LATEST PERSONAL INCOME TAX CACULATION IN VIETNAM

OUTLINES

1. Regulations on individuals leasing properties.

2. How to calculate personal income tax on property rental.

3. Personal income tax declaration dossiers for rental properties.

  Income from property rental is one of the types of income subject to personal income tax. Since August 1st, 2021, there have been many new regulations on value-added tax and personal income tax for business households and individuals, including property leasing. Currently, the preparation of personal income tax returns from property rental has many changes. So, according to the new regulations, what do personal income tax returns for rental properties need? The following article will analyze this content, helping readers understand the necessary information.

 

Property leasing activities are subject to personal income tax (Illustration).

1. Regulations on individuals leasing properties

• According to Point a, Clause 1, Article 9 of Circular No. 40/2021/TT-BTC guiding the incomes generated by individuals from leasing properties include:

• Renting out houses, factories, warehouses, premises, shops without accommodation services (including: providing long-term accommodation facilities other than apartments for students, workers and similar objects. providing short-term accommodation facilities for tourists and other visitors; providing accommodation facilities with catering services or recreational facilities);
• Cho thuê phương tiện vận tải, máy móc thiết bị không bao gồm người điều khiển;
• Cho thuê tài sản khác không kèm theo dịch vụ.Leasing means of transport, machinery and equipment excluding the operator; Lease other property without service.

• According to Clause 3, Article 1 of Circular No. 100/2021/TT-BTC (amendment to point c, Clause 1, Article 9 of Circular No. 40/2021/TT-BTC) guiding the case that individuals only engage in property leasing and If the rental period is not for a full year, then there is no need to pay personal income tax if the rental revenue is VND 100 million/year or less.
• Based on the one-time revenue amortized according to the calendar year to determine whether an individual must pay tax or not in case the lessee pays the rent in advance for many years.

2. How to calculate PIT on rentaL property

• According to Article 10 of Circular No. 40/2021/TT-BTC guiding the personal income tax on property rental is calculated according to the following formula:

• Tax rate 5% x Taxable turnover = Personal income tax payable

• In which:

• Tax rates apply according to the guidance in Appendix I issued together with Circular No. 40/2021/TT-BTC for property leasing.
• The personal income taxable revenue from property leasing is determined by the amount stated in the lease contract that the lessee pays each period and other revenues as agreed in the property lease contract such as fines and compensation. In case the lessee pays a one-time rental for many years, the taxable turnover is the lump-sum payment.

• The beginning of each payment term on a property lease is the time to determine taxable revenue.
• 

Hồ sơ khai thuế thu nhập cá nhân cho thuê tài sản (Ảnh minh họa).PIT declaration file for property rental (Illustration image).

3. PIT declaration file for property rental

1. Property rental tax return period

• According to Point b, Clause 1, Article 9 of Circular No. 40/2021/TT-BTC guiding individuals to lease properties:
  • Tax declaration according to each payment period (each payment period is determined according to the beginning of the lease term of each payment period).
  • Tax return by calendar year.
  • Tax declaration according to each contract.
  • Tax returns for multiple contracts on one return if the rental property in the area is managed by the same tax authority.

• According to Point b, Clause 1, Article 9 of Circular No. 40/2021/TT-BTC guiding individuals who lease property to declare tax and pay one-off tax for the entire prepaid revenue in case the lessee pays for many years in advance. The total payable tax amount of each calendar year is determined as the one-time tax payable as prescribed.
• In case the taxable turnover, payment period, and lease term change because the content of the property lease contract is changed, the individual shall make an adjustment or supplement in accordance with the provisions of the Law on Tax Administration for tax period is subject to change.

2. Personal income tax declaration file for property rental

• According to Article 14 of Circular No. 41/2021/TT-BTC guiding the tax declaration dossiers for individuals who lease property directly declaring tax with tax authorities and organizations declaring tax on behalf of individuals as follows:
• The list of tax declaration dossiers comply with the list promulgated together with Decree No. 126/2020/ND-CP (specifically, item a, point 8.5, Appendix I). Accordingly, taxpayers need to prepare the following documents:
  • Tax declaration form No. 01/TTS issued together with Circular 40/2021/TT-BTC for property leasing activities;
  • Appendix of detailed list of property lease contracts made according to form No. 01-1/BK-TTS issued together with Circular 40/2021/TT-BTC applicable to individuals having direct property leasing activities declare tax with the tax authority if it is the first tax return of the Contract or the Contract Appendix;
  • A copy of the property lease contract, the contract appendix, applicable to individuals who have property leasing activities, and directly declare tax with the tax authority if it is the first tax declaration of the Contract or the Contract Appendix;
  • In case the lessor authorizes a legal representative to carry out the tax declaration and payment procedures, a power of attorney (copy) is required as prescribed by law.In case it is necessary to compare and confirm the accuracy of the copy with the original, the tax authority has the right to request the presentation of the original.

3.  Deadline for submitting PIT return for property rental

• According to Point a, Clause 2, Clause 3, Article 44 of the Law on Tax Administration, the deadline for submitting tax declaration dossiers for property lessors who directly declare tax with tax authorities is as follows:
  • For individuals who declare tax according to each payment period, the deadline for submission of tax declaration dossiers is the 10th day since the beginning of the rental period of the payment period.
  • For individuals who file a tax return once a year, the deadline for for submission of tax declaration dossiers is the last day of the first month of the next calendar year.

4. Time limit for paying personal income tax on property rental

• According to Clause 1, Article 55 of the Law on Tax Administration, which stipulates that individuals who lease property directly declare tax with tax authorities, the deadline for tax payment is the last day of the time limit for submitting tax declaration dossiers. In case of additional declaration of house rental tax return, the time limit for filing tax returns of the tax period with errors or omissions is the tax payment deadline.

➤ More articles:

➤ Where do I submit the PIT finalization file?
➤ Does rental contract have to be notarized or authenticated?
➤ Cases of issuing personal income tax documents. 
➤ Role of personal income tax.

• Here is the latest guidance on personal income tax calculation for rental properties of Thinh Tri Law Firm to send to readers. If you have any questions, please contact Hotline 1800 6365 for advice.