Tax Calculation Method for Individuals Leasing Property Under New Regulations

Based on Clause 1, Article 9 of Circular 40/2021/TT-BTC (Effective from August 1, 2021), which stipulates the tax calculation method for individuals leasing property as follows:

- Individuals leasing property are those who generate revenue from the lease of properties including: leasing houses, premises, stores, factories, warehouses not including accommodation services; leasing transportation means, machinery, equipment without operators; leasing other properties without services. Accommodation services not included in property leasing activities as guided in this clause include: providing short-term accommodation for tourists, transient guests; providing long-term accommodation which are not apartments for students, workers and similar subjects; providing accommodation along with food services or entertainment facilities.

- Individuals leasing properties declare tax on each payment period occurrence (each payment period occurrence is determined by the beginning of the lease term of each payment period) or declare tax according to the calendar year. Individuals declare tax according to each contract or declare tax for multiple contracts on a single declaration form if the leased properties are in the same jurisdiction managed by the same tax authority.

- Individuals leasing properties who do not generate revenue for a full 12 months in the calendar year (including cases with multiple lease contracts) have a revenue threshold of 100 million VND/year or less to determine that individuals leasing properties are not required to pay VAT, or PIT is the taxable revenue of a calendar year (12 months); the actual taxable revenue to determine the tax payable amount in the year is the revenue corresponding to the actual months of property leasing occurrence.

Example 2: Mr. B has a house lease contract with a rent agreement of 10 million VND/month from October 2022 to the end of September 2023. Therefore, the actual revenue for 2022 is 30 million VND, but the total revenue calculated for 12 months of 2022 is 120 million VND; the actual revenue for 2023 is 90 million VND, but the total revenue calculated for 12 months of 2023 is 120 million VND. Therefore, Mr. B is subject to VAT, and PIT corresponding to the actual generated revenue of 2022 and 2023 according to the mentioned contract.

- In case the lessee pays rent in advance for multiple years, the individual leasing the property declares tax and pays tax once for the entire pre-paid revenue. The tax payable amount once is the total tax payable amount for each calendar year as stipulated. In case of changes in the lease contract contents leading to changes in taxable revenue, payment period, lease term, the individual shall make adjustments, and supplements declarations according to the provisions of the Law on Tax Administration for the tax period with the changes.

Respectfully!