In the process of renting real estate must focus on the property rental tax, let's find out the main points

In daily living, whether past or present, we often observe that most property owners used to rent out house or land, but lease transaction has contract with clarification about price and condition only. Conversely, if the lease is made on a large scale, leasing to a company or leasing to foreigners, aside to the contract, there are still many other conditions and obligations that the property owner and the tenant must apply to avoid problems and disputes.

Before clarifying the property rental tax, you may pay attention to the word “Lease” first. According to Article 596, a lease refers to a contract that one party gives to another party to use and enjoy any object or property for a fee (rental price). Generally, leases are not required to be in writing, but can be done orally. But in practice, a written contract is more specific than an oral contract in the event of a dispute. Article 599 of the Civil Code states that a lease can be made for a limited period of time and in case of termination of the lease, both parties must agree and must be notified in advance.

If owner property rent to the company or foreigner, what should both parties do? The Civil law of the lease does not require the knowledge of the competent authority. However, if both parties want to avoid problems in the case of large-scale contract renting to companies or foreigners, the contract must be made under the knowledge of the authorities or attorney. It can be done by both parties taking the lease contract to the commune with the witness so that the commune official can seal it. In addition, if renting to a foreigner, both parties should specify the residence of the foreigner. Also, whether the lease is for a longer period of more than 15 years or up to 50 years, both parties must file a written contract with the Cadastral Authority. For rent transaction need to pay for property rental tax.

What does the property rental tax mean? Property rental tax is a tax levied on rent on house and land, which is levied on the owner or the owner's property. This tax is collected for the benefit of the sub-national budget.

Property rental tax was established in the Finance Law for Management of 1994, promulgated by Preah Reach Kram No. 2 NS dated 28 December 1993 and Prakas No. 021 PRK MEF dated 28 February 1994 on the management of tax collection on house and land rent.

Types of property subject to property rental tax payment include:

✧ Land used for fishing, rocks, minerals, coal, lakes or salt fields

✧ Buildings, houses, factories, hotels or offices

✧ Construction of other business or industrial buildings, warehouses or gas stations

✧ Floating houses, boats, ferries or ships used for housing or other business.

Nevertheless, tax department also specify the type of properties which are exempt from tax, such as:

✧ House and land rents included in the profits of any enterprise, industry, handicraft, agriculture, trade or commercial activity that falls within the framework of the real income tax

✧ The tenant has deposited money as collateral and at the end of the contract the owner must return the full amount to the tenant.

✧ Monthly rent below 500,000 Riel

✧ Real regime taxpayer (self-declaration).

Let's take a look at the tax base, tax rate and tax calculation:

✧ The tax base is based on the total gross monthly rent, which is the price specified in the contract or the price agreed between the lessee and the lessor.

✧ Deposit is not included in this gross rental fee.

✧ Property rental tax is applied at the rate of 10%

             ⁂ ⁂Tax payable = tax base x 10%

For tax declaration and tax payment, you can see the following conditions:

✧ During the time limit, the full amount of tax and fine shall be paid to the provincial-Khan tax branch.

✧ If the taxpayer's property is being destroyed or the taxpayer is in a life-threatening situation, this tax payment may be delayed or the tax amount may be reduced or the taxpayer may be exempt from the tax.

✧ The owner must issue a receipt upon payment from the tenant.

✧ If the owner refuses to pay the tax, the tenant is responsible for deducting the tax from the monthly fee that he/she has to pay to the owner and must pay the tax to the provincial-Khan tax branch.

✧ The lessee is obliged to show the receipt which he/she received from the owner as well as other information about the lease of the property to the competent tax officer.

We can also have knowledge about the rights and obligations of property owners and tenants as follows:

✧ Lessor of the real estate can not prevent the tenant from using and enjoying the real estate that has been agreed to rent in accordance with the law.

✧ Lessee has a case to supervise, manage, maintain and be responsible for repairing minor damage.

✧ Lessee has the right to sublet the property to others, but must have the consent of the owner first

✧ Lessee must pay rent to real estate owners regularly on time.

✧ Lessee must return the property to the owner and have the right to dismantle the object associated with the leased property at the end of the contract.

Source: General Department of Taxation