Question:
Our company wants to rent a space to expand our business. Due to personal circumstances, the lessor is not familiar with tax regulations and would like to have our company handle all the tax payments on their behalf. If we agree to take on the tax payments for the lessor, what procedures should our company follow for this rental? What documents and records should be maintained to ensure these expenses can be properly accounted for?
Answer:
– Based on Clause 2.5, Article 6 of Circular No. 78/2014/TT-BTC dated June 18, 2014, by the Ministry of Finance (amended and supplemented by Article 4 of Circular No. 96/2015/TT-BTC dated June 22, 2015, by the Ministry of Finance) guiding corporate income tax (CIT), it stipulates which expenses are deductible and which are not.
– Based on Circular No. 92/2015/TT-BTC dated June 15, 2015, by the Ministry of Finance, providing guidance on value-added tax and personal income tax for resident individuals engaged in business activities; and providing guidance on the implementation of certain content related to personal income tax regulations in the amending and supplementing of several articles of the Law amending and supplementing a number of articles of tax laws number 71/2014/QH13 and Decree No. 12/2015/NĐ-CP dated February 12, 2015, of the Government detailing the implementation of a number of articles of the Law amending and supplementing a number of articles of tax laws and amending and supplementing a number of articles of decrees on taxes.
In the case where a company rents a property from an individual for business purposes, and the lease agreement specifies that the rental fee for the property does not include taxes (value-added tax, personal income tax), and the company pays taxes on behalf of the individual lessor, the company can include the total amount paid for the property rental, including the portion covering taxes paid on behalf of the individual, as deductible expenses. The company should declare the taxes on behalf of the individual lessor using the tax declaration form No. 01/TTS issued together with Circular No. 92/2015/TT-BTC and submit it to the Tax Department of the district or province where the property is rented.
