The property markets of Asia have reached great heights in recent years as more and more foreign investors realise the huge potential of the region’s real estate markets. This handy guide to paying property lease tax will help investors know more about fees they have to pay for any rental income they may earn through real estate properties in Asia. Read our guide to paying property lease tax in Asia below:
Leased properties in Singapore must follow certain steps to comply with government regulations. Tenants must have all lease documents including rental agreements for rental of rooms, e-Stamped and this will automatically inform the Inland Revenue Authority of Singapore (IRAS). Failure to accomplish this will result in paying a fine of up to $5,000 plus interest on tax.
Rental income received is subject to income tax. This tax is payable on all income in Singapore, including profit from real estate investments. Investors cannot be double taxed as Property Tax and Income Tax are separate taxes that investors must settle with the government.
South Korea allows non-resident foreigners to own Korean properties under a limited liability company. Foreigners may not register the company but they must register tax with the authorities. Moreover, foreigners can bring their rental income outside the country for as long as they do not have outstanding rental income dues. Rental income achieved through a personal company follows a progressive rate and no nil-rate band deduction.
Computation of personal taxable income can either be:
- Method 1: Income – (income * real estate rental business expense rate). Expense rate is often between 20% and 66%. This computation is applicable if the rental income is less than 24 million Korean won.
- Method 2: Income – major expenses such as purchase costs, labour costs, and rental costs.
For example, a rental income not more than 24 million Korean won will use method 1 for computation of personal taxable income since the property value assumption is less than 900 million Korean won.
Individuals staying in Taiwan for more than 183 days during a calendar year must pay taxes on their earnings. For example, individuals living in Taiwan for about 100 days is not responsible to pay taxes. The allowable deduction is 43% of the gross rental income.
Anyone who earns from rental income in Thailand must pay a property lease tax. The only exception to this is if the lease was bought from a developer. The tax payable depends on the progressive scale in relation to an individual’s personal rental income.
Those mandated to pay rental tax must fill out the PND 91 personal income tax return at the end of March, a year after the income was earned. The tenant occupying the property must settle the withholding tax of 15%. This is deductible from the total rent value. The Local Revenue Department will receive this withholding tax filing.
Computation of rental income tax in Vietnam depends on the personal taxable income. Vietnam’s effective tax rate on rental income is 20%. On the other hand, foreigners pay a flat tax rate of 20%.