Laws of the People's Republic of China

The State Administration of Taxation

Official Reply of the State Administration of Taxation on Withdrawing the Reserve of Bad Debts of the Enterprises with Foreign Investment and Foreign Enterprises with the Undertaking of Credit and Leasing by

GuoShuiHan [1997] No.388

July 4, 1997

The Request for Instruction on Withdrawing the Reserve of Bad Debts for the Enterprises with the Undertaking of Credit and Leasing when in the Red (HuShuiWai [1997] No.51) has been received and learned.

The opinion in regards is that the enterprises with the undertaking of credit and leasing can be allowed to withdraw the reserve of bad debts for the purpose of balance of the loss of bad debts before taxation during its operation. Therefore, the enterprises can withdraw the reserve of the bad debts whether in red or not with regards to the relevant provisions in the article 25 of the Rules for the Implement of the Income Tax Law on Enterprises with Foreign Investment and Foreign Enterprises and the Circular of the State Administration of Taxation on some Issues Concerning Business Dealing of Income Tax Law on the Enterprises with Foreign Invstment and Foreign Enterprises (GuoShuiFa [1991] No.165).