceed 50 years from the original expiration date of the time limit for house ownership written on the certificate, except for the case specified in Clause 3 of this Article”.
In accordance with such regulation, the Client can own the Unit for 100 years, including: (i) first 50 years from the issued date of pink booklet; and (ii) 50 years of extension.
3.If the Client wishes to sell the Unit to another foreigner, whether money transfer transaction must be made in the Vietnamese bank?
=> According to Article 162.2.c of Law on housing, the Client who wishes to sell the Unit must pay off the total amount through credit institutions operating in Vietnam. Therefore, it is not necessary to made the money transfer transaction in Vietnamese bank. You can also make the transaction in foreign bank branches operating in Vietnam.
4.Is it possible for the Client to transfer the money from sale of the Unit to another country if the Client can show the official transaction paper and pay Vietnamese tax duties, including VAT 10% and PIT?
=> Article 7.3 of Decree No 70/2014/ND-CP promulgated that: “Non-residents and residents are foreigners who keep foreign currency in their accounts or legal receipts remitted or carried overseas; in case they own legal receipts in Vietnamese dong, they are allowed to purchase foreign currency to remit and carry overseas”.
According to such regulation, the Client is able to transfer the money from sale of the Unit to another country by purchasing foreign currency.
5.How many percentage of the Unit selling price is the Client required to pay for the PIT?
=> In accordance with Article 2.12 of Decree No 12/2015/ND-CP, the rate of tax on income from real estate transfer is 2% of the transfer price.
6.When selling the Unit, is the Client entitled to decide own price at the buyer or has to follow the suggesting price of the OD?
=> The Law on housing and related legal documents haven’t prohibited the Client from making decision the price of the Unit.
