Vietnam Management Channel

Should Airbnb apartments be taxed? HoREA wants to tax the apartment rental business

HoREA says a legal framework is needed to manage the short-term apartment rental business.

The Ho Chi Minh City Real Estate Association (HoREA) has drafter a proposal for Ho Chi Minh City authorities that calls for taxation of the short-term apartment rental business and that regulations be developed to better manage business operations on Airbnb and similar online platforms, which is developing rapidly in big cities.

HoREA said that the last three or four years has seen a dramatic increase in the short-term rental business in Vietnam’s major cities but that current laws and regulations, some of which are included the Law on Housing 2014 and the Law on Real Estate Business 2014, do not have regulations in place for the operation of the short-term apartment rental business.

The Law on Housing 2014 prohibits the use of apartments for non-residential purposes. Under this law, landlord’s leasing rights are recognized, but the law does not allow is conceived as being applicable to medium and long-term apartment rental, and not for short-term rentals.

HoREA notes in their proposal that in many countries, individual landlords who are active in the short-term rental business on internet platforms like Airbnb must register their business, certify that apartments are safe and pay taxes on income derived from rentals. Additionally, many cities have set limits on the number of days an apartment can be rented each year, with certain days or times of the year being prohibited.

HoREA says that Vietnam doesn’t have the correct legal framework for this kind of business and HoREA Chairman Le Hoang Chau has gone on record saying that the established laws should be amended towards the short-term rental business and landlords must register their business and pay taxes.

“An adequate and proper legal framework for short-term rental business will not only help promote the positive development of the sharing economy business model but also generate revenue for the State.”

While many landlords complain that they have to pay various expenses from their revenue such as cleaning and booking commissions, owners of hotels note that they are in the same business, with many of their guests only staying one-night, but they also have management, staff and other expenses, but they still pay taxes.

HoREA’s Chau said also that business registration and payment of taxes should be part of the Industry 4.0 gig economy and that the government should develop the legal framework to manage these operations.

A report by Grant Thornton on Vietnam’s hospitality and lodging industry in showed that Airbnb’s rental market has seen rapid growth in Vietnam.

Grant Thornton estimates that there were 6,500 apartments and houses available for short term rentals in 2016, and that this number increased to 16,000 units in 2017 and has continued to expand to 30,000 apartments and houses available in 2019.

Vietnam’s tourism industry has taken a sever hit because of the global COVID-19 pandemic, but tourism industry experts say that because of Vietnam’s handling of COVID-19, the country is considered “very safe” and they predicted that tourism will rebound quickly once the world is able to control COVID-19 and international tourism resumes.

 

 

 

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