Shall leasing out houses incur taxes in Vietnam? When shall the housing owners be imposed taxes in Vietnam?
Shall leasing out houses incur taxes in Vietnam?
In Vietnam, leasing out a property may be subject to taxes, depending on the rental income and current regulations. Below are the common types of taxes applicable to rental activities:
(1) Licensing fee:
Pursuant to Article 2 of Decree 139/2016/ND-CP, when an individual engages in rental business activities, they need to consider paying a licensing fee. Specifically:
- If the annual revenue is less than 100 million VND, the licensing fee is exempted according to Article 3 of Decree 139/2016/ND-CP.
- If the annual revenue exceeds 100 million VND, a licensing fee must be paid, with the tax rate specified in Article 4 of Decree 139/2016/ND-CP.
(2) Value-Added Tax (VAT):
According to Article 3 of the Value-Added Tax Law 2008 (document effective until July 1, 2025), the activity of leasing out properties is subject to VAT.
- However, households or individuals with annual revenue from production and business activities below 100 million VND are exempt from VAT according to Clause 2, Article 4 of Circular 40/2021/TT-BTC.
- For cases with revenue exceeding 100 million VND, VAT must be declared and paid, with a tax rate of 5% of the taxable VAT revenue, as stipulated in Appendix 1 Circular 40/2021/TT-BTC.
(3) Personal Income Tax (PIT):
Pursuant to Clause 1, Article 3 of the Personal Income Tax Law 2007 (amended by Clause 1, Article 2 of the Law on Amendments to Tax Laws 2014), income from property rentals is subject to PIT.
- However, if the annual revenue from production and business activities is below 100 million VND in a calendar year, the individual is exempted from PIT according to Clause 2, Article 4 of Circular 40/2021/TT-BTC.
- Similarly to VAT, individuals with revenue over 100 million VND in a year must pay PIT, with a tax rate of 5% of the taxable PIT revenue, according to Appendix 1 Circular 40/2021/TT-BTC.
Thus, whether leasing out a property incurs taxes depends on their revenue level, with taxes including licensing fee, VAT, and PIT, and specific tax rates determined based on current legal regulations.
Shall leasing out houses incur taxes in Vietnam? (Image from the Internet)
What is the penalty for leasing out a property without paying taxes when the revenue is over 100 million VND per year in Vietnam?
According to Article 13 of Decree 125/2020/ND-CP, penalties for violations of tax filing deadlines are stipulated as follows:
- A warning for filing tax returns 1 to 5 days late with mitigating circumstances.
- A fine ranging from 2,000,000 VND to 5,000,000 VND for filing tax returns 1 to 30 days late, except as provided in Clause 1, Article 13 of Decree 125/2020/ND-CP.
- A fine ranging from 5,000,000 VND to 8,000,000 VND for filing tax returns 31 to 60 days late.
- A fine ranging from 8,000,000 VND to 15,000,000 VND for one of the following acts:
+ Filing tax returns 61 to 90 days late;
+ Filing returns late for 91 days or more without incurring tax payable;
+ Failing to submit tax returns without incurring tax payable;
+ Failing to submit appendices for tax management for enterprises with associated transactions along with the corporate income tax settlement return.
- A fine ranging from 15,000,000 VND to 25,000,000 VND for filing tax returns more than 90 days late with incurred tax payable, where the taxpayer has paid the tax and interests into the state budget before the tax authority announces the decision of tax inspection, audit, or before the tax authority formulates a record of late tax returns filing as stipulated in Clause 11, Article 143 of the Tax Administration Law 2019.
Note: The above penalties apply to organizations. Penalties for individuals will be 1/2 the penalty for organizations.
What are cases where the revenue from property rental is subject to tax imposion in Vietnam?
According to Clause 3, Article 5 of Circular 40/2021/TT-BTC:
Tax calculation methods for households and individuals paying tax according to the declaration method:
...
- Households and individuals paying tax on the declaration method, if the determined taxable revenue is not consistent with reality, the tax authority will assess the taxable revenue according to Article 50 of the Tax Administration Law.
...
Thus, people leasing out properties paying value-added tax (VAT), personal income tax (PIT) on the declaration method, if the determined taxable revenue is not consistent with reality, the tax authority will assess the taxable revenue according to Article 50 of the Tax Administration Law 2019.
Additionally, landlords may be subjected to tax imposion if they fall under the circumstances regulated in Article 14 of Decree 126/2020/ND-CP including:
- Failure to register for tax;
- Failure to file tax returns or inaccurate, incomplete, untruthful filings;
- Failure to provide additional tax documents upon tax authority’s request, or providing incomplete, untruthful, inaccurate documents to determine taxable basis;
- Failure to reflect or inaccurately reflect data in accounting records for tax obligation determination;
- Failure to present accounting records, invoices, documents, and necessary materials related to the determination of taxable elements; determination of payable tax amount within stipulated time or when the tax inspection, audit period ends at the taxpayer's office;
- Failure to comply with tax inspection decisions within 10 working days from the decision date unless inspection time postponement is granted according to regulations;
- Failure to comply with tax audit decisions within 15 days from the decision date unless audit time postponement is granted;
- Buying, selling, exchanging, and accounting the value of goods, services not at market transaction value;
- Buying, exchanging goods, services using unlawful invoices, or using unlawful invoices where goods, services are real as determined by competent investigation, inspection, audit authorities and have been declared in revenue, expense calculations for tax;
- Signs of evasion or dispersion of assets to avoid tax obligations;
- Performing transactions incorrectly with economic nature, not true to the actual occurrence in order to reduce the tax obligations of the taxpayer;
- Non-compliance with declaration, identification of associated transaction price obligations or failure to provide information as required by tax management regulations for enterprises with associated transactions.
