Declaring corporate income tax on real estate according to Official Dispatch 674/CCTKV17

Relevant legal regulations

According to Point b, Clause 3, Article 17 of Circular 80/2021/TT-BTC, when an enterprise conducts real estate transfer activities in provinces and cities other than the head office, it still declares corporate income tax centrally at the head office. However, the enterprise is responsible for allocating the tax payable to each province where the real estate project where the transfer activity occurs is located.

Enterprises do not have to submit quarterly declarations for real estate transfer activities but still have to temporarily pay tax based on actual revenue generated each quarter. At the end of the year, enterprises must prepare a corporate income tax finalization declaration according to form No. 03/TNDN and prepare appendix 03-8A/TNDN to allocate tax to each locality.

The allocation is based on the revenue generated in each locality. The general provisional payment rate according to the guidance is 1% on the transfer revenue, unless there is a separate adjustment according to the regulations.

Main content of Official Dispatch 674/CCTKV17-QLDN1

The document clearly instructs that enterprises only declare taxes annually for real estate transfer activities. The declaration form used is form 03/TNDN issued with Circular 80/2021/TT-BTC. In this declaration, enterprises need to pay attention to two important indicators: G5 and H3.

Indicator G5 reflects the amount of corporate income tax provisionally paid up to the time of submitting the annual settlement dossier. This is a summary of the tax amounts provisionally paid in the fiscal year related to real estate transfer activities, helping the tax authority determine the outstanding or overpaid tax obligations.

Indicator H3 records the amount of corporate income tax payable and provisionally paid for the transfer of infrastructure and housing handed over this period and collected according to schedule, including revenues from the previous period but only now recognized as revenue according to accounting standards. H3 is where the total tax liability arising from the transfer activities during the period is shown.

In addition, enterprises must prepare an appendix of the corporate income tax allocation table form 03-8A/TNDN, which clearly identifies the revenue and tax amount allocated to each locality where the transfer activities are carried out. This appendix is an indispensable part of the settlement dossier and is the basis for the tax departments of the province or city where the project is located to receive the corresponding tax portion.

Instructions on how to declare specifically

When preparing the corporate income tax finalization form 03/TNDN, the business accountant needs to summarize all revenue and expenses incurred during the year. For the revenue from real estate transfer, the data must be detailed by project and location.

The amount of tax provisionally paid during the year for each locality is recorded in indicator G5 to ensure transparency in the payment progress. The final tax payable is determined in indicator H3. If the tax paid is less than the amount payable, the enterprise must pay additional tax before the deadline. If more is paid, it can be offset or refunded.

Appendix 03-8A/TNDN is a detailed table showing revenue by province and the corresponding tax payable. Enterprises need to base on contracts, handover minutes, invoices and legal documents to determine the exact revenue for each project.

Illustrative case

Suppose Company A is headquartered in Ho Chi Minh City but has three real estate transfer projects in 2024 in Long An, Binh Duong and Dong Nai. The total revenue recorded from the projects is 100 billion VND, allocated as follows: Long An 50 billion, Binh Duong 30 billion and Dong Nai 20 billion. According to regulations, the company must pay 1% of corporate income tax for this activity, equivalent to 1 billion VND.

The company has provisionally paid the following taxes during the year: Long An 400 million, Binh Duong 350 million and Dong Nai 220 million. At the final settlement period, the company needs to record the provisionally paid tax in G5, re-determine the total tax payable and adjust the difference in H3. In Appendix 03-8A/TNDN, the company must clearly declare the revenue and tax payable and paid by each locality for allocation purposes.

Common mistakes to avoid

One of the common mistakes is that businesses do not prepare Appendix 03-8A/TNDN, leading to a lack of basis for tax allocation. In addition, many accountants are still accustomed to recording total revenue at the head office, ignoring the local factor where the transfer activity occurs. Lack of supporting documents, failure to track the provisional payment amount, or confusion between VAT and CIT are also common mistakes that cause late payment, administrative fines, and additional collection after inspection.

The role of software to support and store records

To ensure compliance with regulations, businesses need to use accounting software with the ability to allocate revenue and taxes by locality. Data needs to be regularly checked and updated with the correct version of HTKK and iTax tax declaration software. Storing contract records, handover minutes, receipts and allocation lists is very important to serve inspections and explanations when necessary.

Practical recommendations for businesses

Enterprises should proactively review projects involving real estate transfers, determine revenue in the correct period and locality. Provisional tax payments should be made in full every quarter to avoid shortages at the end of the year. Training accounting staff to understand the regulations in Circular 80 and updating guidance documents from tax authorities will help enterprises minimize the risk of violations. In addition, there should be an internal summary table of revenue and provisional tax payments by project as a basis for preparing declarations and finalization appendices.

Practical impact of Official Dispatch 674

Official Letter 674/CCTKV17-QLDN1 is a specific guidance document, helping to standardize the way of declaring corporate income tax when real estate transfer activities arise in many localities. This document is an emphasis of the tax authority on the obligation to declare, pay and allocate taxes clearly according to each locality. Enterprises should consider this an important reminder to review the entire tax accounting process related to real estate.

Conclude

Compliance with the instructions in Official Dispatch 674/CCTKV17-QLDN1 and Circular 80/2021/TT-BTC is a mandatory requirement for all businesses involved in real estate transfer activities. Correct understanding, full declaration and payment of taxes in the right place not only helps businesses avoid violations but also contributes to demonstrating transparency and professionalism in financial management. Real estate business accountants need to regularly update legal documents, master software tools and keep complete records to best meet the requirements of tax authorities.