The interest expenses paid by the profit-seeking enterprise to purchase the land loan shall be correctly reported according to the actual use of the land

The Taipei National Taxation Bureau of the Ministry of Finance stated that if the land purchased by a profit-seeking enterprise is not available for business use, the interest paid on the loan cannot be listed as current expenses.
According to the bureau, according to Article 97, paragraph 9, of the profit-seeking enterprise income tax review standard, the interest on the loan purchased by the profit-seeking enterprise should be listed as capital expenditure; the interest on the loan after the transfer procedures have been completed or delivered for use can be listed as an expense . However, for land that is not a fixed asset, the interest on the loan shall be recorded as a deferred expense, and when the land is sold, it shall be transferred to the deduction of income from the sale of the land.
The Bureau pointed out that in the recent inspection of the 2007 profit-seeking enterprise income tax settlement declaration case of Company A within its jurisdiction, it was found that Company A had purchased several pieces of land, but the land was idle and had not been actively developed, and it was not a fixed asset for business use. After further investigation, In order to purchase the land, Company A borrowed money from a financial institution to pay interest expenses of nearly one million yuan, and listed it under the item of interest expenses. Although the transfer procedures for the land have been completed, the land is not for business use and is not a fixed asset. , the interest on the loan shall not be recognized as current expenses, but shall be reclassified as deferred expenses, and shall be listed as a deduction of land income when the land is sold in the future.
The bureau called on profit-seeking enterprises to pay interest on loans for land purchases, according to the use of the land, and in accordance with relevant regulations such as the income tax review guidelines for profit-seeking enterprises.
(Contact person: Auditor Sun of the first department of review; telephone 2311-3711 extension 1219)