Christopher Marjoram, Tax Partner at PwC Vietnam, takes a look at the new restrictions on interest deductibility introduced in Decree No 20/2017/ND-CP.
Vietnam has introduced a restriction on the level of tax deductible interest. The introduction of a fixed ratio rule, which follows the recommendations of the OECD in its BEPS initiative, will have the effect of restricting tax deductions to a percentage of EBITDA. The rules may well affect companies that have never used BEPS strategies. Now is the time for companies to look again at the efficiency of their financing arrangements.
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