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	CIRCULAR OF THE STATE ADMINISTRATION OF TAXATION ON THE EXAMINATION AND APPROVAL ITEMS FOR THE PRE-TAX DEDUCTION OF NON-PERFORMING LOAN LOSSES OF FINANCIAL ENTERPRISES

	(No.73 [2003] of the State Administration of Taxation promulgated on June 19, 2003 and implemented as of June 1, 2003)


SUBJECT : PRE-TAX DEDUCTION; FINANCIAL ENTERPRISES; NON-PERFORMING LOAN LOSSES
ISSUING DEPARTMENT : STATE ADMINISTRATION OF TAXATION
ISSUE DATE : 06/19/2003
IMPLEMENT DATE : 06/01/2003
LENGTH : 392 words
TEXT :

The Measures for the Administration of Pre-Tax Deduction of Non-performing loan Losses of Financial Enterprises (Order No.4 of the State Administration of Taxation) provide that the non-performing loan losses of financial enterprises may not be deducted before tax payment unless upon examination and approval by the tax authorities. In order to strengthen the administration of the pre-tax deduction of non-performing loan losses of financial enterprises, we hereby clarify as follows the examination and approval items for the pre-tax deduction of non-performing loan losses of financial enterprises:

I. NON-PERFORMING LOAN LOSSES APPROVED BY THE STATE ADMINISTRAION OF TAXATION

The following non-performing loans losses of financial enterprises shall be subject to the examination and approval by the State Administration of Taxation:

(1) Items decided by the State Council;

(2) Non-performing loan losses that occurred among the provinces and that have been sorted out during the financial system reform and the restructuring of financial enterprises; and

(3) Single non-performing loan losses, each with a sum of more than 50 million RMB, incurred by banks, city and rural credit cooperatives, and other financial enterprises.

II. NON-PERFORMING LOAN LOSSES APPROVED BY THE PROVINICAL LEVEL OR BELOW TAX AUTHORITIES

Except the cases mentioned above, all other non-performing loan losses of financial enterprises shall be subject to the examination and approval by the tax authorities at the provincial level or below, and the specific powers and procedures of the examination and approval shall be determined by the tax authorities at the provincial level.

III. NON-PERFORMING LOAN LOSSES APPROVED BY THE STATE ADMINISTRAION OF TAXATION APPLICATION PROCEDURES

With respect to the non-performing loan of losses of financial enterprises subject to the examination and approval by State Administration of Taxation, the application for examination and approval shall be made according to the following procedures:

(1) With respect to the items decided by the State Council, and the non-performing loan losses that occurred among the provinces and have been sorted out during the financial system reform and the restructuring of financial enterprises, the financial enterprises shall apply for the examination and approval directly to the State Administration of Taxation; and

(2) With respect to other cases, the local competent tax authorities shall, after examination and confirmation, file the application for examination and approval to the State Administration of Taxation level by level.

IV. This Circular shall be implemented as of June 1, 2003.