In case the enterprise borrows money from the director
On February 19, 2025, the Bac Ninh Provincial Tax Department received Transfer Form No. 207/PC-TCT dated February 18, 2025 from the General Department of Taxation on responding to reader K.L.'s questions related to determining and declaring related transactions.
According to information from readers, a business company in the commercial sector borrowed money from its director twice in 2024:
Time 1: Borrow 5% of equity.
2nd time: Borrow 7% of equity.
In total: 12% of equity, returned within the year.
No interest arose.
The question is whether the above transaction is considered an associate transaction and whether it must be declared according to regulations or not?
Bac Ninh Tax Department responded as follows:
Pursuant to Decree No. 132/2020/ND-CP dated November 5, 2020 of the Government on tax management for enterprises with joint transactions:
Enterprises with associations if there are loan transactions or lending of 10% or more of equity to individuals managing and controlling enterprises.
If the loan is from 10% of the equity at the time of issuance, this transaction is determined to be a related transaction.
Thus, the company has borrowed a total of 12% of equity, exceeding the threshold of 10%. Therefore, according to regulations, the company has a relationship with the director and must declare the accompanying transaction appendix according to the provisions of Appendix I of Decree 20/2025/ND-CP.
What should businesses do?
The company is responsible for declaring the linkage and related transactions in the 2024 corporate income tax settlement dossier. Submit the appendices according to regulations, including:
Appendix T (according to Decree 20/2025/ND-CP).
Appendices II and III (according to Decree 132/2020/ND-CP).
In addition, the file for determining the price of the linked transaction is kept, except when it is exempted from file setting according to Clause 2, Article 19 of Decree 132/2020/ND-CP.
If the business has any questions during the implementation process, it can contact the Taxpayer Propaganda and Support Department, Bac Ninh Provincial Tax Department via phone number 0222.3822347 for instructions.
