Circular No. 51-TC/CSTC of the Ministry of Finance guides State budget revenues from activities involving renting houses to foreigners and overseas Vietnamese residing abroad in Vietnam.

CIRCULAR

Guidelines for State Budget Revenue from Activities of Renting Houses to Foreigners and Overseas Vietnamese

Guidelines for State Budget Revenue from Activities of Renting Houses to Foreigners and Overseas Vietnamese

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Pursuant to Decree No. 56/CP dated September 18, 1995 of the Government promulgating the Regulations on renting houses to foreigners and overseas Vietnamese;

Pursuant to the guidance of the Prime Minister in Official Letter No. 5121/VPCP-KTTH dated October 20, 2003 of the Government Office;

Pursuant to Decision No. 276/CT dated July 28, 1992 of the Chairman of the Council of Ministers (now Prime Minister) on the unification of management of various fees and charges;

The Ministry of Finance issues guidelines for State Budget Revenue from activities of renting houses to foreigners and overseas Vietnamese (hereinafter referred to as foreigners) in accordance with Decree No. 56/CP dated September 18, 1995 of the Government as follows:

I. SCOPE OF APPLICATION.

This Circular applies to:

1) The following entities are permitted to rent houses to foreigners for residence, establishment of representative offices, branches, or business premises according to Decree No. 56/CP dated September 18, 1995:

Business enterprises specializing in housing operations established and operating under the law, including those with foreign investment capital;

Other businesses and organizations established and operating under the law, owning houses and having lawful rights to use land;

Vietnamese citizens with full civil capacity, owning houses and having lawful rights to use land.

2) Entities permitted to engage in service and brokerage activities for renting houses to foreigners as stipulated in the Government's Decree No. 56/CP dated September 18, 1995.

The following entities are not permitted to rent houses to foreigners:

State agencies, Party agencies, political and social organizations, and Vietnamese citizens are not allowed to lease state-owned premises and residences they manage or use. - Individuals currently being pursued for criminal responsibility, serving sentences, or not yet having their records expunged.

II. SPECIFIC PROVISIONS ON STATE BUDGET REVENUE ITEMS

1. Regarding fees.

a) Fee collection levels:

Those who wish to rent houses to foreigners must apply to the competent state authority for permission to operate rental services for foreigners. Each time applying for a permit or extending a permit, they must pay the state a fee for issuing a rental house permit at the level specified below:

The fee for issuing one rental house permit is 700,000 VND (seven hundred thousand dong);

The fee for each extension of a rental house permit is 300,000 VND (three hundred thousand dong).

b) Management and use of permit issuance fees:

Permit issuance fees for renting houses to foreigners are part of the State Budget revenue, collected concurrently with the issuance of permits by the competent authority. Authorities responsible for issuing permits for renting houses to foreigners must register with the local tax office to receive accounting books and receipts issued by the Ministry of Finance and are responsible for managing and using them according to the guidance of the tax authority. When collecting fees, the fee collector must issue a receipt to the payer.

The authority issuing permits and collecting fees may temporarily retain 30% (thirty percent) of the collected fees for the following purposes:

Reviewing applications for permits related to renting houses to foreigners (including setting up review files, organizing reviews, soliciting opinions from relevant agencies such as security, environment...);

Printing permits and application forms;

Regular or spot checks on compliance with rental regulations by landlords, tenants, and service enterprises in the area;

Providing allowances and bonuses to staff directly involved in fee collection; the maximum annual amount per person shall not exceed three months' basic salary according to current government regulations.

These expenses must comply with current financial regulations and have valid supporting documents.

The remaining fees after temporary retention at the specified rate must be fully remitted to the State Budget. On the fifth day of each month, based on payment receipts, the fee collector is responsible for preparing a list and submitting the previous month's collected funds to the State Treasury, Account 35, according to the corresponding Chapter - Type - Item - Sub-item. If the total collected amount exceeds 20 million VND, even if it has not reached the submission deadline, the fee collector must still prepare a list and submit it immediately to the State Budget, without waiting until the fifth day of the next month.

Annually, the fee collector must maintain separate accounts for permit issuance fees and service-related expenses in accordance with the Accounting and Statistics Law and this Circular. At year-end, they must settle accounts for revenue, submission, and use of retained fees together with the unit's budget with the tax and finance authorities at the same level. If the retained fees are not fully utilized by the end of the year, they must be fully remitted to the State Budget. If there is a need to retain unused fees for the following year, it must be approved in writing by the same-level finance authority. Retained funds will be included in the next year's financial revenue and expenditure plan.

2. Service fees and agency fees for renting houses to foreigners.

a) According to Article 4 of the Regulations attached to Decree No. 56/CP dated September 18, 1995, service enterprises are not allowed to charge agency fees exceeding 2% of the value of the contract stipulated in Article 7 of the Regulations.

b) In cases where the landlord hires services to perform one or more parts of the entire process of renting houses to foreigners, such as applying for permits, finding tenants, signing rental contracts...; or when providing services to tenants, the service provider is allowed to charge service fees. The service fee for each activity within a single service can be agreed upon between both parties (service provider and service recipient) but shall not exceed 2,000,000 VND (two million dong).

When collecting service fees or agency fees, the collection unit must issue a payment invoice to the payer. For the lessor, this invoice serves as evidence to determine the operating costs for renting out the property.

3. Regarding the obligation to fulfill various types of taxes.

The lessor of housing and service businesses engaged in activities related to renting houses to foreigners must present licenses, rental contracts, registrations, and declarations to the local tax authority (where the rented house is located) to pay various types of taxes and other revenues according to the provisions of the law (if applicable) into the State Budget, specifically as follows:

a) Business tax:

The lessor and service businesses must pay the business tax according to the laws on business tax. In the first year of operation, if the commencement of business occurs in the last six months of the year, then fifty percent (50%) of the annual business tax must be paid that year.

b) Property tax; land rent fee.

Organizations and individuals with rented houses must pay property tax according to the laws on property tax. If they lease land from the State, they must pay the land rent fee according to the current laws on land rent fees. In cases where the landlord authorizes another person to rent out the house, the authorized person (as stipulated in Clause 2, Article 4 of the Regulation issued together with Decree 56-CP) must pay the property tax or land rent fee according to the law.

c) Turnover tax:

The lessor must pay turnover tax monthly at a rate of ten percent (10%) of taxable revenue. Taxable revenue is the total amount received from foreigners renting the house as recorded in the rental contract. If the price stated in the rental contract is lower than the tax-applicable price set by the Ministry of Finance (as specified in the accompanying circular), the taxable revenue shall be calculated based on the tax-applicable price set by the Ministry of Finance.

If the tenant pays rent in convertible foreign currency, the taxable revenue must be converted into Vietnamese Dong based on the official exchange rate published by the State Bank of Vietnam at the time of tax payment.

If the tenant pays rent in advance for multiple months or years, the taxable revenue is the total amount prepaid by the tenant, including any amounts paid for repairs or reconstruction of the house (if any). If there is an increase in rent during the rental period, the taxable revenue will be recalculated based on the new price from the date of the price adjustment.

Service and brokerage businesses must pay turnover tax monthly at a rate of fifteen percent (15%) of taxable revenue. Taxable revenue is the total amount received from service and brokerage activities for foreigners renting houses as per the contract.

d) Income tax:

a) For businesses permitted to rent houses to foreigners, service businesses must accurately record the results of rental activities and service activities, temporarily pay income tax monthly, and settle the annual income tax according to the regulations on registration, declaration, and payment of income tax as directed by the directly managing tax authority.

In cases where rent payments are made in advance for multiple years, and turnover tax is paid once according to the provisions in point 3.c above, when settling the annual tax, the taxable income is determined as follows:

Total Turnover Tax Paid Costs Deductible

Revenue Tax Paid Legitimate

Taxable Income = - Expenses

Annually Number of Years Already Paid Settled

Example: In 1966, Company A District A had rental activities, according to the contract signed with the tenant:

Rental period: 10 years.

The rental price converted to Vietnamese Dong according to the contract is 30 million VND per year.

Article ||| Payment terms in the contract: The tenant pays VND 150 million after signing the contract (advance payment for five years).

. Reasonable and valid costs of renting activities allocated to one year; VND 10 million.

. Business income tax paid in 1966 (one-time payment for five years) is:

VND 150 Trillion x 10% = VND 15 Million

Annual taxable income according to the formula is:

VND 150 Trillion - VND 15 Million

- VND 10 Million = VND 17 Million

5 years

b) For individuals and organizations (not enterprises) depending on the specific conditions of the locality and the provisions of the Law on Business Income Tax and Profit Tax, the local tax authority directly manages the collection of profit tax according to the declaration method or the quota method for cases where profit tax is paid based on revenue. The tax authority bases its determination of taxable income on investigation materials and has the right to calculate the annual profit tax payable and temporarily collect monthly taxes, including cases where rent payments are made in advance for several months, quarters, or years. Profit tax is paid together with business income tax as prescribed by the tax authority.

c) In cases where the lessor receives rent payments in advance from the lessee for several months or years and has paid taxes according to this Circular, but due to certain reasons, the lease contract is terminated according to Clause 4, Article 15 of the Regulation issued along with Decree No. 56/CP dated September 18, 1995, the tax authority will consider refunding the tax already paid for the period from the date of termination or cancellation of the contract if there is sufficient documentation to prove it.

4. Regarding the housing fund under state ownership rented to foreigners. For the housing fund under state ownership transferred to a business operation mode managed by specialized real estate companies according to Decree No. 61-CP dated July 5, 1994 of the Government, if rented to foreigners, the entire rental income received shall be considered as the company's revenue, this activity must be accounted for separately and taxed according to the Law.

III. VIOLATION HANDLING

1- Organizations and individuals violating the regulations on renting houses to foreigners and overseas Vietnamese residents in Vietnam shall be handled according to Articles 17, 18, 19, 20, and Article 21 of the Regulation issued along with Decree No. 56-CP of the Government dated September 18, 1995.

2- Enterprises, organizations, and individuals who delay payment of taxes and fines as stipulated shall, in addition to paying the full amount of tax or fine as prescribed, be subject to a daily penalty of 0.2% according to Circular No. 45 TC/TCT dated August 1, 1996 of the Ministry of Finance guiding the implementation of Decree No. 22/CP of the Government.

The head of the tax authority may impose penalties for late payment on entities directly managed by the tax authority for tax collection.

3- All cases of fine collection must use receipts uniformly issued by the Ministry of Finance (General Department of Taxation).

4- The management and use of fine revenues shall be carried out in accordance with current laws on administrative penalties in the field of taxation.

IV. IMPLEMENTATION

1- Organizations and individuals currently subletting state-owned houses to foreigners, if they have the permission of the competent authority and a valid house rental contract that has not expired by April 1, 1996, can continue to sublet until the end of the contract term and enjoy: 15% (for organizations), 20% (for individuals) of the value of the monthly rental contract from the date of issuance of Decree No. 56 CP. The remaining amount must be fully remitted to the State Budget at the National Treasury Account 21 "House Rent, Land, Water Surface" corresponding to the chapter, type, item, and category.

The sublessor must pay all taxes as prescribed by law, with revenue determined based on the total amount enjoyed according to the above ratio.

The provincial or municipal tax bureau is responsible for organizing the collection and remittance of the remaining rent: 85% (for organizations), 80% (for individuals) to the State Budget.

When the house rental contract expires, houses within the scope specified above must be used in accordance with current state laws.

Specifically, for individuals (Vietnamese citizens, foreign citizens residing in Vietnam) currently subletting state-owned houses to foreigners through specialized real estate companies (hereinafter referred to as specialized real estate companies) established and entrusted with the responsibility of managing foreign house rentals in their locality according to Decree No. 389/HĐBT dated November 10, 1990 of the Council of Ministers (now the Government) and Circular No. 03/TT-LB dated April 8, 1991 of the Ministry of Construction - Labor, Invalids and Social Affairs - Interior - Finance guiding the implementation of the aforementioned decree, the specialized real estate company is responsible for collecting and remitting the entire rent during the validity period of contracts signed before September 18, 1995 to the State Budget according to Circular No. 08/LB-TT dated February 10, 1993.

2- Revenue from activities of renting houses to foreigners and overseas Vietnamese residents in Vietnam shall be included in the State Budget according to current regulations on State Budget management and classification.

3- This Circular takes effect from the date of signature and replaces Circular No. 03/TT-LB dated May 13, 1992 of the Ministry of Construction - State Price Control Commission on minimum rental prices applicable to foreigners and overseas Vietnamese residents staying in Vietnam. Previous regulations on State Budget revenues from foreign house rental activities contrary to this Circular are abolished.

During the implementation process, if there are difficulties, please report to the Ministry of Finance for research and resolution.

REGULATION ON THE TAXABLE VALUE APPLIED TO FOREIGNERS AND OVERSEAS VIETNAMESE RESIDENTS RENTING HOUSES IN VIETNAM

(Issued along with Circular No. 51 TC/CSTC dated September 9, 1996 of the Ministry of Finance guiding State Budget revenues from activities of renting houses to foreigners and overseas Vietnamese residents in Vietnam)

 

2. Individuals who have registered as the principal investigator of a Research Project or Pilot Production Project and those participating in its implementation shall not participate in the Evaluation and Selection Council for that Research Project or Pilot Production Project (hereinafter referred to as the Council). In necessary cases, members of the Council may be staff members of the organization registering as the principal investigator of the Research Project or Pilot Production Project, but not more than one person and they cannot serve as Chairperson, Vice-Chairperson, or reviewing member.

1. The taxable value level for foreign individuals and overseas Vietnamese residing in Vietnam renting houses in Vietnam under this regulation shall be applied to determine the amounts deducted and paid into the State Budget according to the obligation of the house lessor, in cases where the price recorded in the rental contract is lower than the price stipulated in this regulation.

2. This regulation on the taxable value applies to Class I cities, namely Hanoi and Ho Chi Minh City. Provincial People's Committees shall specify the taxable value levels for cities that are not Class I (as specified in this regulation) in accordance with the specific conditions of their localities but such levels must not be lower than 50% of the values prescribed in this regulation. In cases where the rental house prices established at the local level are lower than 50% of the values prescribed in this regulation, there must be written agreement and consensus from the Ministry of Finance.

3. Calculation method: Calculated according to the formula:

House price for tax

per type = Local regulated price x 1 + K

usable area

Where: K is the regional coefficient within the inner city and suburban areas of each city and town (regulated in Part III).

II. TAXABLE VALUE LEVELS APPLIED TO EACH TYPE OF HOUSE BY USABLE AREA.

1. Classification of houses: Rental houses are classified into three types as prescribed by the Ministry of Construction, including:

- Detached houses;

- Independent houses;

- Apartment buildings.

2. Usable area:

Usable area is classified based on the purpose of use within the house,

including the following types:

- Main area: including bedroom, living room, office, dining room, kitchen, bathroom.

- Ancillary area: including balcony, garage, storage, guardhouse...

- Yard and garden area: including yard, walkway (within the premises of the house, villa), flower garden, ornamental plants...

- Other area: including sports facilities such as swimming pool, playground, tennis court...

3. Taxable value levels applicable to Class I cities (Hanoi and Ho Chi Minh City).

Unit: USD/m2/month

4. For houses with special rental prices not conforming to the classification criteria or valuation methods of this regulation, such as multi-story buildings specifically rented out for foreign individuals to use as representative offices or business operations..., the average price of 40 USD/m2/month shall apply, regardless of floor or location;...

 

III. REGIONAL CLASSIFICATION

Depending on the specific situation of each city or town, regions may be divided into 2 to 3 zones to establish appropriate pricing tables, the regional coefficient (K) is defined as follows:

1. Central urban area: This is the area with the highest construction density and population density in the city or town. At the same time, it meets two out of three central standards: Political-Economic; Cultural-Sports; Tourism. It has convenient and integrated public service systems.

2. Peripheral central area: This is the area adjacent to the central urban area, with secondary centers (districts, wards). It has moderate construction density and population density. It has relatively convenient public service systems (transportation, water supply...).

3. Suburban urban area: This includes areas adjacent to the peripheral central area with transportation hubs undergoing urbanization. Public service systems are not yet convenient and complete.

Example: Regarding the application of the regional coefficient: The price of 1m2 of a rented house in the central urban area or town is 100,000 VND, while the same condition 1m2 of a house in the peripheral central area is 90,000 VND; and in the suburban urban area is 80,000 VND.