CIT: Tax deductible impairment losses

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The following impairment losses are accepted as tax deductible:
Impairment loss Features
Debt - Bad debts
- Company insolvency and recovery proceedings and enforcement procedure
- Court and arbitration court claimed debt
- Overdue debt (see table above)
- The tax deductibility of bad debt will now depend on evidence of communication to the debtor of recognition of the expense for tax purposes. The debtor must register that amount as profit for purpose of assessment of taxable income
Receipts - Arsing from debt to be recovered and accepted by insurance companies
Exceptional devaluation of tangible fixed assets, intangible assets, biological and non-consumable assets and investment property - Arising from duly documented cause, including disasters, natural phenomena, exceptionally rapid technical innovations or significant changes with adverse effect in a legal context
- Exceptional devaluations arising, in 2012, from the replacement of invoicing programs or equipments, as a result of mandatory software certification requirements, are considered as impairment losses, without the need to obtain approval from the tax authorities.
Companies and credit institutions’ branches subject to the Bank of Portugal supervision - Specific credit risk
- Country risk
- Capital losses on securities and other instruments
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