Effective as of July 1, 2026, Decree No. 253/2026/ND-CP on guiding the Personal Income Tax (PIT) Law adds strict provisions regarding cases where real estate authorized representatives possess rights equivalent to those of the actual owner. This regulation explicitly aims to prevent tax revenue losses stemming from situations where people exploit power of attorney contracts to secretly conceal real estate transfer activities.
In stark reality, there’ve been numerous cases over recent years where parties buying and selling real estate don’t sign formal transfer contracts. Instead, they draft “full power of attorney” agreements to successfully dodge taxes, avoid registration fees, or strategically delay official name transfers. In these arrangements, authorized representatives receive sweeping rights to actively manage, lease, mortgage, and legally transfer properties. Furthermore, they collect all transaction funds and decide on virtually every single matter related to the real estate.
For these specific cases, tax authorities have rock-solid grounds to thoroughly examine whether the transaction is actually a covert transfer hidden beneath the guise of authorization. The Law on Tax Administration establishes the fundamental principle of management based on economic substance, rather than merely relying on a contract’s explicit title. The freedom to enter into contracts can’t ever become a legally sanctioned tool to legitimize tax evasion.
However, strictly handling pretended transactions and assuming all broad-scope authorizations are outright transfers represent two entirely different issues. The legal framework can’t alter the fundamental nature of authorization entrenched within the Civil Code just to penalize a violating faction.
According to the 2015 Civil Code, a power-of-attorney contract is fundamentally an agreement where the authorized party acts strictly on behalf of the authorizing party. The inherent nature of this relationship is pure representation, definitely not the outright transfer of ownership. The authorized person can firmly sign on behalf of the owner; nevertheless, legal ownership remains with the authorizing party until a formal transfer legally occurs.
This aligns perfectly with the Personal Income Tax Law. Meanwhile, the 2024 Land Law explicitly defines land use right transfers solely as transferring, exchanging, donating, or inheriting. A power-of-attorney contract isn’t a recognized right transfer.
The genuine need for authorization strictly within the real estate sector is incredibly common and thoroughly legitimate.
Vietnamese people living and working abroad frequently authorize relatives to manage their properties; similarly, elderly individuals often empower descendants to handle rigorous administrative procedures on their behalf. For co-heirs, authorizing a single representative to successfully complete inheritance declarations is standard practice.
These specific scenarios don’t trigger any transfer of ownership, and they certainly can’t be automatically deemed blatant tax evasion tactics just to get the ball rolling on tax collection. Therefore, the core issue isn’t merely about whether to strictly tax a power-of-attorney contract.
Instead, authorities must accurately pinpoint the true economic substance of every single transaction. If rock-solid grounds conclusively prove the involved parties actually transferred vital economic benefits, essentially buying and selling the asset while utilizing a power of attorney to secretly conceal the deal, then executing tax penalties is undeniably justified.
Conversely, if authorities blindly consider authorization an outright transfer, it’ll be easy to unjustly infringe upon the lawful right of representation fiercely protected by the Civil Code. Vigorously fighting tax revenue loss and rigorously safeguarding civil rights aren’t mutually exclusive objectives. The legal framework must establish clear criteria to flawlessly distinguish between a totally legal civil transaction and a pretended deal strategically designed for tax evasion.
Blindly dictating that all comprehensive authorization activities are merely covers for transfer contracts requiring PIT payment is fundamentally inappropriate. Authorities can’t use the loophole-exploiting behavior of a small group to cast a massive shadow of doubt over the entire institution of legal authorization.
The 2015 Civil Code firmly stipulates that a power-of-attorney contract is a legally binding agreement where the authorized party strictly performs tasks in the authorizing party’s name. Authorization means representation, definitely not the outright transfer of ownership.
Furthermore, the PIT Law only ever levies taxes strictly on actual real estate transfers. The 2024 Land Law explicitly defines land use right transfers as formal handovers exclusively through exchanging, transferring, inheriting, or donating. Since authorization doesn’t fall within this rigid scope, Decree No. 253/2026/ND-CP can’t automatically label it a fraudulent transfer.
To genuinely levy taxes, authorities must strictly stick to actual cash flows to conclusively prove the transaction’s true nature. Ultimately, a well-crafted policy must seamlessly balance two crucial goals of fiercely fighting tax revenue loss while deeply respecting and rigorously protecting the perfectly lawful civil rights of everyday citizens.
