Article 9 of the Announcement of State Taxation Administration of The People's Republic of China City, People's Republic of China (PRC) (People's Republic of China (PRC) State Taxation Administration of The People's Republic of China Announcement No.201125) stipulates that the following asset losses shall be reported and deducted to the tax authorities in the form of list declaration:
(1) Losses from selling, transferring or selling off non-monetary assets at fair prices in the normal operation and management activities of the enterprise;
(two) the normal loss of enterprise inventory;
(three) the loss of fixed assets that the enterprise has reached or exceeded its service life and is normally scrapped and cleaned up;
(four) the loss of assets caused by normal death when the productive biological assets of the enterprise reach or exceed the service life;
(5) Losses incurred by enterprises in buying and selling bonds, stocks, futures, funds and financial derivatives through various trading places and markets in accordance with the principle of fair market transactions.
Article 10 stipulates that the loss of assets other than those specified in the preceding article shall be declared and deducted to the tax authorities in the form of special declaration. If an enterprise cannot accurately determine whether it belongs to the asset loss declared and deducted by the list, it can declare and deduct it by means of special declaration.
Article 23 stipulates that accounts receivable overdue by an enterprise for more than three years, which have been treated as losses in accounting, can be regarded as bad debt losses, but the situation should be explained and a special report should be issued.
According to the above provisions, the losses caused by the uncollectible accounts receivable of enterprises belong to the scope of special declaration, and the losses should be treated as bad debts after accounting by enterprises. Enterprises should explain to the competent tax authorities in the form of special declaration and issue special reports and other materials to declare pre-tax deduction.