TO DEDUCT 10% MORE OF THE TOTAL LOAN INTEREST COST IN ENTERPRISE INCOME TAX DETERMINATION
On June 24, 2020, the Government issues the Decree No. 68/2020/ND-CP on amending and supplementing Clause 3 Article 8 of the Decree No. 20/2017/ND-CP dated February 24, 2017 of the Government on prescribing tax administration of enterprises having transactions with related parties.
Accordingly, the total loan interest cost (after deducted the interest of deposit and loan amount) arising in a period eligible to be deducted up on determine that income subject to enterprise income tax of enterprises not exceed 30% of total net profit generated from business activities plus loan interest cost (after deducted the interest of deposit and loan amount) and plus the depreciation cost arising in that period. As regulated before, the maximum amount can be deducted was 20%, so that enterprises may be deducted 10% more when determine the enterprise income tax.
For non-deductible loan interest cost according to the above provisions, it may be carried forward to the next tax period, if the total deductible loan interest cost of the subsequent tax period is lower than the prescribed level. Time for transfer of the loan interest cost shall not exceed 05 consecutive years from the following year of the year which the ineligible to be deducted loan interest cost arising.
This Decree takes effect on the signing date and shall be applied from the tax period of 2019.
