According to the Provisional Regulations of People's Republic of China (PRC) on Enterprise Income Tax and the Notice of State Taxation Administration of The People's Republic of China, People's Republic of China (PRC) on Strengthening the Audit of Pre-tax Deduction Expenses of Enterprise Income Tax (Guo Shui Fa [1996] No.201), the pre-tax deduction expenses of enterprise income tax should be deducted in principle. Therefore, the risk reserve and transaction loss reserve accrued by futures exchanges and futures brokerage institutions according to financial regulations cannot be used as the basis for pre-tax deduction of enterprise income tax. When declaring and paying income tax at the end of the year, futures exchanges and futures brokerage institutions shall, in accordance with the provisions of tax laws and regulations, transfer the balance of excess risk reserve and transaction loss reserve to the taxable income in the current period, and shall not carry it over to the subsequent tax years in the form of reserves.