Vietnam's Property Rental Tax: Foreign Owners Face New Obligations

Vietnam's tax regulations are set to undergo significant changes from January 1, 2026, impacting both resident and non-resident foreign property owners. Under the new framework, foreigners owning rental properties in Vietnam will be subject to the same tax obligations as Vietnamese citizens. The latest decrees, specifically Decree No. 68/2026/ND-CP as amended by Decree No. 141/2026/ND-CP, and Circular No. 18/2026/TT-BTC, introduce revised tax policies for property rental activities. A key amendment is the increase in the annual revenue threshold for exemption from Value Added Tax (VAT) and Personal Income Tax (PIT) from VND 500 million to VND 1 billion (approximately US$46,000). This means that individuals with annual rental revenue exceeding VND 1 billion will be liable for both VAT and PIT on their rental income. For instance, a foreign owner earning VND 1.2 billion annually would be taxed on the portion exceeding the VND 1 billion threshold. Previously, rental income was also subject to Business License Tax (BLT), which is officially abolished from January 1, 2026, leaving VAT and PIT as the primary taxes. Taxpayers are required to manage their tax filings accordingly. The specific tax declaration forms and appendices vary depending on whether the taxpayer is an organization declaring on behalf of individuals or an individual directly declaring to the tax authority. Payment deadlines align with tax return submission deadlines, which can be filed either twice a year or annually. For foreign owners, it is crucial to understand their tax residency and the implications of Double Taxation Agreements (DTAs) between Vietnam and their home country. While income from immovable property is typically taxed in the country where the property is located (Vietnam), DTAs may allow for foreign tax credits on the PIT paid in Vietnam, though VAT is generally not eligible for such credits. The updated Housing Law (No. 27/2023/QH15), effective August 1, 2024, allows foreign citizens and investors to purchase property in Vietnam. These tax adjustments aim to enhance tax compliance and ensure equitable taxation for all property owners, regardless of nationality.