An individual must pay tax of 10 percent when gaining a turnover of more than 100 million VND per year from renting a house or an apartment. (Photo vneconomy.vn) Thisis a part of the programme on amending the Value-added Tax (VAT) Law that theGeneral Department is consulting with experts, said Ta Thi Phuong Lan, DeputyDirector of the Tax Administration Department of Small, Medium Enterprises,Business Households and Individuals under the General Department of Taxation.
Accordingto experts, the threshold of rental property tax for individual owners does notsuit the actual situation as the current tax rate is quite high and thethreshold too low.
Individualsrenting houses or apartments must pay the highest tax rate at 10 percentcompared to many other types of service businesses (from 4.5 percent to 7 percent).
Besidesthat, the threshold of this tax at more than 100 million VND (4,255USD) per year or about 8.3 million VND per month is also not suitable withmarket performance. Especially in big cities like Hanoi and Ho Chi Minh City,with this threshold, most house/apartment owners must pay this tax.
Forexample, if an individual renting out a house gains a turnover of 200 millionVND per year or about 16.7 million VND per month, they must pay a tax of 20million VND, including 10 million VND value-added tax and 10 million VND personalincome tax, reported chinhphu.vn.
Someexperts suggest that the tax payment threshold needs to be adjusted to increasefrom 30 percent to 40 percent to match the inflation rate that has increasedabove 20 percent.
NguyenThi Cuc, Chairwoman of the Vietnam Tax Advisory Association, told Thoi bao Tai chinh Viet Nam (VietnamFinancial Times) that for personal income tax, it is reasonable to studyand adjust the taxable revenue threshold.
Thisadjustment of taxable revenue threshold applies not only to rental propertyactivities but also other business activities of individuals can beadjusted to increase, such as commercial activities (including e-commerce),manufacturing, construction and other services.
Thetaxable revenue threshold can be increased to about 150 million VND per year ormore to be more reasonable than keeping the current level, Cuc said.
Fornearly half a year, Nguyen Thi Lan Huong, an owner of an apartment in Hanoi,has been unable to find tenants even though she has slashed rent by nearly50 percent due to the COVID-19 pandemic.
Accordingto Huong, the taxable revenue threshold from 100 million VND per year islow and needs to be raised to a higher level together due to the impact ofadditional expenses such as maintenance and insurance fees and depreciation offixed assets.
"Ifthe tax rate is high, the rental price will also be pushed up, making leasingmore difficult. I hope there is a reasonable tax rate to harmonise the lessorand the lessee," Huong told VTV.
Asfor tenants like Nguyen Thanh Hien in Hanoi, she also wants the tax to bereduced so rent can be lower because the tax is still included in the rentand ultimately, the tenant has to pay this tax.
Lanfrom the General Department of Taxation said the existing regulations did notaccount for additional expenses relating to real estate leasingactivities such as maintenance, installation costs and interior equipment.
Therefore,the tax policy has a lower tax rate for individuals than corporate.Specifically, the value-added tax is 5 percent for individuals while 10 percentfor firms. The personal income tax is 5 percent for the individual and 20 percentfor firms./.
VNA
