China alert - Issue 13, April 2011
On 31 March 2011, the State Administration of Taxation (SAT) issued the Measures for Corporate Income Tax (CIT) Deduction on Asset Losses of Enterprises (New Measures) by way of Announcement No. 25. New Measures replace the Measures for Tax Deduction on Asset Losses of Enterprises issued in 2009 (Old Measures). New Measures have broadened the scope of asset losses, removed the requirement of prior approval for asset losses and, in some cases, simplified documentary evidence requirements. Under New Measures, SAT will give more power to enterprises to manage their compliance with the asset loss deduction rules while reserving its right to conduct audits on their compliance. With the resultant redeployment of resources, tax authorities will be able to focus on conducting tax audits on high risk targets or areas. New Measures are effective from 1 January 2011. At the same time, Old Measures and the circulars, Guo Shui Han  No. 772 and Guo Shui Han  No. 196 were abolished. New Measures should apply to the tax year ended 31 December 2011 and subsequent tax years.