Is it compulsory to pay value-added tax personal income tax when leasing out property, of which revenue is not exceeding 100 million VND/year in Vietnam?

Is it compulsory to pay value-added tax personal income tax when leasing out property, of which revenue is not exceeding 100 million VND/year in Vietnam?

Pursuant to Clause 1.c Article 9 of the Circular 40/2021/TT-BTC (amended by Clause 3 Article 1 of the Circular 100/2021/TT-BTC) stipulating as follows:

Tax calculation in some special cases

...

1. Individuals leasing out their property (hereinafter referred to as “lessors”)

...

b) Lessors shall declare tax separately on each rent payment (according to the beginning date of the lease period) or by calendar year. The lessor shall declare tax on each contract separately, or declare tax on multiple contracts on the same declaration if the pieces of property are under the management of the same tax authority.

c) In case an individual's only business operation is property lease, the lease duration is shorter than 1 year, and the revenue from property lease does not exceed VND 100 million per year, he/she is not required to pay VAT and PIT. In case the lessees pay the rent in advance for many years, the revenue as the basic to determine whether individuals must pay tax or not is the lump sum payment according to the calendar year.

As regulations above, in case an individual's only business operation is property lease, the lease duration is shorter than 1 year, and the revenue from property lease does not exceed VND 100 million per year, he/she is not required to pay VAT and PIT.

In case the lessees pay the rent in advance for many years, the revenue as the basic to determine whether individuals must pay tax or not is the lump sum payment according to the calendar year.

Is calculating tax under periodic declarations required tax finalization in Vietnam?

Pursuant to Article 5 of the Circular 40/2021/TT-BTC stipulating method and basis for calculating tax payable by household businesses and individual businesses under periodic declarations as follows:

Method and basis for calculating tax payable by household businesses and individual businesses under periodic declarations

1. Periodic declarations shall be prepared by large-scale household businesses and individual businesses or other household businesses and individual businesses that choose to pay tax under periodic declarations.

2. Household businesses and individual businesses paying tax under periodic declarations shall declare tax monthly, except new businesses and businesses that satisfy the criteria for declaring tax quarterly prescribed in Article 9 of Decree No. 126/2020/ND-CP.

3. If the revenue of a household business or individual business that is paying tax under periodic declarations is found to be false, the tax authority shall impose the taxable revenue as prescribed in Article 50 of the Law on Tax Administration.

4. Household businesses and individual businesses paying tax under periodic declarations shall comply with on accounting, invoices and documents. A household business or individual business is not required to do accounting if their a business line has the basis for determination of revenue which is confirmed by a competent authority,

5. Household businesses and individual businesses paying tax under periodic declarations are not required to finalize tax.

As regulations above, household businesses and individual businesses paying tax under periodic declarations are not required to finalize tax.

Periodic declarations shall be prepared by large-scale household businesses and individual businesses or other household businesses and individual businesses that choose to pay tax under periodic declarations.

Are household businesses and individual businesses whose revenue from business operation is not exceeding 100 million VND required to declare tax in Vietnam?

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

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.

As regulations above, household businesses and individual businesses whose revenue from business operation is not exceeding 100 million VND shall not be subject to value-added tax personal income tax. However, they still have to declare tax truthfully and accurately; submit tax documents punctually.

Best regards!