Threshold on deductible interest expense of enterprises with related party transactions for CIT calculation

On 14 July 2020, the General Department of Taxation issued Official Letter No. 2835/TCT-TTKT guiding the implementation of Decree No. 68/2020/ND-CP (“Decree 68”) regarding the application of the threshold on deductible interest expense of enterprises with related party transactions for corporate income tax (“CIT”) calculation purpose. Detail as following:

  1. For the tax year 2019

Already declared CIT Finalization for the tax year 2019 ended before 31 March 2020, taxpayer shall revise and amend the CIT Finalization dossier following the regulation under Decree 68

Not yet declared CIT Finalization for the tax year 2019, taxpayers shall implement under Decree 68’s guidance

  1. Retrospective application for the tax years 2017, 2018

Việc xử lý hồi tố chi phí lãi vay khống chế theo quy định tại khoản 3 điều 8 Nghị định 20 cho các năm 2017, 2018 chỉ áp dụng đối với quy định tại điểm a, khoản 3, Điều 8 Nghị định 20 sửa đổi bổ sung tại Điều 1 Nghị định 68, cụ thể:

Raise the cap on interest expense from 20% to 30%

Apply for the net interest expense method (interest expense – income from deposit interest, incomve from loan interest)

The specifications of non-deductible expense carried-forward and expansion of exemption cases are not retrospective.


Decree 126/2020/ND-CP Decree 2835/TCT-TTKT

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