Many investors choose to put their money in property investments because of their good ROI. When investments are doing good, paying taxes for that income follows suit. Businesses that lease out their properties get income by collecting rents from residential and commercial tenants. Compared with the stock market, property leasing provides investors with less volatile returns. Here is our guide to property lease tax laws in Asia:
Paying of property lease tax in Asia differs per country. For the purpose of discussion, Australia will be included in the Asian region.
Property Lease Tax Laws in Asia
Payment of lease duty on rents is no longer applicable in all states and territories of Australia. However, all states (except Australian Capital Territory) requires stamp duty for grant or transfer of a lease at a premium. This stamp duty is often similar to land transfer. In Victoria, grant or transfer of lease other than rent depends on the total value of the leased property.
Tax rates in Brunei often depend on the ad valorem rate. If, for example, the lease duration is less than a year, the stamp duty is calculated as follows: BND 3.50 for the first BND 500 of the yearly lease and BND 1.00 for every BND 250.00 for the yearly rent thereafter.
If a lease goes beyond a year but less than five years, the stamp duty is calculated as follows: BND 14.00 for the first BND 500 of yearly rent and BND 4.00 for every BND 250.00 of yearly rent thereafter.
Leased properties have a 10% withholding tax levied on the rental amount paid to the government during the monthly tax return filing by the tenant. If the lessor is not a registered taxpayer, a lease clause to deduct withholding tax should be included in the contract.
The real estate tax for leased properties in Beijing, Shanghai, and Guangzhou is levied at 12% of the rent for both local and foreign companies. Properties without rental income, real estate tax are levied at 1.2% of the property’s annual value.
When paying rental income tax in China, it is often divided into three categories: business tax, property tax, and income tax. Sometimes, the government chooses to lump these taxes together in a comprehensive tax.
Property tax on land and buildings is equal to 0.5% of the actual tax calculated over the taxable sale value. Land and structures used for parks, nature reserves, places of worship, and diplomatic offices are exempted from property tax. However, income from rental payments is charged with a 10% final tax on the transactional value. Non-residents must pay 20% of the lease value. Payment must be done to the tax authorities by the lessor if the other party cannot shoulder it.
Property taxes in Mongolia are pretty simple and straightforward. For instance, a Mongolian resident whose property is under his/her name will only need to pay a 10% rental income tax. If the property is under a foreign company based abroad, the company is liable to pay a 30% tax rate or 20% income tax plus a 10% VAT.
Individuals with a rental income exceeding PHP 12,800 monthly and a gross annual rental income not exceeding PHP 1,919,500 should not pay a 12% VAT. They, however, must pay a 3% flat rate levied on the gross rent.