* Pursuant to Article 4 of Circular No. 96/2015/TT-BTC dated June 22, 2015 of the Ministry of Finance amending and supplementing Article 6 of Circular No. 78/2014/TT-BTC (amended and supplemented at Clause 2, Article 6 of Circular No. 119/2014/TT-BTC and Article 1 of Circular No. 151/2014/TT-BTC) as follows:
“Article 6. Deductible and non-deductible expenses when determining taxable income
Except for non-deductible expenses mentioned in Clause 2 of this Article, enterprises may deduct all expenses if they fully satisfy the following conditions:
a) Actual expenses incurred in connection with production and business activities of the enterprise.
b) Expenses with sufficient legal invoices and documents as prescribed by law.
c) Expenses if there is an invoice for buying goods and services each time with a value of VND 20 million or more (VAT included) when paying, there must be a non-cash payment voucher.
Non-cash payment vouchers comply with the provisions of legal documents on value added tax.
…2. Expenses that are not deductible when determining taxable income include:
2.5. Expenses for property rentals of individuals who do not have the following documents and records:
– In case an enterprise leases an individual’s property, the documents used to determine the deductible expenses are the property lease contract and the rental payment voucher.
– In case an enterprise leases an individual’s property, and the property lease contract contains an agreement that the enterprise shall pay tax on behalf of the individual, the documents used to determine the deductible expenses are the property lease contract and the rental payment voucher and tax payment voucher on behalf of the individual.
– In case an enterprise leases property from an individual, and the property lease contract has an agreement that the rent does not include tax (value-added tax, personal income tax) and the enterprise pays tax on behalf of the individual then the enterprise shall be included in the deductible expenses the total amount of the property rent, including the tax paid on behalf of the individual.”
* Pursuant to Circular No. 92/2015/TT-BTC dated June 15, 2015 of the Ministry of Finance guiding the implementation of value-added tax and personal income tax for resident individuals conducting business activities; guiding the implementation of a number of amendments and supplements to personal income tax as follows:
+ Article 4 stipulates the tax calculation methods applicable to individuals leasing properties
“Article 4. Tax calculation methods applicable to individuals leasing properties
Principles of application
a) Individuals leasing properties mean individuals that generate revenue from property rental, including: rental of houses, premises, shops, factories, and warehouses, excluding accommodation services; leasing means of transport, machinery and equipment without the operator; leasing other assets without services..
Accommodation services that are not included in property rental under the guidance at this point include: providing short-term accommodation for tourists and other visitors; providing long-term accommodation for students, workers and similar individuals; providing accommodation with food and/or entertainment services. Accommodation services do not include: providing long-term accommodation that are considered as permanent establishments such as monthly or annual apartment rentals classified in the real estate industry in accordance with the law on the Vietnam Standard Industrial Classification
b) For individuals leasing properties, the revenue of 100 million VND/year or less to determine that the individual is not required to pay value added tax and is not required to pay personal income tax is the total revenue generated in the calendar year of the property lease contracts. In case the lessee pays the property rental in advance for many years, when determining the revenue of 100 million VND/year or less to determine that the individual is not required to pay value added tax and is not required to pay personal income tax is the one-time payment distributed according to the calendar year.
In 2016, Ms. C leased her house for 12 months (from January to the end of December), with rental revenue of: 12 months x 10 million VND = 120 million VND (> 100 million VND ) . Thus, in 2016, Ms. C has to pay value added tax and pay personal income tax for house rental activities.
…2. Tax bases _
The tax base for individuals leasing properties is the taxable revenue and the rental rate calculated on the revenue.
a) Taxable revenue
Taxable revenue from property leasing is determined as follows:
a.1) Revenue subject to value-added tax for property leasing is the tax-inclusive revenue (in taxable cases) of the amount the lessee pays each period according to the lease contract and other revenues exclusive of fines and compensation received by the lessor as agreed in the lease contract.
a.2) Revenue subject to personal income tax for property leasing is the tax-inclusive revenue (in taxable cases) of the amount the lessee pays each period according to the lease contract and other revenues inclusive of fines and compensation received by the lessor as agreed in the lease contract.
a.3) In case the lessee pays rent in advance for many years, the revenue subject to value-added tax and personal income tax shall be determined according to the one-time payment of revenue.
b) Tax rate on revenue
– The value-added tax rate for property leasing activities is 5%.
– The personal income tax rate for property leasing activities is 5%.
c) Determination of tax payable
Amount of VAT payable = revenue subject to VAT x VAT rate 5%
Amount of PIT payable = revenue subject to PIT x PIT rate 5%
– Revenue subject to value added tax and revenue subject to personal income tax are guided at Point a, Clause 2 of this Article.
– Value-added tax rate and personal income tax rate are guided at Point b, Clause 2 of this Article.
d) Time to determine taxable revenue
The time of determining taxable revenue is the beginning of each payment term on the property lease contract.”
+ Article 8 stipulates tax deduction, tax declaration and tax payment for individuals leasing property
“1. For individuals who directly declare tax with tax authorities
Individuals leasing property that directly declare tax with tax authorities are individuals who sign property rental contracts with individuals; individuals signing property lease contracts with organizations that are not economic organizations (State agencies, mass organizations, associations, international organizations, embassies, consulates,…); individuals signing property lease contracts with enterprises or economic organizations in which there is no agreement that the lessee is the taxpayer.
a) Tax declaration rules:
– Individuals who directly declare tax shall declare value-added tax and personal income tax if the total revenue from property rental in a calendar year is over 100 million VND.
– Individuals choose to declare tax by payment period or declare tax once per year.
…d) Tax return filing deadline
– The deadline for filing tax returns for individuals declaring tax by payment period is the 30th (thirtieth) day of the quarter following the quarter starting the lease term at the latest.
… The deadline for filing tax returns for individuals declaring tax once per year is the 90th (ninety) day from the end of the calendar year at the latest.
d) Tax payment deadline
Tax payment deadline is the deadline for filing tax returns.”