Shall individuals leasing out business premises issue invoices in Vietnam?

Shall individuals leasing out business premises issue invoices in Vietnam?

Based on the guidance in Official Dispatch 4852/CTHN-TTHT in 2024 regarding issuing invoices for business households as follows:

The Tax Department of Hanoi City received Document No. 01/CV-2023 from Seibu Nousan Vietnam Co., Ltd. (hereinafter referred to as the Company) regarding guidance on issuing invoices for business households. The Tax Department of Hanoi City has the following opinions:

- Based on Tax Administration Law No. 38/2019/QH14 dated June 13, 2019, of the National Assembly.

+ Article 51 Clause 5 stipulates tax determination for business households, individual businesspersons paying taxes according to the presumptive tax method:

“5. Business households and individual businesspersons with revenue, labor scale meeting the highest criteria for micro-enterprises as prescribed by law on support of small and medium enterprises must comply with accounting policies and pay taxes according to the declaration method.”

+ Article 91 stipulates the application of e-invoices when selling goods, providing services:

“...3. Business households, individual businesspersons under the case stipulated in Clause 5, Article 51 of this Law and cases with determined revenue when selling goods, providing services must use e-invoices with tax authority codes when selling goods, providing services.”

4. Business households, individual businesspersons not meeting conditions to use e-invoices with tax authority codes as stipulated in Clauses 1 and 3 of this Article but need invoices to provide to customers or in cases where enterprises, economic organizations, and other organizations accepted by the tax authority to issue e-invoices to customers, the tax authority will issue e-invoices with codes on each occurrence after tax declaration and tax payment before the tax authority issues e-invoices on each occurrence.

- Based on Clause 1, Article 9 of Circular 40/2021/TT-BTC dated June 1, 2021, of the Ministry of Finance providing tax calculation methods for some specific cases:

“Article 9. Tax calculation methods for some specific cases

1. Individuals leasing assets

a) Individuals leasing assets are individuals with revenue arising from leasing assets including leasing houses, premises*, shops, factories; warehouses excluding lodging services; leasing means of transport, machinery, equipment without operators; leasing other assets without services. Lodging services not accounted in asset lease activities under this guidance include short-term lodging supply for tourists, transients; long-term lodging for students, workers, and similar subjects; lodging supply with catering services or entertainment facilities.*

b) Individuals leasing assets declare taxes per each payment cycle (determined by the start date of the lease period of each payment term) or declare taxes based on the calendar year. Individuals declare taxes for each contract or declare taxes for multiple contracts on one tax declaration if the leased assets are in the same tax authority management region...”

- Based on Article 4 of Circular 96/2015/TT-BTC dated June 22, 2015, of the Ministry of Finance stipulating deductible and non-deductible expenses when determining taxable income:

“...

2. Non-deductible expenses when determining taxable income include:

...2.5. Asset rental expenses from individuals lacking complete documents, vouchers below:

- In case companies lease assets from individuals, documents to determine deductible expenses include the asset lease contract and payment vouchers for rented assets.

- In case companies lease assets from individuals where the lease contract stipulates the company pays taxes on behalf of individuals, documents to determine deductible expenses include the asset lease contract, payment vouchers, and tax payment vouchers on behalf of individuals.

- In case companies lease assets from individuals where the lease contract specifies rent is exclusive of taxes (VAT, personal income tax) and the company pays tax for individuals, the company can count into deductible expenses the total rental price including taxes paid on behalf of individuals....”

Based on the above provisions, in cases where Seibu Nousan Vietnam Co., Ltd. signs a rental contract with a business household or individual, the business household or individual is not obligated to use e-invoices when leasing assets. The documents to determine deductible expenses when determining taxable income are the house lease contract and rental payment vouchers following guidance at Point 2.5, Clause 2, Article 4 of Circular 96/2015/TT-BTC of the Ministry of Finance.

Therefore, it is recommended that the Company base its actual situation, compare with cited legal provisions, and implement correctly according to regulations.

Thus, individuals renting business premises are not required to issue VAT invoices for enterprise customers.

Shall individuals leasing out business premises issue invoices in Vietnam? (Image from Internet)

Shall individuals leasing out business premises pay taxes in Vietnam?

Based on Point c, Clause 1, Article 9 of Circular 40/2021/TT-BTC (amended by Clause 3, Article 1 of Circular 100/2021/TT-BTC) stipulating tax calculation methods for some specific cases of individuals renting assets as follows:

Tax calculation methods for some specific cases

1. Individuals leasing assets

...

c) Individuals only having rental activities with a lease period less than a year, if annual rental income does not exceed 100 million VND, they are exempt from VAT and PIT. Should the lessee pay rent upfront for multiple years, the income threshold to determine tax obligation is the total prepayment spread over the calendar years.

...

Additionally, per Clause 2, Article 4 of Circular 40/2021/TT-BTC, the regulations are as follows:

Tax declaration principles

1. Tax declaration principles for business households and individuals are executed following applicable VAT, PIT laws, and related legal documents.

2. Business households, individuals with annual revenue from business activities not exceeding 100 million VND are not required to pay VAT and PIT per VAT and PIT law. Business households, individuals must declare taxes accurately, truthfully, comprehensively, and submit tax dossiers on time; they are accountable for the accuracy, truthfulness, and completeness of tax dossiers per regulations.

3. Business households, individuals operating as a group of individuals or households, the revenue threshold of 100 million VND/year to determine the tax exemption for one designated representative of the group or household in the tax year.

Based on stipulations, if an individual only leases business premises with a lease period of less than a year and the annual lease income does not exceed 100 million VND, they are exempt from VAT and PIT.

If rent is paid in advance for several years, the income threshold for tax obligation is considered on the basis of calendar year division.

What are guidelines on tax declaration for leasing out business premises directly with the tax authority in Vietnam?

Based on the guidance in Article 14 of Circular 40/2021/TT-BTC regarding tax declaration for leasing business premises directly with the tax authority as follows:

(i) Tax declaration dossier

- Tax declaration form for asset-leasing activities (applies to individuals directly declaring taxes for asset leasing with the tax authority and organizations declaring on behalf of individuals) following Form No. 01/TTS issued together with Circular 40/2021/TT-BTC;

- Annex with detailed asset lease contract list (applies to individuals directly declaring taxes for asset leasing with the tax authority if it is the first tax declaration of a contract or contract annex) following Form No. 01-1/BK-TTS issued together with Circular 40/2021/TT-BTC;

- Copy of asset lease contract, contract annex (if it is the first tax declaration of a contract or contract annex);

- Copy of Power of Attorney according to legal regulations (in cases where individuals authorize a legal representative to perform tax declaration and payment procedures).

The tax authority reserves the right to request the original to compare and confirm the accuracy of the copies with the originals.

(ii) Place to submit the tax declaration dossier

Individuals with income from leasing real estate in Vietnam shall submit tax declaration dossiers at the Tax Sub-department directly managing the location where the real estate is leased.

(iii) Tax declaration submission deadline

The deadline for submitting tax declaration dossiers for individuals leasing assets and declaring directly with the tax authority is as follows:

+ The deadline for submitting tax declaration dossiers for individuals declaring taxes per each payment cycle is no later than the 10th day from the start of the lease term of the payment cycle.

+ The deadline for submitting annual tax declaration dossiers for individuals declaring once per year is by the last day of the first month of the following calendar year.

(iv) Tax payment deadline

The tax payment deadline is no later than the last day of the tax declaration dossier submission deadline. In the event of additional tax declaration, the tax payment deadline is from the amended tax period with discrepancies.