Loss of corporate tax deductions for doubtful debts of financial management practices
(September 9, 2002 the State Administration of Taxation issued)
In order to strengthen the financial management of corporate income tax collection, standard tax deduction of bad debt losses, and enhance their ability to withstand business risk, according to "Provisional Regulations of the PRC Enterprise Income Tax", and its Implementing Rules and other relevant provisions of the regulations.
Article by financial companies to take all possible measures and implement the necessary procedure, one of the following conditions of debt or equity, can serve as a bad debt deduction before the enterprise income tax: (a) the borrower and the guarantor shall be declared bankrupt, closed, dissolution, and termination of legal personality, financial firms and guarantor of the loan recovery, the failure to recover the debt; (b) the death of the borrower, or in accordance with "General Principles of Civil Law" requirement declared missing or dead, financial enterprises according to their property or estate for repayment, and the guarantor for recovery, the failure to recover the debt; (c) the borrower suffered a major natural disaster or accident, the loss is huge and can not get the insurance compensation, indeed unable to repay the loan; After the _set_tlement of insurance claims or, indeed unable to repay part of the debt, the financial companies of their property _set_tlement and recovery of the guarantor, the failure to recover the debt; (d) the borrower and the guarantor has not yet declared bankrupt, closed, dissolution, but has completely ceased its operations, was the county (city, district) and the industrial and commercial administrations above the county level shall cancel, revoke the business license, termination of legal personality, financial firms and the guarantor of the loan repayment, the failure to recover claims; (e) the borrower breaks the law, be punished according to law, the property is insufficient to return the borrowed debt, no other debt obligations, the financial company does not recover after by the recovery of claims; (f) The borrower and the guarantor can not repay maturing debt, financial firms to court, the court enforced the borrower and the guarantor, the borrower and the guarantor of property no enforceable court to terminate the execution, financial firms are still unable to recover the debt; (g) The above (a) to (f) because the borrower can not repay maturing debt, finance companies repossessed as_set_s acquired according to law, according to assessment of fair value recognized in the market after deducting costs of foreclosed as_set_s received, less than the difference between loan principal and interest, can not be recovered by the recovery of debt after; (h) open letters of credit, handling acceptances, guarantees issued when such advances occur, where the applicant and the guarantor issuing the above (a) to (g) of the reasons unable to pay advances, financial firms can not be recovered by the recovery of advances after; (ix) in accordance with national laws and regulations of financial institutions with investment rights of foreign investment, due to be invested enterprises declared bankrupt, close, dissolve and terminate the legal qualifications, the financial business clearing and recovery of the invested enterprises are still unable to recover the shares after; (ten) bank card forgery, fraudulent use, by cheating occurred a net loss incurred by the banks; (k) Grant overdue loans, the bank recourse in determining the effective period, and shall dispose of student loan collateral (pledge), and recourse to the Guarantor jointly and severally liable, still unable to recover the loans; (l) occurred in the financial business In addition to the loan principal and interest receivable other than 3 years can not recover overdue accounts receivable (excluding current accounts between affiliated enterprises); (xiii) written off by the State Council approved the project debt.
The following Article doubtful debt or equity shall not be deducted before the enterprise income tax: (a) the borrower or guarantor financial ability to pay, for whatever reason, fails to repay the debt of financial companies; (b) violation of laws and regulations in various forms, under the pretext of financial enterprises evaded or suspended claims; (c) administrative intervention in the financial enterprises evaded or suspended claims; (d) the financial guarantor business without recourse to the borrower and the creditor; (v) financial an enterprise's debt and other non-business activities; (f) other financial institutions should not be written off debt or equity.
Article financial risk and loss of corporate as_set_s can be extracted the following provisions for doubtful debts, including loans (including mortgage, pledge, hypothecation and other loans), bank card, overdraft, foreclosed as_set_s, discount, bank acceptances advances, guarantees advances into export financing, equity investment and bond investment, lending (split out), interest receivable (excluding loans receivable interest), dividends receivable, premiums receivable, reinsurance receivables, lease receivables and other claims and equity.
On lending by financial enterprises and bear the responsibility of external repayment of foreign loans, including loans from international financial organizations, foreign buyer's credit, foreign government credit, JBIC untied loans and foreign government loans and other as_set_s mixture can be provision for doubtful debts preparation.
Financial companies do not take risks and responsibilities entrusted loan repayment and agency loans and other as_set_s, provision for doubtful debts no.
Article financial enterprises by the following formula to allow provision for doubtful debts in the pre-tax deductions:
Allow pre-tax deduction allowed for doubtful debts = the year end balance of as_set_s of doubtful extracted × 1% - on the end of the year pre-tax deduction in the balance of allowance for doubtful debts.
Article VI of the bad loans of financial loss incurred by an enterprise, Anguidingbao after examination and verification by the tax authorities, should have been in pre-tax deduction to off_set_ the bad debt reserve, partially off_set_ the lack of factual deductible.
Article financial enterprises have been recovered in the pre-tax deduction for bad debts, should be included in the recovery of the current period's taxable income subject to corporate income tax; financial firms have not yet recovered in the pre-tax deductions for bad debts, more than the principal part, included in the current recovery the amount of taxable income subject to corporate income tax.
Article VIII of the implementation of consolidated tax payment of financial enterprises, provision for doubtful debts to be unified by the head office to the location of the provinces (autonomous regions, municipalities or cities with independent planning) tax authorities, after examination and verification, the year-end unified calculated and deducted; For the member companies index decomposition doubtful debts, the total reported to the relevant indicators should also be accompanied by the decomposition of data, the location of provinces (autonomous regions, municipalities or cities with municipal) tax authorities for examination and confirmation to the member companies under one level.
(B) of the loan and investment contracts, loans and investment certificates and related materials.
(C), courts, public security, industrial and commercial administration departments, corporate departments, insurance companies and other units issued by the relevant documents.
(D) The tax required by the authorities of the other information. Financial enterprise can not provide relevant information, the competent tax authorities have the right to not be accepted.
Article financial companies receiving the tax authorities in the loss of tax deductions for doubtful application, should be strictly examined and verified, if necessary, the field investigation and verification.
Article XII of the tax authorities at all levels to strengthen pre-tax loss on the bad debt deduction, it was discovered false information or fraudulent means to obtain bad debt losses to tax deductions, the tax authorities the right to make the decision not to pre-tax deductions, be adjusted compensation tax, and under "Tax Collection and Administration Law of the PRC" and other relevant provisions, be punished.
Article XIII of the way except for the PRC financial as_set_ management companies outside the financial business of all types of financial companies, including policy banks, commercial banks, insurance companies, securities companies, trust investment companies, financial companies and financial rental companies.
City commercial banks, urban and rural credit cooperatives should deducted pre-tax bad debt losses relevant provisions of these Measures, but the application and endorsement process, authority and specific requirements, shall be formulated separately by the State Administration of Taxation.
Article XIV of the way from October 1, 2002 shall come into force.
January 1, 2001 occurred after the loss or extraction of bad debt provisions for doubtful debts, yet the tax treatment, in accordance with the present Measures. Previous provisions inconsistent with this approach, all these Measures shall prevail.
Article XV of all provinces, autonomous regions, municipalities, tax authorities and municipalities may formulate specific implementation measures in accordance with the views submitted to the State Administration of Taxation for the record. |