Inheritance income tax proposed to be scrapped

The tax is unreasonable and could inconvenience people if the inheritance does not generate a regular income, the committee said in its comments on the Ministry of Finance’s proposed amendments to the Personal Income Tax Law.

In Vietnam, there is a 10% income tax on gifts or inherited assets in the case of securities, stakes in businesses and real estate among others.

Da Nang City proposed exempting inheritance or gifts from family members that do not involve real property.

The Ministry of Agriculture & Rural Development called for adjustments to the tax rate on real estate inheritance, which is much higher than the 2% on property transactions.

"This could put pressure on heirs as the higher the value of their real estate [inheritance], the more personal income tax [they have to pay]," it said.

In response, the finance ministry said it is reviewing the draft and exploring possible adjustments to the inheritance tax.

But it disagreed with the agriculture ministry’s suggestion, saying inheriting and trading real estate are two different activities, and therefore, applying the same tax rate to both is not appropriate.

It pointed out that Vietnam does not impose income taxes on many forms of inheritance that other countries do.

Thailand, for example, also taxes cash inheritance, while South Korea and Japan tax all forms of inherited assets.

The government plans to submit the amendments to the National Assembly at the end of this year and expects them to be approved next May.

Personal income tax is the third highest source of revenue for the government behind value-added tax and corporate income tax.

It amounted to an estimated VND189 trillion (US$7.4 billion) last year, up 20% from 2023 and accounting for 9.3% of revenue.