Accounting for GDLK 2025 interest

Interest accounting affiliate transactions (GDLK) has become an important tool, helping businesses comply with tax laws, optimize financial costs and improve transparency in financial reporting. Understanding the principles and correctly implementing GDLK loan accounting will help businesses minimize transfer pricing risks, effectively control costs, and strengthen their reputation with investors and management agencies.

Introduction to accounting for interest on long-term loans

What is GDLK interest accounting? 

Accounting for related party interest is the process of recording, classifying and managing interest expenses arising from transactions between related companies, including parent companies - subsidiaries, or between companies belonging to the same multinational corporation. Unlike normal loans from banks or external credit institutions, interest from related party transactions needs to be determined transparently, in compliance with market principles (arm's length principle) to ensure that there is no transfer pricing or unreasonable cost declaration.

The importance of accurate accounting of GDLK interest for businesses

Correctly accounting for interest on loans with interest brings many benefits to businesses. First of all, it helps businesses comply with tax regulations, avoiding the risk of being charged or fined by tax authorities. 

Second, accurate accounting also helps businesses manage interest expenses effectively, thereby optimizing profits and improving financial efficiency. Finally, financial reports with full information on associated interest expenses will increase transparency, helping investors, shareholders and partners have an accurate view of the financial situation of the business.

Decree 132/2020/ND-CP together Circular 45/2021/TT-BTC has provided detailed instructions on declaring, calculating and accounting for interest on GDLK loans, especially emphasizing the application of market interest rates to determine tax-deductible expenses. Therefore, understanding and correctly applying the accounting process for GDLK loans is not only a legal requirement but also an important step in managing tax risks and financial costs of enterprises.

Benefits of accounting for interest on long-term debt

Accounting for interest on long-term debt is not only a legal requirement but also brings many practical benefits to businesses. Including:

• Accounting for related party interest is the most important benefit of tax compliance. When interest payments between related parties are accurately accounted for, businesses will avoid the risk of being charged or fined by tax authorities due to unreasonable expense declaration.
• Accounting for interest on loans helps businesses optimize financial costs. When interest costs are determined based on market interest rates and fully recorded, businesses can accurately calculate tax-deductible expenses, thereby minimizing tax burden and increasing net profit.
• Accounting for interest on GDLK loans also supports businesses in preparing internal management reports, analyzing financial performance between departments or subsidiaries, and accurately assessing profits on each project or loan.

Principles of accounting for interest on loans

To accurately account for GDLK interest, businesses need to master the following basic principles:

Identify the borrower

To properly account for GDLK loan interest, businesses need to start by clarifying who is the borrower in the affiliated relationship. Specifically as follows: 

• Affiliated parties: Are companies belonging to the same group or have a capital ownership relationship, controlling operations. Loans from related parties must be clearly recorded in the contract, including interest rate, term and payment method.
• Third Party: Is a bank, credit institution or company that is not affiliated in terms of capital and management. This loan is not an affiliated transaction, but still needs to be accounted for according to normal accounting standards.

Determine the appropriate interest rate 

When recording interest, enterprises must apply market interest rates to avoid transfer pricing risks. In case the interest rate is higher or lower than the market rate, the difference can be excluded when determining tax-deductible expenses. Therefore, enterprises need to base on actual data from banks, interbank interest rate reports or reliable reference sources to determine valid interest rates.

Time of accounting for interest on GDLK loans

The timing of accounting for related-party interest must also be accurate and consistent with the accounting period in which it occurs. If a business records interest expenses earlier or later than the actual amount, the financial statements will be inaccurate and will easily create risks during the tax audit process. In addition, all related-party interest must be supported by contracts, agreements and clear payment documents to ensure transparency. This is not only the basis for accounting and auditing reports, but also important evidence in case the tax authority conducts an inspection or transfer pricing audit.

Strict compliance with the above principles not only helps businesses accurately account for interest on trading loans, but also protects tax benefits, optimizes financial costs and enhances reputation in the eyes of investors and management agencies.

Procedure for accounting for interest on long-term loans in enterprises

To help businesses visualize more clearly, the process of accounting for related-party transaction interest can be summarized into specific steps. Each step plays an important role in ensuring transparency, legal compliance and cost optimization. The table below will summarize each stage in detail.

Board: Detailed summary of each stage of accounting for interest on long-term loans in the enterprise

Therefore, enterprises need to build a strict internal control mechanism, apply modern support tools and regularly review loan contracts to ensure the accuracy, transparency and reasonableness of the entire GDLK loan interest accounting process.

How to calculate interest costs of related party transactions 

Calculating interest expense is an important step in the accounting process for interest on a loan, as it determines whether the expense is acceptable for tax deduction. As a general rule, interest expense should be determined based on the loan amount, market interest rate and actual loan term. Enterprises should compare the interest rate stated in the contract with the prevailing interest rate in the market, such as the average lending rate of commercial banks in the same period, to ensure that the recorded expense does not exceed the accepted standard.

Reliable interest rate data

According to the State Bank of Vietnam (SBV), the new average lending interest rate is currently at about 6,231 TP3T/year, about 0.7 percentage points lower than at the end of 2024.

Source: State Bank of Vietnam (SBV)

In July 2025, the average lending interest rate among commercial banks was commonly at 6.5 - 8.91 TP3T/year; the priority short-term lending interest rate was about 3.91 TP3T/year; the USD lending interest rate fluctuated at 4.1 - 5.01 TP3T/year.

Example: Suppose Company A borrows from Company B (with an affiliated relationship) an amount of 20 billion VND in 1 year with an agreed interest rate of 8%/year.

• Compared with the average market interest rate (about 6.231 TP3T/year), only about 6.231 TP3T × 20 billion = 1.246 billion VND is accepted as a valid expense for tax deduction.
• The difference (8% – 6.23%) × 20 billion = 0.354 billion VND will be excluded from valid expenses when calculating tax.

Source: Bank loan interest rates

This example clearly illustrates how a business needs to compare the contract interest rate with the market interest rate to determine the deductible cost, ensuring that the accounting for GDLK interest is both accurate and legal.

Notes and risks when accounting for GDLK

Risk of misidentifying market interest rates

• If the interest rate in the linked loan contract is unusually high or low compared to the interest rates of commercial banks with the same term and credit risk level, the tax authority may adjust the interest expense.
• This results in the expense being disallowed, and the business may be subject to back taxes and penalties.

Limits on interest deductions as prescribed

• According to Decree 132/2020/ND-CP, total net interest expense deductible usually does not exceed 30% EBITDA.
• The excess portion will be eliminated from tax calculation, but can be carried forward to subsequent years within the allowable limits.
• Enterprises need to periodically reconcile "accounting interest" and "tax-deductible interest" to avoid large differences at the end of the year.

Tax obligations on loans from foreign affiliates

• Enterprises must review their obligations to deduct contractor tax when paying interest abroad.
• Consider applying a Double Taxation Agreement to enjoy tax incentives (if eligible).
• Missing tax residency documents, unclear loan agreements, or mismatched interest payment schedules can all result in expenses being disallowed at settlement.

Internal control requirements

• Businesses should periodically review interest rates against the market.
• Check compliance with 30% EBITDA limit.
• Standardize accounting processes to avoid the risk of cost exclusion.

Meaning

• Accounting for interest on long-term debt is not only a technical accounting requirement but also linked to cost management strategy.
• By applying market standards and good internal control, businesses will limit the risk of being regulated or collected by tax authorities.

Conclude

Accounting for GDLK interest is not just a bookkeeping procedure but a strategic management tool: if done correctly, it will help optimize capital costs, increase transparency in financial reporting and minimize the risk of being regulated by tax authorities; if done incorrectly, the enterprise may have to pay back taxes, fines and damage its reputation. Therefore, enterprises need to view accounting for related interest as an inter-departmental process, linked to financial policies, transfer pricing and risk management.

For specific advice, businesses Please contact MAN – Master Accountant Network

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