OFFICIAL REPLY OF THE STATE ADMINISTRATION OF TAXATION ON THE ISSUE OF OVERDUE-RENT-BAD-DEBT-RESERVE TRANSFER FOR LEASING ENTERPRISES WITH FOREIGN INVESTMENT (EXCERPT)

The State Taxation Bureau

Official Reply of the State Administration of Taxation on the Issue of Overdue-rent-bad-debt-reserve Transfer for Leasing Enterprises
with Foreign Investment (excerpt)

GuoShuiHanFa [1992] No.1531

November 3, 1992

I.

The document coded GuoShuiHanFa [1990] No.1174 still shall apply to six-month overdue rent in 1991 for leasing enterprises with foreign
investment, but no bad debt reserve is to arise thereupon. Nor should it be deducted from the taxable income of the period when it
gets confirmed as bad debt in later years.

II.

The overdue rent arising after the year of 1992 should, on the accrual basis, be included in the taxable income of the corresponding
period, and Article 25 , Article 26 and Article 27 of the Rules for the Implementation of the Tax Law can apply to the treatment
of the above-mentioned rent-to-bad-debt transfer and of the bad debt loss.