Is it Required to Pay PIT, VAT when Leasing Property?

According to Point b, Clause 1, Article 4 of Circular 92/2015/TT-BTC stipulates:

"Article 4. Tax calculation method for individuals leasing property

1. Application principles

...

b) For individuals leasing property, the revenue level of 100 million VND/year or less to determine that individuals do not have to pay value-added tax and personal income tax is the total revenue generated in the calendar year from property lease contracts. In cases where the lessee pays property rental fees in advance for multiple years, to determine the revenue level of 100 million VND/year or less, to determine that individuals do not have to pay value-added tax and personal income tax, the revenue is a one-time payment distributed across the calendar years."

Thus: Based on the above provisions, if an individual leasing property has a revenue exceeding 100 million VND/year, they are required to pay value-added tax and personal income tax.

In cases where rental fees are paid in advance for multiple years, revenue (to determine whether value-added tax and personal income tax are payable) is determined as a one-time payment distributed across calendar years.

Therefore, for your case, it is determined as follows:

The house rental contract between you and the company is valid from August 1, 2018, to July 31, 2019, with the rental fee being 20 million VND/month. Thus, the revenue and the value-added tax and personal income tax you must pay in this case are determined as follows:

- For the period from August 1, 2018, to December 31, 2018 (the calendar year is 2018):

You lease the house for a total of 5 months, with total rental revenue in 2018 being: 5 x 20 million VND = 100 million VND.

Therefore, in 2018, you are not required to pay value-added tax and personal income tax for house rental activities.

- For the period from January 1, 2019, to July 31, 2019 (the calendar year is 2019):

You lease the house for a total of 7 months, with total rental revenue in 2019 being: 7 x 20 million VND = 140 million VND.

Therefore, in 2019, you are required to pay value-added tax and personal income tax for house rental activities, with taxable revenue of 140 million VND.

According to Point c, Clause 2, Article 4 of Circular 92/2015/TT-BTC, the payable VAT and PIT are calculated according to the following formula:

+ Payable VAT = Taxable VAT revenue x VAT rate of 5%

+ Payable PIT = Taxable PIT revenue x PIT rate of 5%

Where: The VAT rate for property leasing activities is 5%, and the PIT rate for property leasing activities is 5% (Point b, Clause 2, Article 4 of Circular 92/2015/TT-BTC)

Therefore:

The VAT you must pay in 2019 for house rental activities is: 140 million VND x 5% = 7 million VND.

The PIT you must pay in 2019 for house rental activities is: 140 million VND x 5% = 7 million VND.

Conclusion: The VAT and PIT you must pay for the house rental activity under this contract are: 14 million VND.

The above is our legal advice on the issue you are concerned with.

Best regards!