Tag: Bad debt

Debt which is unlikely to be paid. Bad debts may usually be treated as losses and written off against a reserve for such debts.

Peru vs. Telefonica, July 2019, Supreme Court, Case No 11111-2016, Lima

Peru vs. Telefonica, July 2019, Supreme Court, Case No 11111-2016, Lima

Telefónica brought before the Supreme Court of Peru the following issues related to a long lasting dispute with SUNAT – the Peruvian tax authorities: 1: Financial Charges – Carve Out 2: Withdrawal of assets of majority shareholder Telefónica del Perú S.A.A. 3: Depreciation of fixed assets transferred 4: Tax deduction for “Overhead” 5: Provision for doubtful debt collection The Supreme Court agreed with the tax authorities on issues 1 and 4 (carve out financial charges, related to the way in which they were financed; and the overhead tax deduction, which the tax authorities considered to be an incorrect application of accounting standards). The remaining three issues are still awaiting final determination. Click here for English Translation Click here for other translation New1 Corte Suprema de Justicia de la República ... Read more
Taiwan vs Intracom, November 2018, Supreme Administrative Court, Case No 691 of 107

Taiwan vs Intracom, November 2018, Supreme Administrative Court, Case No 691 of 107

Intracom Taiwan had deducted losses on intra-group receivables and management fees in its taxable income. These deductions had been partially denied by the Taiwanese tax administration due to lack of documentation and economic substance. Intracom brought the case to court. The Supreme Administrative court dismissed Intracom’s appeal and upheld the assessment. On the issue of deduction for bad debt the court states: “The Appellee’s request for such documents was in accordance with the law. However, the Appellant was unable to produce documents that met the statutory requirements, and from this point of view, the Appellee’s refusal to allow the recognition of the doubtful accounts could not be considered an error. (3) The appellant’s argument that the tax authorities should accept the recognition of doubtful debts as long as the appellant obtains the documentary evidence of the “foreign office certification” which proves the objective fact that “the debtor of the receivable has gone into liquidation” is clearly inconsistent with Article 94 ... Read more