We would like to discuss that we have rent an apartment which the rental agreement was prepared between the company and landlord and we need to pay for the deposit and monthly rental, but the landlord does not charge VAT, is it OK? When we pay them, do you need to withhold any amount?
Panwa: Please note that the the property rental transaction is VAT exempt according to Revenue Code Section no. 81 (1). So, the lessor cannot charge you the VAT for rental fee or deposit. However, the service charge (such as public utility services etc.)did not exempt VAT, so the lessor should charge you the VAT for service charge (if any) in case they are the VAT registrant.
For the rental deposit payment, it should not deduct the withholding tax if rental contract is not over 3 years (withholding tax rate 5%), if the monthly rental will deduct the withholding tax at rate 5% and the monthly services (if any) will deduct the withholding tax at rate 3% from service fee before VAT.
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