Is it compulsory to pay personal income tax on my rental income?

I have a house for lease with the price of 8 million dong per month, the payment in 1 year is 96 million dong. Do I have to pay personal income tax on my rental income? I hope your company could advise me.

FDVN’s opinions:

Thank you for concerning FDVN’s legal services. Regarding your consulting requests, after studying the relevant legal documents, FDVN Law Firm would like to give you the following advice:

Pursuant to Article 4 of Circular 92/2015/TT-BTC on tax accounting method applied by persons leasing property:

“1. Applied principles:

a) Persons leasing property (hereinafter referred to as lessors) are those who earn revenue from the lease of their property, including housing, premises, stores, workshops, warehouses, depots exclusive of accommodation services; lease of means of transport, machinery, and equipment without operators; lease of other property without associated services.

Accommodation services not included in the property lease mentioned in this point include: provision of short-term lodging establishments for tourists and other guests; provision of long-term lodging establishments for students, workers, and the like; provision of lodging establishments together with food and drink services and/or entertainments. Accommodation services do not include: long-term provision of lodging establishments as if permanent establishments such as monthly or annual lease of apartments, which are classified as real estate activities according to Vietnam’s System of Business lines.

b) If the total revenue from lease contracts earned in the calendar year is VND 100 million or lower, the lessor shall not pay VAT and PIT. If the lessee pays a lump-sum of rent in advance for many years, the taxpayer shall not pay VAT and PIT if the annual revenue, which equals (=) lump-sum revenue divided by (:) the number years, is VND 100 million or lower.

c) Business people who have a co-ownership of a piece of property for lease and earn a revenue of VND 100 million/year or lower shall not pay VAT and personal income tax. It is considered that the revenue is earned by only 01 representatives of the group or household in the tax year.”

Thus, in your case, value-added tax and personal income tax are not required because the total rent is only 96 million dong per year. In case you rent the price with a turnover of over 100 million dong per year, you must pay taxes in accordance with the law.

Above is FDVN Law Firm's opinion for your consulting requests based on studying the relevant legal provisions. Hopefully, FDVN's advice would be helpful to you.

Nguyen Thi Lan Anh - FDVN Law Firm

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