Tax return procedures when renting personal property

When renting an individual’s property such as premises, factories, machinery, means of transport, etc. What documents are needed to make the above cost a reasonable expense? This is an important question that every resident should know the answer to make sure they meet the regulations of the government. In Vietnam, personal tax return procedures are complex for foreign workers and new employees. Therefore, in this article, we will discuss the topic of tax return procedures when renting property in Vietnam.

1. Tax Revenue Calculation from Contract to Year-End

Determination of taxable revenue over the lease period is the first step to take. Property leases often have a fixed period of time in a year that can last for many years. There are two situations, including: lease duration less or more than one year.

1.1 Lease Duration Less Than One Year

1.1.1 If the turnover is less than 100 million VND

  • There is no need to declare license fees, Value Added Tax (VAT), and Personal Income Tax (PIT) on that turnover.
  • If the total annual revenue falls between 50 million VND and 100 million VND, no declaration of license fees and VAT is required, and PIT can still be included in reasonable expenses.

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1.1.2 If the turnover exceeds 100 million VND

  • It is mandatory to declare license fees, VAT, and PIT and pay the corresponding taxes to the management agency.
  • If the total annual revenue is above 100 million VND, the declaration and payment of license fees, VAT, and PIT are required.

1.2 Rent Duration Over Many Years

1.2.1 If the turnover is less than 100 million VND

There is no need to declare license fees, VAT, and PIT on that turnover.

1.2.2 If the revenue is over 100 million VND

It is mandatory to declare license fees, VAT, and PIT and pay the corresponding taxes to the tax authority. We will take an example for you to understand easier.
For example, in 2018, the rental period is 4 months (September 1, 2018, to December 31, 2018), with a total rental revenue of 60 million VND per year, which is less than 100 million VND per year. In this case, the revenue needs to be declared with the tax agency due to the rental period spanning multiple years. However, there are no license fees, VAT, or PIT on that revenue in 2018.

Another example, 2019 and 2020, the total rental revenue per year is 180 million VND. Since the revenue has already been declared with the tax agency at the time of renting, there is no need to re-declare it in the following years. Only the mandatory amounts, such as license fees, 5% VAT, and 5% PIT on revenue for one year, need to be paid (which can be done at the beginning of the year or divided according to the rental payment deadline in the contract).

2. Documentation procedures for rental and regulations on tax arrival to lease of property

2.1 Turnover under 100 million/year.

2.1.1 Documentation of procedures.

The property lease contract signed between the lessor and the lessee does not need to be notarized.

  • Payment documents: Receipt slip, payment slip, Debit note, Credit note
  • There is no need to declare to the tax office and also not have to pay 5% VAT, 5% PIT on that rental revenue.

2.1.2 Regulations on VAT, PIT, license fees.

In Circular 2, Article 1 of Circular 119/2014/TT – BTC wrote: “Households and individuals with rental properties are required to declare and pay VAT, PIT and license tax as notified by tax authorities. Particularly for households and individuals with leased properties, whose total rental amount in the year is 100 million or less or the average total rental amount per month in the year is 8.4 million VND or less, they are not required to declare and pay VAT and PIT and the tax authority does not issue retail invoices in this case.

2.2 Turnover over 100 million/year.

In Clauses 1 and 2, Article 8 of Circular 92/2015/TT – BTC has written: “Individuals who lease property directly declare with tax authorities. Or the lessee declares and pays tax on behalf of the lessee if it is agreed in the contract that the lessee is the taxpayer.”

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If there is an agreement on the declaration and payment of tax on behalf of the contract, in addition to the initial rental cost on the contract, the replacement tax payment will also be added to the rent to include in the expenses when finalizing CIT at the end of the year.

General conclusion is that i f the individual’s property rental revenue is over 100 million/year, the total tax and fee payable to the state budget is:

Total tax and fee payable = (Total rental revenue X 10%) + License fee.

At S4B, we understand the importance of complying with tax regulations when it comes to personal property rental. Our team of experts is here to assist you in navigating the complex documentation procedures and tax regulations related to leasing property.

With S4B’s tax consultation services, you can rest assured that your personal tax matters are in capable hands. We are committed to helping you achieve tax compliance while optimizing your financial outcomes. Let us be your trusted partner in managing your tax responsibilities effectively and efficiently. Contact us today to schedule a consultation and take the first step towards a seamless and compliant tax journey.


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