The State Administration of Taxation ("SAT") has recently released the Announcement on Matters Concerning Safekeeping Asset Losses Materials for the Enterprise Income Tax Purpose for Future Reference (the "Announcement"), applicable to the final settlement and payment of enterprise income tax from the year 2017 and thereafter.
The Announcement clearly states that materials about enterprises' asset losses will no longer be requested. To declare the deduction of asset losses with the tax authority, an enterprise only needs to fill out and submit the Breakdown Sheet for Pre-tax deduction of Asset Losses and Tax Adjustments, part of the Annual Enterprise Income Tax Return, and does not have to provide materials on asset losses any longer. Relevant materials shall be safekept by enterprises themselves for future reference. After the Announcement is issued, enterprises shall collect, sort, gather together and safekeep relevant materials in respect of asset losses, in accordance with applicable rules stipulated in the Announcement of the State Administration of Taxation on Issuing the Administrative Measures for Deduction of Asset Losses of Enterprises before Income Tax, and are no longer required to submit such materials to tax authorities when they are filing tax returns. Furthermore, the Announcement specifies requirements in respect of safekeeping materials on enterprises' asset losses for future reference, stating that enterprises shall well preserve all materials in relation to asset losses and ensure their truthfulness and legality.