On 24 June 2020, the Government had issued Decree 68/2020/NĐ-CP (“Decree 68”) revising, amending Clause 3, Article 8 of Decree 20/2017/NĐ-CP (“Decree 20”) on tax administration applicable for enterprise having related party transactions Decree 68 is effective from the signing date and applied from the tax year 2019. Below is a summary of the significant changes compared with Decree 20:

• When calculating corporate income tax, the total deductible interest expense of a given year shall not exceed 30% of EBITDA (earnings before interest, tax, depreciation and amortization).
• Organizations and loans not subject to this Decree on deductible interest expenses include Credit institutions that follow the Law on credit institutions, Commercial insurance organizations that follow the Law on commercial insurance organizations, Official Development Assistance (ODAs), Foreign loans guaranteed by the Vietnamese Government, loans to further the implementation of National goals including rural development and poverty elimination, loans to further the implementation of social welfare governmental policies and programs.

Decree 68 takes effect on 24 June 2020 and is applicable to 2019 tax year. In addition, companies are allowed to submit revised corporate income tax returns for the tax years 2017 and 2018 to adjust deductible interest expenses and corporate income tax liabilities of such tax years before 1 January 2021.