We have released our January 2020 publication of our Tax and Accounting Updates covering a Draft Decree to adjust the deductible interest cap for enterprises with related party transactions, and our regular review of recent Official Letters released by the Tax Authorities.


2020欧洲杯预赛直播Further to the meeting hosted by the Deputy Prime Minister on 29 November 2019, which discussed amending regulations for interest expense deductions for companies with related party transactions (currently covered by Decree 20/2017/ND-CP), the Ministry of Finance released a Draft Decree On 12 December 2019.

Key points of the Draft Decree include:

2020欧洲杯预赛直播1. Increasing deductible interest expense cap from 20% to 30% of EBITDA

The total net interest expense incurred in a period by a taxpayer (interest expenses, less interest income from deposits and loans) is deductible when determining the income subject
2020欧洲杯预赛直播 to corporate income tax where the net interest expense does not exceed 30% of total net profit from business activities, plus the net interest expense, plus depreciation expenses in the period.

2020欧洲杯预赛直播2. Deductions for interest expenses can be carried forward for the next five years Where EBITDA ≤ 0 for a taxpayer with related party transactions, the net interest expenses arising in a period can be carried forward against taxable income for the next five years.

2020欧洲杯预赛直播3. Widening of exemptions from related party transactions provisions

The provisions will not apply to taxpayers to which the Law on Credit Institutions or the Law on Insurance Business applies, nor will they apply to public and social projects under control of the Government.

4. Effective date of the proposed changes

2020欧洲杯预赛直播The changes are proposed to apply for the 2019 Corporate Income Tax (“CIT”) year onwards.

Comments are being sought from enterprises on the Draft Decree before being considered for approval by the Prime Minister.

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