Is rental income subject to personal income tax in Vietnam?

Is rental income subject to personal income tax in Vietnam?

Pursuant to Clause 1 Article 3 of the Law on Personal Income Tax in 2007 (amended by Clause 1 Article 2 of the Law on amendments to Tax Laws in 2014) stipulating income subject to personal income tax:

Taxable incomes

Incomes liable to personal income tax include the following kinds of income, except for incomes eligible for tax exemption specified in Article 4 of this Law:

1. Incomes from business include:

a) Incomes from manufacturing, sale of goods or services;

b) Income from freelance works of individuals having licenses or practicing certificates as prescribed by law.

A sole trader’s income of VND 100 million per year or less is not considered income from business prescribed in this Clause.

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Pursuant to Clause 2 Article 4 of the Circular 40/2021/TT-BTC stipulating tax calculation rules:

Tax calculation rules

1. Rules for calculating tax payable by household businesses and individual businesses shall comply with applicable regulations of law on VAT, TIN and relevant legislative documents.

2. A household business or individual business whose revenue from business operation in the calendar year is not exceeding 100 million VND shall not be required to pay VAT and PIT as prescribed by VAT and PIT laws. Household businesses and individual businesses shall declare tax truthfully and accurately; submit tax documents punctually; take legal responsibility for the accuracy, truthfulness and adequacy of the tax documents submitted.

3. For household businesses and individual businesses in the form of groups of individuals or households, the revenue of not exceeding 100 million VND/year as the basis for exemption from VAT and PIT shall be determined for 01 representative of the group of individuals of household in the tax year.

According to regulations, renting out a house is considered a business activity in the field of residential services. Therefore, rental income is subject to personal income tax.

However, it's important to note that if the annual revenue from rental activities exceeds 100 million Vietnamese dong, then personal income tax must be paid. Conversely, if the annual revenue from rental activities is 100 million Vietnamese dong or less, no personal income tax is required.

Is rental income subject to personal income tax in Vietnam? - image from internet

What is the deadline for personal income tax payment regarding annual tax declaration dossiers in Vietnam?

Pursuant to Article 55 of the Law on Tax Administration in 2019 stipulating tax payment deadlines:

Tax payment deadlines

1. In case tax is calculated by the taxpayer, the tax payment deadline is the deadline for submission of the tax declaration dossier. In case of submission of supplementary tax documents, the tax payment deadline is the deadline for submission of the erroneous tax declaration dossier.

The deadline for paying corporate income tax, which is paid quarterly, is the 30th of the first month of the next quarter.

The deadline for paying resource royalty and corporate income tax on crude oil is 35 days from the date of selling domestically or the date of customs clearance in case of export.

Resource royalty and corporate income tax on natural gas shall be paid monthly.

Pursuant to Clause 2 Article 44 of the Law on Tax Administration in 2019 stipulating deadlines for submission of tax declaration dossiers:

Deadlines for submission of tax declaration dossiers

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2. For taxes declared annually:

a) For annual tax statement dossiers: the last day of the 3^rd month from the end of the calendar year or fiscal year. For annual tax declaration dossiers: the last day of the first month from the end of the calendar year or fiscal year

b) For annual personal income tax statements prepared by income earners: the last day of the 4^th month from the end of the calendar year;

c) For presumptive tax declarations prepared by household businesses and individual businesses: the 15^th of December of the preceding year. For new household businesses and individual businesses: within 10 days from the date of commencement of the business.

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Based on the aforementioned regulations, for annual tax declaration dossiers, the deadline for personal income tax payment is the last day of the tax declaration deadline. For example, the deadline for personal income tax payment in 2023 is as follows:

- The latest deadline for annual tax declaration dossiers is January 31, 2024.

- The latest deadline for annual tax settlement dossiers is March 31, 2024.

- The latest deadline for annual personal tax income settlement dossiers (individuals who directly settle their taxes) is May 2, 2024 (as the last day of the usual April month falls on the public holidays of April 30 and May 1, it will be moved to the next working day).

Who are payers of personal income tax in Vietnam?

Pursuant to Article 2 of the Law on Personal Income Tax in 2007 stipulating taxpayers:

Taxpayers

1. Personal income taxpayers include residents who earn taxable incomes specified in Article 3 of this Law inside and outside the Vietnamese territory and non-residents who earn taxable incomes specified in Article 3 of this Law inside the Vietnamese territory.

2. Resident means a person who satisfies one of the following conditions:

a/ Being present in Vietnam for 183 days or more in a calendar year or 12 consecutive months counting from the first date of their presence in Vietnam;

b/ Having a place of habitual residence in Vietnam, which is a registered place of permanent residence or a rented house for dwelling in Vietnam under a term rent contract.

3. Non-resident means a person who does not satisfy any of the conditions specified in Clause 2 of this Article.

As regulations above, payers of personal income tax in Vietnam are: 

- Residents who earn taxable incomes inside and outside the Vietnamese territory;

- Non-residents who earn taxable incomes inside the Vietnamese territory.

Best regards!