In actual operation, enterprises with working capital difficulties have sought to borrow money from other individuals or businesses and these loans do not charge interest. For transactions arising like this, accountants need to understand and recognize the nature of borrowing or borrowing for accuracy, from which they can record into appropriate accounts.
Civil law has clearly distinguished two forms of lending and lending transactions. #
An object in a lending transaction has the following characteristics: Being a specific object; not be consumed, keep the original properties, appearance and features of use; is an object used for a specified purpose and must be returned to it. With a loan transaction, the lender only transfers to the borrower the right of possession and the right to use the borrowed object. The borrower has no right to dispose of the borrowed item. For example, when borrowing a laptop, the lessor transfers the right to use it to the borrower, the borrower must return the same laptop to the lender when the loan term expires or when it is reclaimed.
Conversely, in a loan transaction, the payment object can be consumed and when it is due, the payment object can be converted into money or another asset of equivalent value that can be agreed upon by both parties. The lender has no right to demand the return of the borrowed property from the borrower. When lending, the lender transfers all three rights: the right to possess, the right to use, the right to dispose to the borrower but does not lose ownership. At the maturity of the agreement, the title will turn into a claim and the lender will exercise its right to collect according to the regulations. For example, when borrowing money, the borrower cannot return the same note to the lender, with the same serial number as when receiving the money, the lender transfers the right of disposition to the borrower, so this is considered a loan. a loan, not a loan.
Is a loan without interest considered a loan? #
Article 463 of the 2015 Civil Code stipulates that property loan contract An agreement between the parties whereby the lender delivers the property to the borrower. When the repayment is due, the borrower must return to the lender property of the same type in the correct quantity and quality and only pay interest if so agreed or prescribed by law.
Thus, with a property loan contract, the borrower may or may not pay interest to the lender, depending on the agreement of the parties or prescribed by law. And accordingly, a loan with no interest or interest rate of 0% must also be considered a loan.
Based on the above regulations, the accountant must record this amount in the loan account according to its nature, not in the payable account.
Risk from recording an interest-free or zero-interest loan #
The fact that a loan has no interest or a lending rate of 0% indicates that the lender to the business is a related party, which is a non-market transaction. For these transactions, the tax authority will find out the relevant amounts from this loan, the reasonableness and validity from using this source, any irregularities, if any, will be arrears. tax and penalties for late payment, administrative penalties for these transactions. Depending on the seriousness of the violation, the fine level changes accordingly.
Therefore, in addition to determining the nature of the transaction for accurate accounting, it is necessary to determine the reasonableness of the related transactions to avoid tax risks for the business.