Renting Houses Without Declaring Taxes: Current Situation, Challenges, and Management Solutions

Current Regulations on Rental Taxes

According to Circular 40/2021 of the Ministry of Finance, individuals renting out houses must declare taxes per contract or combine multiple contracts under the same tax authority.

Under the Law on Tax Administration, individuals can declare taxes per payment period or on a calendar-year basis.

House, office, and premises rentals are subject to:

• Value-Added Tax (VAT)

• Personal Income Tax (PIT)

• Business License Fee

Details:

• Annual rental revenue ≤ VND 100 million → exempt from taxes.

• Annual rental revenue > VND 100 million → liable for 5% VAT, 5% PIT (on total revenue), plus business license fee.

Like other individual businesses, landlords cannot deduct expenses such as repairs or furnishings.

Current Situation: Lack of Awareness and Tax Evasion

Many landlords still fail to declare or pay taxes, often due to lack of knowledge or intentional evasion. For example, Ms. Ngoc Mai (HCMC) rents her house for VND 14 million/month, with payments via bank transfer, but has never filed taxes, citing “not knowing.”

Authorities acknowledge cases where landlords underreport income or avoid tax. The tax office is now enhancing data integration with other agencies to better monitor rental activities.

Challenges in Implementation

Before 2015, companies renting offices needed invoices, so landlords had to declare taxes. Since late 2015, tenants can account rental costs with contracts and bank transfers, even without invoices, creating loopholes for landlords to evade taxes or under-declare outdated rates.

Some landlords declare income below the VND 100 million threshold to avoid taxes, while in some cases tenants pay taxes on behalf of landlords. Although taxes still reach the state budget, the declaration does not match the actual owner.

Expert Perspectives: Fairness in Rental Taxation

Experts stress that taxing rental activities is necessary and fair, as real estate leasing is a profit-generating business. Landlords are not required to set up a business entity but must declare and pay taxes to ensure transparency and market fairness.

Solutions: Awareness and Digital Tools

Authorities are encouraged to guide landlords through notices and direct explanations, reserving penalties for deliberate fraud.

With tax IDs linked to national ID numbers (CCCD), compliance will become more transparent and even beneficial for landlords in financial transactions.

Digital solutions are also needed:

• Link rental contracts with banking data.

• Simplify online tax filing.

• Allow partial expense deductions to encourage voluntary compliance.

Rental taxation is not only a fiscal duty but also a tool for real estate market transparency. Proper tax compliance increases state revenue and protects landlords’ rights.

As HCMC and major cities’ rental markets expand, tax management will become more strict, transparent, and digitalized, ensuring a sustainable and fair real estate market.