What is social housing? Is income from leasing social housing subject to VAT in Vietnam?

What is social housing?

Pursuant to the provisions in Clause 7, Article 2 of the Housing Law 2023, social housing is defined as housing supported by the State for eligible individuals who qualify for housing support policies as stipulated by the Housing Law 2023.

Is income from leasing social housing subject to VAT in Vietnam?

Based on Clause 2, Article 8 of the Value Added Tax Law 2008 (supplemented by Clause 3, Article 1 of the Amended Value Added Tax Law 2013 and amended by Clauses 2 and 3, Article 3 of the Law Amending Laws on Taxation 2014), a 5% tax rate is applied for the following goods and services:

Tax Rate

...

2. The 5% tax rate is applicable to the following goods and services:

a) Clean water used for production and living;

b) Ores used for fertilizer production; pesticides and growth stimulants for animals and plants;

c) [Abolished];

d) Services for excavating, dredging canals, ditches, ponds for agricultural production; cultivation, care, pest control for crops; preliminary processing, preservation of agricultural products;

đ) Unprocessed agricultural, livestock, and aquaculture products, except for products specified in Clause 1, Article 5 of this Law;

e) Semi-processed rubber latex; semi-processed turpentine; nets, rope, and fibers for weaving fishing nets;

g) Fresh food; unprocessed forestry products, except timber, bamboo shoots, and products specified in Clause 1, Article 5 of this Law;

h) Sugar; by-products in sugar production, including molasses, bagasse, and filter mud;

i) Products made of jute, sedge, bamboo, rattan, straw, coir, coconut shells, water hyacinth, and other handicrafts utilizing agricultural materials; semi-processed cotton; newsprint;

k) [Abolished];

l) Medical equipment, tools, medical cotton, hygiene bandages; preventive and curative medicine; pharmaceutical and medicinal products used as raw materials for the production of preventive and curative medicine;

m) Educational tools for teaching and learning, including models, diagrams, boards, chalk, rulers, compasses, and specialized equipment for teaching, research, and scientific experiments;

n) Cultural, exhibition, sports activities; art performances, film production; import, distribution, and screening of films;

o) Toys for children; all types of books, except for those specified in Clause 15, Article 5 of this Law;

p) Scientific and technological services as regulated by the Law on Science and Technology.

...

Thus, leasing social housing is subject to a 5% VAT rate.

What is social housing? Is income from leasing social housing subject to VAT in Vietnam? (Image from the Internet)

What are regulations on leasing social housing in Vietnam?

According to Clause 3, Article 89 of the Housing Law 2023, the leasing of social housing is carried out under the following regulations:

[1] The leasing of available social housing can only be performed when ensuring the requirements of Clause 4 or Clause 5, Article 88 of the Housing Law 2023, specifically:

- The selling, leasing purchase, and leasing of available social housing by investors of social housing construction projects must adhere to the following conditions:

+ The residential area for sale, lease purchase, and lease must have completed the construction of technical infrastructure and social infrastructure projects according to detailed plans, design dossiers, and project schedules approved; if the investor has mortgaged the social housing, it must be mortgaged before selling or lease purchasing this housing, except where agreed otherwise by the buyer, lease purchaser, and mortgagee;

+ There must be a notice from the provincial housing management agency confirming that the housing is eligible for sale, lease purchase, or lease, excluding social housing financed by public investment;

+ The housing meets the conditions specified in Point b and Point c of Clause 1, Article 160 of the Housing Law 2023.

- For social housing personally invested and constructed for lease, it is only required to follow the provisions of Article 56 of the Housing Law 2023.

[2] The leasing of social housing must be established by contract containing the terms stipulated in Article 163 of the Housing Law 2023;

[3] Signing contracts to lease social housing that is to be developed in the future is not allowed.

In cases where housing meets the conditions specified in Point a and Point b of Clause 3, Article 88 of the Housing Law 2023, the investor in social housing construction projects may only sign deposit contracts and collect a housing rental deposit of up to 12 months worth of anticipated rent; signing a housing rental deposit contract must ensure the right subjects and conditions for renting social housing as defined in this Law; after the housing meets the conditions under Clause 4, Article 88 of the Housing Law 2023, the investor may sign a rental contract with the tenant.