The Decision on the publication of the interest rate on loans between related parties, which determines the amount of the interest rate on loans between related companies referred to in Article 14 of the Income Tax Act for 2022 was published in December.
According to the said Decision, the interest rate is set at 2.68% and in tax terms it is considered as:
- the minimum interest rate that a company should charge when lending to related parties who are non-residents and
- the highest interest rate charged to the company on the received loan by related parties who are non-residents.
In the first case, if interest was charged at a rate of less
than 2.68% or an interest-free loan was approved, then the
difference between calculated and prescribed interest rates should
increase corporate income tax base when compiling the Income Tax
form.
Related to the second case, if interest was calculated at a rate
higher than 2.68%, then the difference above the interest
calculated according to the prescribed rate should increase the
corporate income tax base when compiling the form.
These rules also apply to loans between related parties who are
residents, if one of the related parties has:
- preferential tax status, for example pays income tax at rates lower than the prescribed rate or is exempt from paying income tax
- has the right to transfer tax losses from previous tax periods.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.