Vietnam is one of Southeast Asia’s premier emerging markets. From 2014 to 2016, Vietnam’s economy recovered, with strong GDP growth of 5.4%, 6.0% and 6.7% mostly due to the implementation of effective monetary policy. The positive signals of the economy and new updated land laws have led to a significant growth in demand from foreign buyers aiming to own properties in Vietnam.
1. What are the regulations on foreign property ownership in Vietnam?
- Current Law: effective 1 July 2015
- Who: Foreigners permitted entry to Vietnam.
- Property: Residential properties: apartments and landed houses
- 30% total units of any apartment development
- 10% of landed villa and/or housing project stock
- 250 landed properties in one administrative ward
- Duration: 50 year leasehold with extension, subject to authority approval
- Purpose: Living, sale, lease, inheritance, gift or donation.
To ensure more seamless transfer for local property purchases, foreign investors are advised to set up a local bank account. There are many international banks in Vietnam such as: ANZ, Citi Bank, HSBC and Standard Chartered.
3. What taxes are involved?
A foreigner is responsible to directly declare and pay tax at the district tax bureau where the property is located. A third party may be legally authorized to act on their behalf.
- Value added tax (VAT): 10% VAT is applied on any property sale whether local or foreigner.
- Administration fees: A minor fee is payable for property ownership certificate issuance.
- Ownership registration tax: 0.5% registration tax against property value to obtain the ownership ‘pink book’ certificate.
Maintenance fee / sinking fund:
- Maintenance fees are referred to as a ‘sinking fund’ and are contributed to by development unit buyers.
- Fees are for major building and common area servicing to maintain development quality standards.
- Current sinking fund fees are 2% of the house/apartment price, before VAT.
Personal income tax: Personal income earned through assignment or apartment/houses resale requires 2% personal income tax paid on the transacted value.
- Personal income tax: Personal income earned through house/apartment rental requires 5% VAT and 5% PIT on revenue be paid.
- For rental income exceeding VND 100 million pa, a business license tax of VND 1,000,000 per year applies.