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미래전략 연구소2020-08-05T16:50:09+09:00

Vietnam 2020 Vietnam Government - Increasing recognition limit of borrowing interest expense of related party transactions to 30%

Date
2020-07-07 15:55
Vietnam Government

Increasing recognition limit of borrowing interest expense of related party transactions to 30 %

Decree No. 68/2020/ND-CP dated June 24th, 2020 of the Government on amendments to Clause 3 Article 8 of the Government’s Decree No. 20/2017/ND-CP dated February 24, 2017 prescribing tax administration for enterprises engaged in transfer pricing

The total interest expense is allowed to be recognized by the enterprises have transactions with related parties will increase from 20% to 30%, retrospectively applied to the tax period 2019.

The remaining 70% of interest expense is not recognized in the year will be carried forward for the next 5 years.

The interest expenses of the years 2017 and 2018 are also allowed to be declared for adjustment if not exceeding the 30% limit prescribed in this Decree. However, the adjusted dossier of Corporate income tax finalization for 2017 and 2018 must be submitted before January 1, 2021.

The Decree attached Form No. 1 – Declare information of related parties and related party transactions.

The Decree takes effect from the date of signing and applies from the 2019 corporate income tax filing.