The National Taxation Bureau stated that according to Article 101-1 of the income tax review guidelines for profit-seeking enterprises, if commodities or raw materials, materials, and work-in-progress are scrapped due to factors such as expiration, deterioration, and damage, the list can be inspected within 30 days after the fact. Report to the competent taxation agency to send personnel to investigate and supervise the destruction, or the competent authority to supervise the destruction and obtain supporting documents. In addition to verification and confirmation, it can also be verified and confirmed according to the accountant's audit report or annual income tax audit report and relevant materials. Scrap loss.
| project | Scrap identification method |
| commodity or raw material, material, work in progress | 1. Within 30 days after the occurrence of the fact, check the list and submit it to the State Taxation Bureau for investigation and supervision, or the competent authority for supervision and destruction and obtain supporting documents. 2. The accountant's verification report or the annual income tax verification report and related materials. |
| Fresh produce, fish or raw materials, materials, and products in progress that cannot last for a long time after expiration or deterioration | 1. Within 30 days after the occurrence of the fact, check the list and submit it to the State Taxation Bureau for investigation and supervision, or the competent authority for supervision and destruction and obtain supporting documents. 2. The accountant's verification report or the annual income tax verification report and related materials. |
| Commodities, raw materials, materials, products in process or fresh agricultural and fish products or raw materials, materials, products in process outside the Republic of China | 1. The pre-inspection list shall be submitted to the National Taxation Bureau for approval, and the following materials shall be obtained: (1) Supervision, visa and certification documents by local qualified accountants; supervision and certification documents by notary agencies or inspection agencies. (2) Verification by units stationed abroad or other accredited institutions. 2. my country's accountant audit report or annual income tax audit report and related materials. |
According to the current tax law, the expense or loss must be reported to the tax collection agency before or after the event, mainly including commodity inventory loss, disaster loss, fixed asset scrapping, commodity scrapping, etc. If a profit-seeking enterprise fails to complete the reporting procedures due to temporary negligence, the reported expenses or losses may not be recognized. An example is given as follows:
There is a small-scale beverage company with an annual turnover of hundreds of millions of yuan. Due to the distribution of its beverages by downstream companies, occasionally some beverages are not sold beyond the shelf life and are returned on the grounds of deterioration. , the cumulative amount of the year was as high as more than 4 million yuan, because the spoiled beverage was only recorded in the account, but not in accordance with the provisions of Article 101. Within 30 days after the occurrence, the inspection list shall be submitted to the competent taxation agency for inspection and supervision. When the National Taxation Bureau inspects the declaration of income tax settlement of the current year's profit-seeking enterprises, the company failed to submit the accountant's audit report or annual report on the scrapping of the goods listed by the company. Income tax inspection and visa report, and failed to report to the National Taxation Bureau within 30 days after the fact happened, more than 700,000 yuan of income tax for profit-seeking enterprises were all excluded. In this case, the company not only failed to sell the spoiled beverages, which resulted in a decrease in revenue, but also failed to recognize the losses, which can be described as worse.
In view of this, we hereby list the expenses or loss reporting matters stipulated by the relevant tax laws in detail in the attached table, for reference by profit-making enterprises, and for the purpose of tax saving.
| project | Legal basis | Regulations | Filing deadline |
| 1. Commodity loss | Check Code 101 | If the inventory adopts the perpetual inventory system or the retail price method is approved, the shortage of inventory must be submitted to the competent auditing agency for investigation and confirmation within 30 days after the fact occurs; The income tax inspection visa report is exempt from filing. | Subsequent reporting shall be reported within 30 days after the fact occurs. |
| 2. Disaster loss | 1. Article 10-1 of the Enforcement Regulations of the Income Tax Act 2. Article 102 of the Inspection Guidelines | 1. For earthquakes, winds, floods, fires, droughts, insect disasters, wars and other force majeure disasters and losses, except for ship disasters and air disasters, which actually occurred overseas and are difficult to investigate, they should be issued by the competent government office or maritime reports and insurance companies. In addition to the processing of proof, the inspection list and supporting documents shall be submitted to the competent tax collection agency to send personnel for investigation within 30 days from the day after the fact occurs. | Subsequent reporting shall be made within 30 days from the day after the fact occurred. |
| 2. If it has not been reported to the tax collection agency for investigation according to the above regulations, but it can produce definite evidence to prove that the loss is true, it should still be verified and confirmed. | |||
| 3. Fixed asset retirement | 1. Article 57 of the Income Tax Law 2. Paragraph 10 of Article 95 of the Verification Guidelines | If a fixed asset is destroyed or abandoned due to a specific accident that does not reach the service life specified in the fixed asset service life table, it may be approved by an accountant's audit report or annual income tax audit report with relevant materials attached, or submitted to the supervisory authority of the industry. In addition to the verification and confirmation of the destruction and the issuance of certification documents containing the name, quantity, and amount of the destroyed fixed assets, it shall be reported to the taxation agency for approval in advance, and the unreduced balance shall be listed as the loss of the year. However, if there is income from the sale of waste materials, the sale shall be regarded as income. | Report in advance. |
| 4. Commodity scrap | Article 101-1 of the Audit Guidelines | 1. Commodities or raw materials, materials, work in progress, etc. are scrapped due to expiration, deterioration, damage, or sluggishness and cannot be sold, processed and manufactured, except for the audit report of the accountant or the annual income tax audit report, and attach relevant documents. In case of data verification and determination of scrap loss, a checklist should be submitted to the competent taxation agency to send personnel to investigate and supervise the destruction within 30 days after the fact, or the competent authority has supervised the destruction and obtained supporting documents for verification and determination. 2. Fresh agricultural and fish commodities or raw materials, materials, and finished products cannot survive for a long time after expiration or deterioration due to product characteristics or relevant health laws and regulations. They can check the visa report according to the accountant or the annual income tax audit report, and attach relevant documents. Data verification determined its scrap loss. 3. For commodities or raw materials, materials, work in progress, etc. that are discarded according to the above regulations, if there is income from the sale of waste products, it should be listed as a deduction for other income or loss of commodity scrapping. | Reporting shall be made within 30 days after the occurrence of the fact. |
Press releaseThe Taipei National Taxation Bureau of the Ministry of Finance stated that if the commodities or raw materials, materials, and work-in-progress of profit-making enterprises are scrapped due to expiration, deterioration, damage, or sluggishness and cannot be sold, processed, etc. In addition to checking the visa report and submitting relevant materials for verification and confirmation, a checklist should be submitted to the competent taxation agency to send personnel to inspect and destroy it within 30 days after the fact occurs, or the certification documents that have been supervised and destroyed by the industry competent authority can be verified and certified. In addition, if fresh agricultural and fish products or raw materials, materials, and finished products cannot survive for a long time after expiration or deterioration due to product characteristics or relevant health laws and regulations, they can check the visa report according to the accountant's audit report or the annual income tax audit report, and Submit relevant materials to verify and determine the loss of scrapping. If the scrapped commodity is outside the Republic of China, in addition to checking the visa report of the country's accountants or the annual income tax audit report and submitting relevant materials for verification, it is also possible to submit a check list in advance and report the reasons to the auditing agency for verification, and then entrust overseas The local qualified accountant supervises the destruction and visa, or entrusts an overseas notary agency or inspection agency to supervise the destruction, obtain relevant certification documents, and verify it with the local embassy or consulate of the Republic of China or other institutions recognized by the government of the Republic of China for verification and confirmation.
The Bureau gave an example. Company A’s 2006 Profit Enterprise Income Tax Settlement Report reported a loss of 4.5 million yuan on scrapped commodities. When the Bureau checked, Company A stated that the commodity inventory had no realizable value and had been destroyed by itself. However, the company did not Within 30 days after the fact happened, the inspection list was submitted to the bureau to send personnel to investigate and supervise the destruction, and the certification documents of the supervision and destruction by the competent authority were not presented, and there was no accountant issued a check and visa report for dispatching personnel to conduct an on-site inventory and supervision and destruction. List.
The bureau called on profit-seeking enterprises to report commodity scrap losses and pay attention to relevant laws and regulations in order to protect their own rights and interests. (Contact person: Auditor of Legal Affairs Division 1; Tel. 2311-3711 extension 1835) Release unit: Taipei National Taxation Bureau, Ministry of Finance Release date: 2020-07-31 Update date: 2020-07-31
Sources: Relevant laws and regulations, the National Taxation Bureau, Internet information and Jingxun joint accountants compiled 2020/11/27There are services all over the country. Jingxun United Accounting Firms start-up companies set up bookkeeping, tax declaration, accounting, tax saving, capital visa fees, Taipei, Taoyuan, Taichung, Yunlin, Tainan
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