In the context of increasingly transparent and stringent tax administration, declaring related-party transactions involving personal loans is no longer a mere administrative procedure but has become a central focus in in-depth tax audits and inspections. Entering 2026, with strong support from Big Data technology, artificial intelligence, and an interconnected reconciliation system between the Tax Department, Banks, and the Police, tax authorities will be able to identify related-party relationships and transfer pricing practices with absolute accuracy.
This article will provide a comprehensive and accurate legal and practical overview to help businesses comply with regulations on declaring related-party transactions and personal loans, thereby optimizing tax costs and avoiding the risk of tax arrears and administrative penalties.
Why is it important to declare related-party transactions involving personal loans?
Traditionally, many business owners have borrowed money from individuals (usually directors or shareholders) to supplement working capital without establishing contracts or charging interest. However, according to Decree 132/2020/ND-CP and the latest amendments in Decree 20/2025/ND-CP, these loans largely fall under the scope of tax management for related-party transactions.
Failure to declare or misdeclaration of related-party transactions involving personal loans can lead to extremely serious financial consequences for businesses:
- Tax assessment: The tax authorities have the right to determine the interest rate on loans based on market rates if the business borrows interest-free (0%). This means that the business is disallowed from interest expense, but the individual lender may still be subject to retroactive personal income tax collection from capital investment.
- Exceeding interest expense limits: Interest expenses exceeding the 30% EBITDA limit will be disallowed as deductible expenses when calculating corporate income tax, resulting in a direct cash flow loss.
- Administrative penalties: The fines for failing to submit the related-party transaction appendix or submitting incorrect pricing documentation are substantial, along with the risk of being listed as a high-risk tax enterprise.
Identifying relationships and personal loan transactions.
To properly declare related-party transactions involving personal loans, the first and most important step is to determine whether the individual is a legally recognized related party of the business.
Conditions for determining the relationship
Based on recent tax audits, there are two most common cases that require businesses to declare related-party transactions involving personal loans:
- Case 1: The business borrows or lends at least 10% of the owner's contributed capital at the time the transaction occurs during the tax period to an individual who manages or controls the business, or to an individual who is related to one of the following family members (spouse, biological parents, adoptive parents, biological children, adopted children, half-siblings...).
- Case 2: The enterprise has transactions involving the transfer or acquisition of at least 25% of the owner's capital contribution during the tax period; and borrowing or lending at least 10% of the owner's capital contribution at the time the transaction occurs during the tax period with individuals managing or controlling the enterprise.
Important Note: The current definition of "related party" has been verified through the national population database. Therefore, concealing the family relationship between the lender and the business operator to avoid declaring related-party loan transactions is an extremely high-risk practice and is easily detected through identification numbers.
Arm's Length Principle
Tax laws require that transactions between related parties be conducted at market prices equivalent to those between independent parties. When a business declares a related-party transaction involving borrowing from an individual, if the applicable interest rate is outside the lending interest rate range of commercial banks at the same time, the business is obligated to demonstrate its reasonableness or accept an upward adjustment to its taxable income.
Regulations on interest expense ceilings 30% EBITDA
This is crucial information that every chief accountant needs to master in order to advise business owners when declaring related-party transactions involving personal loans.
How to accurately calculate EBITDA for related-party transactions.
The total interest expense deductible when determining corporate income tax for enterprises with related-party transactions shall not exceed 30% of the total net profit from business operations during the period plus interest expense (after deducting interest on deposits and loans) incurred during the period plus depreciation expense incurred during the period.
See details: How to calculate interest costs according to Decree 132
The method of carrying forward interest expense to the next period.
One positive aspect of the new regulation is that the portion of interest expense exceeding the 30% limit when businesses declare related-party transactions involving personal loans will be allowed to carry forward to subsequent tax periods. The continuous carry-forward period cannot exceed 5 years. This helps businesses reduce tax pressure during years of heavy investment using borrowed capital, but requires extremely detailed monitoring and declaration of related-party transactions involving personal loans each year.
A real-world case study on calculation and declaration methods.
To clarify further, consider the following example: Company X has a registered capital of 10 billion VND. In 2026, Company X borrowed 2 billion VND from its Director (the managing individual) (representing 20% of equity – reaching the linkage threshold). The interest rate on the loan is 8%/year.
- Total interest expense for the year: 160 million VND.
- Net profit from business operations: 200 million VND.
- Depreciation cost: 100 million VND.
- Interest earned on bank deposits: 10 million VND.
Calculate:
- Net interest expense: 160 – 10 = 150 million VND.
- EBITDA: 200 + 150 + 100 = 450 million VND.
- Ceiling for deductible interest expense (30%): 450 * 30% = 135 million VND.
- Interest expense excluded: 150 – 135 = 15 million VND.
In this case, when declaring the related-party transaction involving personal loans, Company X must exclude VND 15 million from deductible expenses when settling corporate income tax for 2026.
Reference: Declaration of related-party transactions involving loans to the director.
Guidelines for declaring related-party transactions in personal loan compliance.
To fully fulfill their tax obligations, businesses not only need to understand the law but also establish a robust internal control process. Below is a three-step roadmap to help accountants optimize the declaration of related-party transactions and personal loans, ensuring all data is supported by compelling evidence when presented to regulatory authorities.
Step 1: Review the list of individual affiliates.
Businesses need to create a list of all individuals who are related to the company by blood or in management. Check the outstanding loan balances at each point in time to determine the obligation to declare related-party transactions involving personal loans.
Step 2: Prepare the supporting documentation system.
To protect your data when declaring related-party transactions for personal loans, the following documents are required:
- Loan agreement: Clearly state the terms regarding interest rates and the purpose of using the funds for production and business activities.
- Bank documents: Absolutely avoid using cash in loan/repayment transactions with related parties.
- Personal financial capacity profile: Proof that the source of funds for the loan is legitimate.
Step 3: Complete the declaration using the HTKK software.
When performing technical operations, businesses can refer to detailed instructions regarding... Declare related-party transactions on HTKK. To avoid errors in software specifications, accountants need to accurately fill out Form No. 01 (Appendix I):
- In Section III: Select the appropriate link code (usually g).
- In Section IV: Recording the principal and interest transaction values. Omitting the principal amount is the most common error that leads to the declaration of related-party loan transactions being considered incomplete.
Methods for determining transfer pricing for in-depth profiles.
For businesses exceeding VND 50 billion in revenue, declaring related-party transactions involving personal loans also includes the obligation to prepare a valuation report. Businesses typically apply the comparable unsecured transaction price (CUP) method.
- Data collection: Find the highest unsecured loan interest rates offered by at least three local banks.
- Adjusting for Differences: If there are differences in terms or repayment conditions, mathematical adjustments must be made to bring the prices to an equivalent level before declaring the related-party loan transaction.
Serious mistakes to avoid in 2026
Based on tax audit findings, businesses should pay particular attention to the following errors when declaring related-party transactions involving personal loans:
- Interest-free loans: The tax authorities do not recognize the concept of interest-free loans between related parties. If related-party transactions involving personal loans at market interest rates are not declared, the risk is assessed as 100%.
- Failing to exclude interest income from deposits when calculating EBITDA: This error alters the 30% threshold, leading to incorrect tax declarations.
- Omitting related parties in the declaration: Only declaring the Director and forgetting loans from relatives. With the 2026 personal identification system, this is an extremely easy error to detect through population data.
- Inadequate documentation: A poorly drafted loan agreement will raise suspicions about the transaction and may result in the entire expense being disallowed when declaring related-party loan transactions.
Sustainable compliance strategies for businesses
To effectively manage the declaration of related-party transactions for personal loans, businesses should:
- Capital planning: Prioritize bank loans if personal interest expenses risk exceeding 30% EBITDA.
- Utilize supporting tools: Automated accounting software with integrated related-party transaction alert features will make declaring related-party transactions for personal loans simpler.
- Expert consultation: In complex cases, the use of related party transaction advisory services Professional services from reputable and experienced organizations like MAN – Master Accountant Network will help businesses build a strong defense against tax authorities.
Conclude
The obligation to declare related-party loan transactions is an integral part of tax settlement for every business today. In the era of digital tax management in 2026, transparency and compliance are the only ways for businesses to survive and develop sustainably. Understanding regulations, accurately calculating EBITDA, and fully completing the steps for declaring related-party loan transactions will not only help businesses avoid heavy penalties but also build a strong reputation with regulatory authorities.
Ensure that all loan transactions within your business are properly controlled and that all related-party lending transactions are accurately documented in accordance with current laws.
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Content production by: Mr. Le Hoang Tuyen – Founder & CEO MAN – Master Accountant Network, Vietnamese CPA Auditor with over 30 years of experience in Accounting, Auditing and Financial Consulting.