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On June 24, 2020 The Goverment issued Decree No.68/2020/ND-CP amending Clause 3, Article 8 of Decree 20/2017/ND-CP providing for tax administration of enterprises having associated transactions.
Accordingly, amending and supplementing regulations on total deductible interest expenses when determining taxable income for enterprises having associated transactions as follows:
Total loan interest expenses (after subtracting deposit interests and loan interests) arising in the period to be deducted when determining taxable income of the enterprise must not exceed 30% of the total net profit from business activities during the period plus interest expenses (after deducting interest on deposits and lending interests) incurred during the period plus amortization costs incurred in the period.
The non-deductible loan interest expense shall be carried forward to the next tax period when determining the total deductible loan interest expense in case the total deductible loan interest expense of the subsequent tax period is lower than the prescribed level. as above. The time for transferring loan interest expenses shall be no more than 05 years from the year following the year the loan interest expenses are not deducted.
The above provision does not apply to loans of taxpayers:
Credit institutions under the Law on Credit Institutions;
Insurance business organizations under the Insurance Business Law;
Official development assistance (ODA) loans;
Preferential loans of the Government shall follow the mode of the Government’s borrowing foreign loans to enterprises;
Loans for implementation of national target program (new rural program and sustainable poverty reduction);
Loans for investment in programs and projects implementing the State’s social welfare policies (resettlement houses, worker houses, students and other public welfare projects).
Decree 68/2020/ND-CP takes effect from June 24, 2020 and applies to the 2019 corporate income tax period.