Legal News

[Taxation] Hanoi Tax Department on Tax Policy on Interest on Loans

2024/06/13

Hanoi Tax Department issued Official Letter No. 27296/CTHN-TTHT dated May 10, 2024 to guide tax policy on loan interest.

Pursuant to Decree No. 132/2020/ND-CP, a loan by a parent company to a subsidiary at 0% interest (no interest) shall be considered as a related party transaction. In accordance with Article 8.1 of Decree No. 132/2020/ND-CP, the parent company is required to adjust the price and profit rate of the loan transaction when filing CIT return.

Pursuant to Article 50, paragraph 1 of Law 38/2019/QH14 on Tax Administration, if non-periodic loans of non-financial companies are made without interest or with interest below market rate, presumptive taxation by the Tax Department shall be applied.

In accordance with Article 2, paragraph 4 of Circular No. 111/2013/TT-BTC and Article 14 of Circular No. 78/2014/TT-BTC, if the interest is transferred to the capital contribution and then the capital contribution is further transferred, the taxpayer shall pay personal income tax or corporate income tax on the gain from such transfer.

References:
Official Letter No. 27296/CTHN-TTHT dated May 10, 2024
Circular No. 111/2013/TT-BTC
Circular No. 78/2014/TT-BTC
Decree No. 132/2020/ND-CP
Decree No. 132/2020/ND-CP