Filing corporate income tax returns for real estate projects according to Official Letter 674/CCTKV17

Relevant legal regulations

According to point b, clause 3, Article 17 of Circular 80/2021/TT-BTC, when a business engages in real estate transfer activities in provinces or cities other than its head office, it must still declare corporate income tax centrally at its head office. However, the business is responsible for allocating the tax payable to each province where the real estate project involving the transfer is located.

Businesses are not required to file quarterly tax returns for real estate transfer activities, but they must still make provisional tax payments based on actual quarterly revenue. At the end of the year, businesses must prepare a final corporate income tax return using form 03/TNDN and create appendix 03-8A/TNDN to allocate the tax amount to each locality.

The allocation is based on revenue generated in each locality. The common provisional payment rate, as per guidelines, is 1% on transfer revenue, unless otherwise adjusted as per regulations.

Main content of Official Letter 674/CCTKV17-QLDN1

The official guidance clearly states that businesses only need to file annual tax returns for real estate transfer activities. The form to be used is mẫu 03/TNDN issued with Circular 80/2021/TT-BTC. In this form, businesses 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 filing the annual tax return. This is a summary of all tax advances made during the fiscal year related to real estate transfer activities, helping tax authorities determine any outstanding or overpaid tax obligations.

Item H3 records the amount of corporate income tax payable and provisionally paid for the transfer of infrastructure and housing handed over in this period and for which payments have been collected according to schedule, including amounts from previous periods but which are only recognized as revenue at this time according to accounting standards. H3 is where the total tax liability arising from the transfer activity in the period is shown.

In addition, businesses must prepare an appendix to the Corporate Income Tax Allocation Table (Form 03-8A/TNDN), clearly specifying the revenue and the amount of tax allocated to each locality where the transfer activities take place. This appendix is an indispensable part of the tax settlement dossier and serves as the basis for the provincial and city tax departments where the project is located to receive the corresponding tax share.

Instructions on how to fill out the form

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

The amount of tax provisionally paid during the year for each locality is recorded in item G5 to ensure transparency regarding payment progress. The final amount of tax payable is determined in item H3. If the amount of tax paid is less than the amount due, the business needs to make the additional payment before the deadline. If the amount paid is more than the amount due, it can be offset or a refund can be requested.

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

Illustrative situation

Suppose Company A has its headquarters 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 these projects is VND 100 billion, allocated as follows: Long An VND 50 billion, Binh Duong VND 30 billion, and Dong Nai VND 20 billion. According to regulations, the company must pay corporate income tax for this activity, equivalent to VND 1 billion.

The company made provisional tax payments during the year as follows: Long An 400 million VND, Binh Duong 350 million VND, and Dong Nai 220 million VND. At the final tax settlement period, the company needs to record the provisional tax payments in G5, recalculate the total tax payable, and adjust the difference in H3. In Appendix 03-8A/TNDN, the company must clearly declare the revenue and the amount of tax payable and paid for each locality to facilitate allocation.

Common mistakes to avoid

One common mistake is that businesses fail to prepare Appendix 03-8A/TNDN, leading to a lack of basis for tax allocation. Additionally, many accountants are still accustomed to recording all revenue at the head office, neglecting the locality where the transfer activity occurs. Lack of supporting documentation, failure to track provisional payments, or confusion between VAT and corporate income tax are also common errors resulting in late payments, administrative penalties, and subsequent tax arrears after audits.

The role of software in supporting and storing records.

To ensure compliance, businesses need to use accounting software with features for allocating revenue and taxes by locality. Data must be regularly reconciled and updated to the correct version of the HTKK and iTax tax declaration software. Storing contracts, handover minutes, payment receipts, and allocation statements is crucial for audits and explanations when necessary.

Practical recommendations for businesses

Businesses should proactively review projects involving real estate transfers, accurately determining revenue by period and location. Provisional tax payments should be made in full quarterly to avoid shortfalls during year-end settlement. Training accounting personnel to thoroughly understand the regulations in Circular 80 and stay updated on guidance from tax authorities will help businesses minimize the risk of violations. Furthermore, an internal summary table of revenue and provisional tax payments by project should be maintained as a basis for preparing tax returns and settlement appendices.

The actual impact of Official Document 674

Official Document 674/CCTKV17-QLDN1 is a specific guidance document that helps standardize the declaration of corporate income tax when real estate transfer activities occur in multiple localities. This document emphasizes the tax authority's clear obligations regarding tax declaration, payment, and allocation according to each locality. Businesses should consider this an important reminder to review their entire tax accounting process related to real estate.

Conclude

Compliance with the guidelines in Official Letter 674/CCTKV17-QLDN1 and Circular 80/2021/TT-BTC is mandatory for all businesses involved in real estate transfers. Understanding, fully declaring, and paying taxes correctly not only helps businesses avoid violations but also contributes to transparency and professionalism in financial management. Real estate accountants need to regularly update their knowledge of relevant laws, master accounting software, and maintain complete records to best meet the requirements of the tax authorities.