Tax Benefits for Real Estate Investors in Vietnam

Published on October 1, 2025 and written by Cyril Jarnias

In an expanding economic context, Vietnam positions itself as a prime destination for real estate investors attracted by lucrative opportunities and a dynamic market.

In addition to its rapid growth, the country offers attractive tax benefits that enhance the appeal of real estate investment. These tax incentives serve as a strategic tool of the Vietnamese government to stimulate foreign investment while revitalizing the local real estate sector.

This article examines the various deductions and tax credits available, providing an essential guide for anyone looking to maximize their returns in this promising market.

Exploring Vietnamese Local Taxation for Real Estate Investors

Legal Framework of Local Taxation on Real Estate Investment in Vietnam

Real estate investors in Vietnam are subject to several types of local taxes, primarily land tax, real estate property tax (especially during acquisition or sale), as well as taxes related to rental operations.

Tax / Levy	Tax Base	Current Rate	Specifics
Land Tax	Land area	0.03% to 0.15%/m²	Varies by province and property type
Registration Tax	Value of acquired property	0.5%	Payable upon property transfer
VAT (sale of new property)	Sale price	10%	Also applies to foreigners
Personal Income Tax (PIT) – resale	Total transaction amount	2%	On each transfer
PIT – rental income	Annual rental income	Generally: VAT: 5%, PIT: 5% + license tax if >1,500,000 VND/month

Concrete Examples and Regional Disparities

• In Hanoi or Ho Chi Minh City: rates generally close to the national maximum for residential land (up to 0.15%/m²/year) due to their attractiveness.
• In some rural or less developed provinces: rates around 0.03%/m²/year, sometimes with temporary exemptions to encourage real estate development.

Tax Exemptions and Reductions

• Local authorities may provide:
  • Partial or full exemptions during an initial period (often between one and three years), particularly in special economic zones or for certain types of projects promoting social housing.
  • Targeted reductions for investments contributing to sustainable urban development or in priority sectors designated by the state.

Practical example:
In a newly created industrial zone near Hai Phong, some developers benefit from a full land tax exemption for five years to attract capital and jobs.

Administrative Procedures

1. Tax declaration:
   • The investor must declare their real estate acquisitions to the competent local tax office.
   • The declaration must be made before any official transaction at the public notary.
2. Payment:
   • Taxes are generally paid by bank transfer directly to the local Treasury after a tax notice is issued.
3. Required documents:
   • Land Certificate/Land Use Right (“DUT”)
   • Authenticated contract
   • Identity proof
4. For rental income:
   • Quarterly or annual filing depending on amount received
   • Online payment possible in several major cities

Practical Tips to Optimize Local Taxation

• Consult a specialized Vietnamese accounting firm at the start of the project; they are precisely familiar with the local specifics applicable to the targeted province.
• Regularly inquire about temporary incentive policies that can significantly reduce tax pressure in the initial phase.
• Prefer certain validated legal structures allowing efficient management between private/direct holding and via a locally registered company—each structure has its specific tax advantages depending on investor profile/expected returns.

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Foreign investors not fully mastering these procedures or not fluent in Vietnamese are recommended to systematically use a licensed local accountant. This ensures not only strict compliance with regulations but also optimization adapted to the frequent changes in Vietnamese legal texts governing real estate.

International Tax Strategies to Avoid Double Taxation

Vietnam has concluded bilateral double taxation agreements (DTAs) with over 80 countries, including France, Germany, the United Kingdom, Japan, South Korea, Singapore, China, Australia, and many other major economic partners. These agreements aim to avoid double taxation of income for individuals and corporations operating in multiple jurisdictions, while facilitating cross-border investments, particularly in real estate.

Notable Countries with a DTA with Vietnam

France

Germany

United Kingdom

Japan

South Korea

Singapore

China

Australia

Russia

Malaysia

Benefits for Foreign Real Estate Investors:

• Reduction or elimination of double taxation on rental income, real estate capital gains, and dividends from investments in Vietnam.
• Increased legal security thanks to the clear definition of taxing rights between Vietnam and the investor’s country of residence.
• Possibility to repatriate net profits with reduced taxation according to the applicable agreement.

Main International Tax Planning Techniques:

• Tax credit: Tax paid in Vietnam on real estate income can be deducted from the tax due in the investor’s country of residence, within the limit provided by the DTA.
• Exemption of repatriated profits: Some agreements provide for full or partial exemption from tax on dividends, interest, or capital gains repatriated to the home country.
• Structuring via entities located in jurisdictions with favorable DTAs to optimize the overall tax burden.
• Use of compliant transfer pricing to avoid tax adjustments during international intra-group transactions.

Legal Provisions and Local Taxation Supporting Real Estate Investment:

• Long-term property rights for foreign investors in certain residential and commercial projects.
• Competitive corporate tax rates (generally 20% on profits).
• Temporary tax exemptions for certain real estate projects, particularly in special economic zones or industrial zones.
• Simplified procedures for registering foreign investments and creating foreign-capital entities.

Concrete Example:

A French investor acquires a rental building in Ho Chi Minh City via a 100% locally owned company. The rental income received is taxed in Vietnam at a rate of 20%. Thanks to the Vietnam-France DTA, the investor benefits from a tax credit in France equivalent to the tax already paid in Vietnam, thus avoiding double taxation on this income. Dividends repatriated to France may also be exempt or subject to a reduced rate, according to the terms of the agreement.

Case Study:

A Singaporean company invests in a commercial complex in Hanoi. Under the Vietnam-Singapore DTA, dividends paid to the parent company in Singapore are subject to a reduced withholding tax (for example, 5% instead of 10%), and Singapore grants a tax credit for the tax paid in Vietnam. This structure optimizes the net profitability of the investment.

Compliance and Tax Risk Management for Investors:

• Obligation to comply with local formalities to benefit from DTA advantages (request for tax residence certificates, appropriate documentation, notification to the Vietnamese tax administration).
• Need for increased vigilance regarding documentation (proof of financial flows, contracts, investment decisions) to protect against tax adjustments.
• Monitoring of legislative developments and international negotiations, particularly the OECD/G20 BEPS (Base Erosion and Profit Shifting) rules, which aim to limit aggressive optimization practices.
• Risk of financial penalties or disputes if transparency, economic substance, or reporting requirements are not met.

Key Takeaway:

Double taxation agreements and Vietnamese local taxation offer an attractive framework for foreign real estate investment, provided that compliance, documentation, and international tax planning tailored to each situation are mastered.

Decoding Land Tax and Property Tax in Vietnam

Definitions and Differences Between Land Tax and Property Tax in Vietnam

• Land Tax: Annual tax paid by real estate owners (individuals or entities) on the value and/or area of the owned property, whether residential, commercial, or agricultural land. It aims to regulate land use, fund public services, limit speculation, and redistribute resources.
• Property Tax: Historically applied to occupants of a dwelling (owners or tenants), this tax is no longer in effect on buildings in Vietnam since 1992. Currently, taxation primarily focuses on land, not on housing occupancy.

Characteristic	Land Tax	Property Tax
Taxable Subject	Land/property owner	Occupant (owner/tenant)
Calculation Base	Land value/area	Living area x price/m²
Current Status in VN	Applied	Not applied since 1992

Usual Tax Rates and Calculation Base

• The current land tax is primarily a “non-agricultural tax,” with a rate generally ranging between 0.03% to 0.15% of the cadastral value for each type of land.
• A recent project proposes a progressive scale based on the number of properties owned: first property at a low rate; increasing rate for each additional property.
• Typical proposed calculation:
  *Total built area* × *cadastral price/m²* × *applicable rate*

Application to Local and Foreign Investors

Any individual or legal entity with the right to own/use land must pay this tax—this includes both Vietnamese citizens and foreigners legally residing in Vietnam.

Local and foreign companies holding a land use right certificate are also liable.

Tax Exemptions/Reductions for Real Estate Investors

Main measures:

• Certain real estate projects temporarily benefit from partial exemptions during the first years following their completion to encourage investment.
• Land used exclusively for social activities (accredited private schools…), certified ecological agriculture, or specific projects may benefit from either:
  – Full exemption
  – Partial reduction for a determined period

Indicative list:

• Temporary exemption during the first two years after new construction/major renovation
• Targeted reductions for investments in certain strategic/priority zones
• Additional tax benefits sometimes negotiated within Special Economic Zones

Regional Comparison

Country	Usual Rate / Base	Specifics
Vietnam	0.03–0.15% (cadastral value)	Progressive scale considered; historically low
Thailand	~0.02–1% (estimated value)	Clear progressivity from second property
Indonesia	~0.5% (taxable value)	Reduction if single residence
Malaysia	Locally variable (~1–3%)	Many local exemptions

Vietnamese taxation remains relatively moderate compared to neighboring countries but is currently undergoing targeted strengthening against multi-residential speculative phenomena.

Comparison of Tax Benefits for Real Estate Investors in Vietnam and Elsewhere

Tax Incentives Specific to Vietnam

• Real estate investors in Vietnam benefit from relatively advantageous taxation:
  • Two taxation options when reselling a property:
    • 20% tax on capital gains (difference between purchase and sale price).
    • 2% tax on the total transaction value, regardless of profit made.
  • Foreign investors can purchase real estate (excluding land) for a renewable 50-year term, with restrictions on the proportion of properties owned in the same building.
  • There are few other exemptions or real estate tax credits: direct taxation on holding or renting remains moderate compared to other countries.
  • Registration fees and land taxes are generally low.

Comparative Table of Main Tax Benefits for Real Estate Investors

Country	Main Tax Benefits	Capital Gains Tax Rates	Other Tax Particularities
Vietnam	Choice between 20% on capital gains or 2% on total sale value	20% (capital gains) or 2% (gross value)	Low registration fees, no holding exemptions
United States	Tax deductions on loan interest, depreciation, investment credits	0-20% depending on duration and status	1031 Exchange: tax deferral, high local property taxes
United Kingdom	Allowances on main residence, exemptions for certain thresholds, limited depreciation	18-28% (real estate capital gains)	High Stamp Duty, exemptions on main residence
Singapore	Exemptions on main residence, credits for first-time buyers, low holding rates	0-22% depending on holding period	Acquisition taxes (BSD/ABSD), temporary exemptions

Similarities and Differences Between Tax Systems

Similarities

• All these countries tax real estate capital gains upon resale.
• Registration fees or acquisition taxes exist in each country.
• Incentives exist for first-time buyers or main residences (more pronounced in the UK and Singapore).

Differences

• Vietnam: flexible choice of taxation mode, simple and low taxation on holding, absence of tax depreciation or significant deductions.
• United States: complex but very advantageous taxation for the investor (deductions, depreciation, 1031 Exchange to defer taxation).
• United Kingdom: high taxation on capital gains, exemptions for main residence, high transfer duties.
• Singapore: strict taxation on foreign investments, but significant exemptions for residents and first-time buyers.

Implications for International Diversification

An investor seeking to diversify their international portfolio must consider:

• The simplicity of the Vietnamese tax system (few formalities, low rates) vs American sophistication (optimization opportunities, but regulatory complexity).
• The entry cost: Vietnam offers low acquisition prices and holding taxation, unlike Singapore or London where duties and taxes are high.
• Protection against speculation: Vietnam plans to strengthen taxation to limit speculation but remains attractive for medium-term investments.
• Access to property: restrictions for foreigners in Vietnam (limited duration, quotas), but recent reforms favoring facilitated access.

Why Prefer Vietnam?

Vietnam attracts with:

• Moderate acquisition and holding taxation.
• A choice of taxation at the time of resale allowing optimization of the tax burden according to the situation.
• A rapidly growing market, with potential capital appreciation higher than that of mature markets.
• Fewer administrative constraints and controls than in Western markets, facilitating investment entry and exit.

An international investor may prefer Vietnam to benefit from a simple tax environment, high rental yields, and strong capital gains potential, while diversifying exposure away from traditional markets.