On August 15th, 2024, the General Department of Taxation issued Official Letter No. 3602/TCT-CS, accordingly:
In case the company signed a long-term loan contract with a foreign parent company in 2014, the contract stipulating that both principal and interest are to be repaid in a single payment after 10 years, the parent company is subject to contractor tax in Vietnam on income derived from loan interest according to regulations.
In case the parent company forgives the loan interest, and the company does not incur any interest payment to the parent company, the company is not required to declare and pay contractor tax on behalf of the parent company. The loan interest expense that the company deducts in advance annually by the company corresponding to the forgiven interest must be accounted as other income to determine income subject to corporate income tax according to regulations.
