For many businesses, it is quite a normal financial decision for shareholders or members to temporarily lend money to the company to solve liquidity needs. When it is necessary to pay a debt due, discharge assets at the bank or handle a short-term cash flow shortfall, capital from the shareholders themselves is often faster, more flexible and less expensive than borrowing from a credit institution. In many cases, the parties also agreed on an interest rate of 0%.
The legal risk of a shareholder loan does not start from 0%, but starts from how the tax authorities assess the nature of the transaction.
From a commercial perspective, this is a perfectly reasonable option. Shareholders are supporting the business they invest in, so the goal is not to profit from the loan. However, what is considered reasonable in corporate governance is not necessarily viewed in the same way from the perspective of tax management.
Recently, a written response by the tax authority to the case of enterprises borrowing money from individual shareholders at 0% interest rates has attracted the attention of the business community when mentioning the possibility that this transaction can be considered under the related-party transaction mechanism and lead to tax imposition[1]. Since then, a fairly common question has emerged: can businesses still borrow money from shareholders at 0% interest rate?
The legal risk of a shareholder loan does not start from 0%, but starts from how the tax authorities assess the nature of the transaction.
Not all shareholder loans are associated transactions
The first point to clarify is that not all loans between shareholders and enterprises are governed by the law on related-party transactions.
In practice, the two concepts of "shareholder" and "associate" are often identified with each other. However, the tax law does not approach it that way.
From July 1, 2026, Decree 255/2026/ND-CP continues to be a legal document regulating tax administration for related-party transactions. According to this Decree, borrowing, lending and financial transactions are only within the scope of related-party transactions when they are carried out between entities that meet the criteria for related-party relations as prescribed by law.
Notably, for many small and medium-sized enterprises, the association relationship is not only determined through the capital ownership ratio but can also arise from the operating relationship or control of the business. Accordingly, borrowing and lending transactions between enterprises and individuals who operate or control enterprises or people who have family relations with them, if they meet the statutory conditions, may also give rise to association relationships.
This shows that calling the amount a "shareholder supporting the business" does not change the legal nature of the transaction if the conditions for forming an association relationship have been met.
Therefore, the first question businesses need to ask is not "is the interest rate 0% or not?" but "is this transaction within the scope of related-party transactions or not?" Only when the answer is "yes" does the analysis according to the principle of independent trading really begin.
0% interest rate and independent trading principle
Even if the loan is in an associated transaction, it does not mean that the 0% interest rate is naturally illegal.
The Law on Tax Administration and Decree 255/2026/ND-CP focus on the principle of independent transactions. Accordingly, related-party transactions must be determined according to conditions equivalent to transactions between independent parties in the same economic circumstances, in order to exclude factors dominated by related-party relations that reduce tax obligations. It should be emphasized that the principle of independent trading does not create a "standard interest rate" that applies to every loan.
The cost price of a loan is always influenced by many factors such as loan term, loan currency, collateral, repayment capacity, purpose of using capital, borrower's risk level, and market conditions at the time of transaction. A short-term loan that aims to handle a cash flow shortfall in a matter of weeks cannot be compared to a multi-year commercial loan with collateral. Similarly, loans in Vietnamese dong cannot arbitrarily take foreign currency loan interest rates as the standard.
In other words, what needs to be evaluated is not only whether shareholders will lend to businesses at 0% interest rates, but whether in equivalent economic conditions, independent parties will accept the same transaction conditions.
Adjusting the transaction does not mean modifying the loan contract
One of the most common misconceptions is that if the tax authority determines that the 0% interest rate is not in accordance with the principle of independent transactions, the loan contract will be "converted" into a profitable contract.
In fact, this is not the case. Civil relations between the parties and tax relations are two independent matters. If the contract stipulates that interest is not calculated, the enterprise and shareholders still do not have to pay interest to each other. The tax authority does not have the right to amend the civil contract that the parties have legally concluded.
What the tax authority can do is to redefine some elements of the transaction for tax purposes in cases permitted by law. At the same time, the application of the tax assessment mechanism cannot be carried out just because the interest rate of the contract is different from the market interest rate.
The Law on Tax Administration requires consideration of whether transaction conditions reduce tax liability; whether the taxpayer complies with the obligation to declare and determine the price of related-party transactions; and whether the re-determination of the transaction meets the statutory conditions.
In other words, from determining that the transaction is not in accordance with the principle of independent transaction to applying the tax assessment mechanism are still two different steps of legal analysis.
In fact, many businesses focus only on the question of whether or not to be subject to tax arrears, ignoring another, more important risk: the obligation to comply with related party transactions.
Is it possible to be taxed on an interest that has never been incurred?
In the transaction of shareholders lending to the enterprise at 0% interest, the enterprise is the direct beneficiary because it does not have to pay capital use costs. Meanwhile, the person who gives up the potential income is the individual lender.
So the question is: if the contract stipulates an interest rate of 0% and in fact the individual does not receive any interest, is it possible to establish a taxable income only on the basis of the assumption that this person "should have earned interest"?
This is not just a question about related-party transactions but also a question about the limits of the tax imposition mechanism. The right to redefine transaction conditions for tax administration purposes does not imply the right to generate an income that has never been generated in practice. However, from determining the interest rate according to the principle of independent transactions to establishing taxable income for individuals is still a separate legal step. The assessment mechanism allows tax authorities to re-determine the tax bases in cases prescribed by law, but the application to individuals still has to answer questions about the nature of income, taxable subjects and the time when tax liabilities arise. Therefore, the formula 'market interest rate × outstanding loan × PIT rate' should not be considered as an automatic consequence of every 0% loan.
Therefore, invoking an official letter in response to a specific case to infer that every shareholder loan with a 0% interest rate gives rise to personal income tax on the assumed interest is an approach that should be viewed with caution.
Greater risk may lie in the obligation of related-party transactions
In fact, many businesses focus only on the question of whether or not to be subject to tax arrears, ignoring another, more important risk: the obligation to comply with related party transactions.
If the loan gives rise to the related-party relationship, the enterprise may have to fulfill the obligation to declare related-party transactions, determine the related-party transaction price, and make and keep records as prescribed, except for cases of exemption.
In addition, loans of large value, lasting many years, are continuously extended, do not have a clear repayment schedule or are in fact close to capital supplementation rather than a commercial loan may also become subject to closer scrutiny by the tax authorities during the inspection process. check. Therefore, the biggest risk often lies not in a hypothetical tax, but in the fact that the business does not prepare documents that can explain why the transaction is designed that way.
What should businesses do?
Before considering amending interest-free loan contracts, businesses should review transactions in a reasonable order.
First, accurately determine whether the transaction gives rise to an association relationship or not.
Secondly, if it is a related-party transaction, it is necessary to evaluate the loan conditions according to the principle of independent transactions on the basis of full comparative analysis, rather than only comparing with bank interest rates.
Thirdly, it is necessary to keep sufficient documents proving the economic reason of the transaction. A short-term loan to handle a liquidity shortfall in an emergency situation will have a different commercial basis than a loan of tens of billions of dong that has existed for many years.
More importantly, businesses need to avoid the mindset that without recording interest expenses, there will be no tax risk. In the current tax administration, what is considered is not only the accounted expense but also the economic nature of the transaction and the impact of the linkage on the tax obligation.
Conclusion
Shareholder loans with 0% interest rate are not a problem in themselves. The concern is not in the 0% number, but in whether it reflects a sound trade decision or is merely a consequence of the special relationship between the parties. As tax administration increasingly shifts from checking the legal form to assessing the economic nature of the transaction, businesses will no longer be protected by just a properly drafted contract. What is decisive is the ability to prove why the transaction was designed the way it is and whether the same circumstances can be made by independent parties to the same choice. That's the real line between an internal financial support and a transaction that can become a tax risk.
