On 19 January 2021, the General Department of Taxation (“GDT”) issued Notification no. 1005 GDT to determine the market interest rate for loans in 2020 for the purpose of implementing obligations to withhold tax on fringe benefits on loans to employees. Under this notification, the following market interest rate for loans in 2020 were determined based on the average annual interest rate of 8 (eight) big local commercial banks:
- 92% per annum for Khmer Riel loans
- 48% per annum for the United States Dollar loans
The above interest rates are to be used for loans to employees only. For related party loans, the interest rate shall follow Instruction no. 11946 GDT dated 21 August 2018 on the interest rule for related party. For non-related party loans, the interest rate shall follow the actual loan transaction as mentioned in the agreement with clear supporting documents.
If you need any assistance in relation to this notification and related party transactions, please feel free to contact us at Grant Thornton (Cambodia) Limited.
For more details, please refer to the attached Notice No. 1005 GDT