On 11 September 2019, the Department of Taxation of Ha Noi City issued Official Letter No. 71443/CT-TTHT providing clarification on the determination of loan interest costs.
Under article 8 (3) of Decree No 20/2017 / ND-CP, the total loan interest expense of an entity that accrues in a given tax period and for which a tax deduction on corporation taxable income is permitted, must not exceed 20% of the total net operating income plus the loan interest and amortization expenses incurred during this period. The letter explains that the decree applies to loan interest expenses incurred from 1 May 2017 onwards to the end of the entity’s fiscal year.
