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미래전략 연구소2020-08-05T16:50:09+09:00

Vietnam 2020 Department of Taxation of Ho Chi Minh city - Tax policy applicable to loans borrowed from parent company outside Vietnam

Date
2020-07-28 12:27
Department of Taxation of Ho Chi Minh city

Tax policy applicable to loans borrowed from parent company outside Vietnam

The Official Letter No. 4547/CT-TTHT dated May 7th, 2020 of the Department of Taxation of Ho Chi Minh city regarding tax policy.

In case a company in Vietnam, in the stage of investment and has not yet put into operation, borrows money from its parent company outside Vietnam and then it deposits money with interests at a bank in Vietnam, the loan interests and deposit interests shall be handled as follows:

Interest expenses on all of borrowings shall be only accounted not higher than 20% of total earnings before interest, taxes, depreciation and amortization (EBITDA) according to Clause 3 Article 8 of Decree No. 20/2017/ND-CP (now the limit is increased to 30% according to Decree No. 68/2020/ND-CP).

Interests income of the deposits at bank shall be offset against loan interest expense, the remaining amount (if any) shall be recognized as “other incomes” to calculate corporate income tax.